2010 (11) TMI 1059 - SC - Indian Laws

Additional charges/surcharge payable on the delayed payment of outstanding electricity dues raised under Clause 32.2.1 and 34 of the Terms and Conditions of supply (TCS) - upward revision of price - HELD THAT - The Electricity Board appealed to this Court against the judgment of the High Court. Allowing the appeals preferred by the Board this Court took the view that while the consumers had no obligation to take notice of the revised tariffs and to make any payment on the basis thereof after the judgment of the High Court of Kerala till the said decision was reversed by this Court, yet no sooner the decision of this Court upheld the upward revision of the tariffs, the Board's entitlement to draw bills on the basis of the revisions and consequently enforce payment of such bills by the consumers revived with full force. This Court repelled the contention that the liability to pay the revised tariffs accrued only after the pronouncement of the judgment of this Court upholding the upward revision and not from any date prior to that. This Court held that once the upward revision was found to be valid and enforceable such revision would be effective from the date the revision was made, no matter such revision had remained unenforceable for some period on account of the decision of the High Court. It is quite evident that this Court had upheld the claim for payment of interest @ 18% p.a. primarily because of the stipulation contained in the tariffs/agreement executed between the Board and the consumer providing for payment of interest at that rate in the event of delay in the payment/discharge of the bills raised against the consumer. It is not as though this Court had refused to enforce the stipulation contained in the tariffs providing for recovery of interest from the consumer if the latter failed to pay the amounts within the time stipulated - The very fact there was during the intervening period an erroneous decision of the High Court obliterating the revision in full or in part would make little difference in so far as the liability to pay the amount under the revised tariffs was concerned. So also the fact that the consumers were not deliberately in default on account of the judgment of the High Court did not affect the enforceability of the demand arising from the revised tariffs or the stipulation regarding payment of interest demanded on the same on account of the non- payment or delayed payment of the amount recoverable by the Board. Reliance placed upon the decision of this Court in KANORIA CHEMICALS INDUSTRIES LTD. VERSUS UP. STATE ELECTRICITY BOARD 1997 (3) TMI 600 - SUPREME COURT . That was also a case where the validity of a notification issued by the U.P. State Electricity Board revising the electricity rates/tariffs under Section 49 of the Electricity (Supply) Act, 1948 was challenged by the consumers. Interlocutory applications filed in the writ petitions for stay of the operation of the impugned notification were eventually dismissed by the High Court whereupon the consumers deposited the differential amount between the pre-revised and the revised electricity rates. Consumers did not, however, deposit the late payment surcharge recoverable in terms of Clause 7(b) of the notification. Notices of demand were, therefore, issued to the consumers which were challenged in a fresh batch of writ petitions filed by them - The main contention urged by the consumers before the High Court was that since the operation of the notification revising the tariffs had been stayed between 25th July, 1990 and 1st March, 1993, no late payment surcharge could be levied on the amount withheld by the petitioners under the orders of the Court, no matter the writ petitions were finally dismissed. That contention was rejected by a Division Bench of the High Court of Allahabad. The matter was then brought up to this Court in appeal by the consumers, inter alia, contending that the stay of the operation of the impugned notification relieved the consumers of the obligation to pay the revised tariffs/rates and consequently additional charges for late payment, if any. Both on the question of restitution of the benefit drawn by a party during legal proceedings that eventually fail as also on the general principle that a party who fails in the main proceedings cannot benefit from the interim order issued during the pendency of such proceedings, this Court found against the consumers and upheld the demand for payment of additional charges recoverable on account of the delay in the payment of the outstanding dues. Far from lending any assistance to the appellant-company the decision squarely goes against it and has been correctly appreciated and applied by the High Court. Appeal dismissed.

Summary

Issues Involved:

1. Demand for additional charges/surcharge on delayed payment of electricity dues.
2. Validity of Clauses 32.2.1 and 34 of the Terms and Conditions of Supply (TCS).
3. Applicability of previous Supreme Court decisions (Kerala State Electricity Board v. MRF Limited and Kanoria Chemicals and Industries Ltd. v. U.P. State Electricity Board) to the present case.
4. Principle of restitution and its application to the case.

Issue-wise Detailed Analysis:

1. Demand for Additional Charges/Surcharge on Delayed Payment of Electricity Dues:

The appellant, a public limited company, challenged the demand for additional charges/surcharge on delayed payment of electricity dues raised by the respondent-Electricity Board under Clauses 32.2.1 and 34 of the TCS. The High Court of Andhra Pradesh dismissed the writ petitions filed by the appellant and upheld the demand. The appellant argued that during the period when the interim order of stay was in effect, they could not be considered in default for delayed payments. The Supreme Court, however, found that the appellant's reliance on the interim order did not absolve them from the liability to pay the additional charges once the interim order was vacated and the demand was upheld.

2. Validity of Clauses 32.2.1 and 34 of the Terms and Conditions of Supply (TCS):

The High Court held that the TCS were statutory in character and not in conflict with any provision of the Electricity Supply Act or the Constitution of India. Clauses 32.2.1 and 34 were intended to discourage delayed payment of electricity dues and to compensate the Board for any delay. The Supreme Court agreed with the High Court's view, emphasizing that the stipulated terms and conditions were designed to sustain the economic health of the Board and did not violate any constitutional or statutory provisions.

3. Applicability of Previous Supreme Court Decisions:

The appellant heavily relied on the decisions in Kerala State Electricity Board v. MRF Limited and Kanoria Chemicals and Industries Ltd. v. U.P. State Electricity Board, arguing that similar relief should be granted to them. The Supreme Court distinguished the present case from these precedents, noting that the previous cases involved different factual and legal contexts. In Kerala State Electricity Board's case, the Court had upheld the claim for interest based on the specific terms of the agreement between the Board and the consumer, which included a provision for interest on delayed payments. The present case, however, involved different tariff conditions and did not warrant the application of the same principles.

4. Principle of Restitution and Its Application:

The principle of restitution, as enunciated in Rodger v. Comptoir D'Escompte de Paris, was discussed by the Supreme Court. The Court reiterated that a party who had suffered due to an erroneous decision that was later reversed should be put back in the same position as if the adverse decision had not been passed. In the present case, the appellant had benefited from the interim order that stayed the collection of the disputed amount. The Supreme Court held that once the interim order was vacated and the demand upheld, the appellant was liable to pay the additional charges to restore the Board to its rightful position.

Conclusion:

The Supreme Court dismissed the appeals, upholding the High Court's decision that the demand for additional charges/surcharge on delayed payment of electricity dues was valid. The Court found that the TCS were statutory in nature and intended to ensure timely payment and financial stability of the Electricity Board. The appellant's reliance on previous Supreme Court decisions was found to be misplaced due to differing factual and legal contexts. The principle of restitution was applied to ensure that the Electricity Board was not prejudiced by the interim order that had temporarily stayed the collection of the disputed amount. The appeals were dismissed without any orders as to costs.