1975 (7) TMI 152 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of the coal surcharge levied by the Orissa State Electricity Board.
2. Applicability of Sections 49 and 59 of the Electricity (Supply) Act, 1948.
3. Relevance of the arbitration clause in the agreement.
4. Authority of the Board to enhance rates unilaterally.

Summary:

1. Validity of the Coal Surcharge:
The appellant challenged the press note dated February 1, 1971, which levied a coal surcharge at the rate of 0.62 paise per unit on electricity supplied by the Orissa State Electricity Board from the Talcher-Hirakud grid. The appellant argued that the coal surcharge was not authorized by the agreement dated December 3, 1960, which stipulated the rates for electricity supply.

2. Applicability of Sections 49 and 59 of the Electricity (Supply) Act, 1948:
The Board claimed that the coal surcharge was permissible u/s 49 and 59 and the Sixth Schedule of the Electricity (Supply) Act, 1948. However, the Court found that neither Section 49 nor Section 59 conferred any authority on the Board to enhance the rates for the supply of electricity where they are fixed under a stipulation made in an agreement. The Court referred to its judgment in Indian Aluminium Company v. Kerala State Electricity Board, stating that the Board has no authority under these sections to override a contractual stipulation and enhance unilaterally the rates for the supply of electricity.

3. Relevance of the Arbitration Clause:
The High Court dismissed the writ petition on the preliminary ground that the appellant should have availed the arbitration remedy provided in clause (23) of the agreement. The Supreme Court, however, held that the arbitration clause did not cover the question of whether the Board had the power u/s 49 and 59 and the Sixth Schedule to levy the coal surcharge. The arbitration agreement could not be regarded as a relevant factor influencing the Court's discretion to entertain the writ petition on merits.

4. Authority of the Board to Enhance Rates Unilaterally:
The Court concluded that the Board could not justify the levy of the coal surcharge on the appellant by resorting to Sections 49 and 59. The effect of the levy would be to enhance the rates for the supply of electricity stipulated under the agreement, which the Board was not authorized to do unilaterally.

Conclusion:
The Supreme Court dismissed the appeal but made no order as to costs, noting that the Board's action could not be invalidated merely because it was purportedly made under a wrong provision if it was otherwise within its power.