1968 (3) TMI 115 - HC - Indian Laws

Summary

Issues Involved:
1. Rate of electricity supply for street lights and water works motors.
2. Whether the appellant company purchased liabilities along with assets.
3. Right of the appellant company to unilaterally revise electricity rates.
4. Binding nature of agreements between the municipality and the original company.
5. Legality of the revised rates under the Electricity (Supply) Act, 1948.
6. Assurance given by the appellant company regarding non-application of revised rates.

Detailed Analysis:

1. Rate of Electricity Supply for Street Lights and Water Works Motors:
The dispute centers on the rate at which electricity was to be supplied to the respondent municipality for street lights and water works motors. The original agreements, dated September 28, 1943, were between the municipality and Wadhwan State Electric Power Distributing Company. The appellant company, Zalawad Electric Power Supply Company, purchased the original company in 1950 and continued to supply electricity under the same terms until they published revised charges in May 1952. The respondent municipality objected to the revised charges, leading to arbitration and an umpire's award on September 3, 1952, which fixed new rates.

2. Whether the Appellant Company Purchased Liabilities Along with Assets:
The appellant company contended that they only purchased the assets and not the liabilities of the Wadhwan State Electric Power Distributing Company. However, both the trial judge and the Extra Assistant Judge Surendranagar held that the appellant company had purchased both the assets and liabilities, making the original agreements binding on them.

3. Right of the Appellant Company to Unilaterally Revise Electricity Rates:
The appellant company claimed the right to unilaterally revise the rates based on the umpire's award. The trial court and the Extra Assistant Judge Surendranagar concluded that the company did not have the right to unilaterally revise the rates and was bound by the original agreements. However, the High Court found that under the provisions of the Electricity (Supply) Act, 1948, specifically Section 57 and the first clause of Schedule VI, the appellant company had the statutory right to adjust rates unilaterally to ensure that their clear profit did not exceed a reasonable return.

4. Binding Nature of Agreements Between the Municipality and the Original Company:
The agreements between the municipality and the original company were initially upheld by the trial court and the Extra Assistant Judge Surendranagar as binding on the appellant company. However, the High Court ruled that the provisions of the Electricity (Supply) Act, 1948, override any inconsistent terms in the agreements, allowing the appellant company to revise the rates.

5. Legality of the Revised Rates Under the Electricity (Supply) Act, 1948:
The High Court referred to the Supreme Court decision in Amalgamated Electricity Co. Ltd. v. N. S. Bathena, which held that the maxima prescribed by the State Government under the Electricity Act, 1910, do not limit the rates a licensee can charge under the Electricity (Supply) Act, 1948. The High Court concluded that the appellant company was within its rights to revise the rates under the first clause of Schedule VI of the Electricity (Supply) Act, 1948.

6. Assurance Given by the Appellant Company Regarding Non-Application of Revised Rates:
The municipality argued that the appellant company had assured them that the revised rates would not apply. The High Court found that while such an assurance was given initially, it was superseded by the umpire's award and the subsequent public notice. The correspondence between the parties indicated that the company intended to charge the revised rates after the umpire's award, making the municipality's claim of assurance invalid.

Conclusion:
The High Court ruled in favor of the appellant company, allowing them to charge the revised rates for the supply of electricity to the respondent municipality. The suit filed by the municipality was dismissed, and the appeal was allowed with costs. The court emphasized that the statutory provisions of the Electricity (Supply) Act, 1948, took precedence over any inconsistent terms in the original agreements.