1973 (11) TMI 94 - SC - Indian Laws

Summary

Issues Involved:
1. Whether the reference by the respondent Electricity Company to the Arbitration of the Central Electricity Authority operates as a bar to the Constitution of a Rating Committee by the Board under Section 57A of the Electricity (Supply) Act, 1948.
2. Interpretation of the provisions of the Sixth Schedule and its applicability to disputes between the Board and the Electricity Company.
3. The legal standing of the Board in relation to the State Government concerning arbitration clauses in the licence.

Detailed Analysis:

Issue 1: Whether the reference by the respondent Electricity Company to the Arbitration of the Central Electricity Authority operates as a bar to the Constitution of a Rating Committee by the Board under Section 57A of the Electricity (Supply) Act, 1948.

The court examined whether the Electricity Company's reference to arbitration under the Sixth Schedule barred the Board from constituting a Rating Committee. The Electricity Company argued that the arbitration clause in para XVI of the Sixth Schedule allowed them to refer disputes to the Authority, thus preventing the Board from forming a Rating Committee. The court analyzed Section 57A and its provisos, concluding that the reference to arbitration must be between the licensee and the State Government, not the Board. Therefore, the Board's formation of the Rating Committee was not barred by the Electricity Company's arbitration reference.

Issue 2: Interpretation of the provisions of the Sixth Schedule and its applicability to disputes between the Board and the Electricity Company.

The court delved into the Sixth Schedule, which outlines financial principles to prevent consumer exploitation by the licensee. The court noted that the Schedule's provisions are incorporated into the licence issued by the State Government to the licensee. The court emphasized that disputes under para XVI of the Sixth Schedule pertain to the interpretation of its provisions and matters arising therefrom. However, the court found that such disputes must be between the State Government and the licensee, not the Board. The court also highlighted that the Board, not being a party to the original licence, could not invoke the arbitration clause in para XVI for disputes with the Electricity Company.

Issue 3: The legal standing of the Board in relation to the State Government concerning arbitration clauses in the licence.

The court scrutinized whether the Board could be considered a substitute for the State Government in arbitration matters. The court referred to Section 60(1) of the Act, which transfers obligations from the State Government to the Board post-constitution. However, the court clarified that this transfer does not extend to arbitration clauses in the licence. The court cited the Amalgamated Electricity Company Ltd. v. N.S. Bathena case, reinforcing that the arbitration clause is an engagement between the State Government and the licensee, binding only them. Consequently, the Board could not invoke para XVI for arbitration with the licensee.

Conclusion:

The court concluded that the reference to arbitration by the Electricity Company did not bar the Board from constituting a Rating Committee. The court emphasized that the arbitration clause in para XVI of the Sixth Schedule applies only to disputes between the State Government and the licensee, not the Board. The court remanded the case to the High Court for further proceedings on other issues raised in the Special Civil Application, as they were not addressed due to the initial finding. The costs were to be determined in the cause.