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TMI Blog2000 (11) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Board shall be entitled to charge only for the reduced energy actually supplied and not for 40% of the contract load as minimum charges and thereby overruling an earlier decision of a Division Bench of the said High Court reported in M/s Gwalior Steels Private Ltd. vs M.P. Electricity Board (AIR 1993 M.P. 118). For the purpose of appreciating the points raised, we would advert to the facts in one of these appeals, particularly those in M/s Raymond Ltd. in C.A. Nos. 4218-4219 of 1998. The appellant M/s Raymond Ltd., a company registered under the Companies Act, 1956 and having its cement manufacturing division within the State of Madhya Pradesh, entered into an agreement with the Madhya Pradesh Electricity Board on 27.3.1979 renewed periodically for supply and purchase of high tension electric energy for use in the manufacture of cement. The minimum contractual demand was for 33 MW (38,822 KVA) per day and clause 19 provided for the Tariff, while clause 21 stipulated the term relating to minimum guarantee in the following terms: 21(a) The consumer shall from the date of utilisation of electrical energy, or from the date of expiry of the three months notice mentioned in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units of the electrical energy and the charges therefor, the ultimate bill and demand came to be raised on the basis of the minimum guarantee charges equivalent to 40% load factor of contract demand. This, according to the appellant, resulted in a demand of ₹ 87,45,685/- in addition to the charges really due on the actual consumption of energy during the period in question. Challenging the same, Writ Petition No. 3616 of 1995 came to be filed, claiming either for refund or adjustment of the said excess amount against future demands, the said sum being for electrical energy not really consumed by them. During the pendency of the said Writ Petition, another bill dated 18.10.96 for the consumption period from 1.12.95 to 15.12.95 was said to have been issued for ₹ 10,24,867/- towards minimum guarantee charges equivalent to 40% load factor of contract demand. As against this, Writ Petition No. 4711 of 1996 came to be filed challenging the demand and seeking for either refund of the same or for adjustment thereof against future demands. The Electricity Board contested the claim of the appellants and others contending that as per the terms of the agreement entered into governi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is from the date of the order and will not have any retrospective operation. This is being done keeping in view that the Division Bench judgment of this Court has held the field since 1993 and the Board has been billing the consumers in the State on that basis and now since we are taking a different view from that of the Division Bench of this Court and we are interpreting the provision contrary to the view taken by the Division Bench in the above case of M/s Gwalior Steel Private Limited it would be more just and equitable to give this interpretation a prospective effect and not retrospective. Similar course of action was adopted by the Hon. Supreme Court in the case of L.Chandra Kumar v. Union of India, AIR 1997 SC 1125. Therefore, we hold that the present interpretation will be prospective in nature and not retrospective. Thereupon, the Writ Petitions came to be posted before the Division Bench, and apparently on account of the prospective declaration of law, no relief as prayed for in respect of particular demands for the earlier period could be granted and the Writ Petitions came to be dismissed. Hence, the appeals by the Writ Petitioners before the High Court. So far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. On behalf of the consumer industries Shri G.L.Sanghi, learned senior Advocate, made the leading arguments followed by Sarvashri A.K. Chitale, Bhimrao Naik, Ravindra Srivastava, Senior Advocates, and S.Ganesh, U.A.Rana, A.K.Sanghi and others. Adverting to clauses 1(a), 3(a), (b), 8, 11, 12, 18, 19, 21 and 23, it was strenuously contended that the contract must be construed as a whole in the context of the object underlying the same and the basic contract being for supply continuously 33 KV electrical energy on day to day basis, it should really be meaningful and really useful and possible of consumption for the purposes of the industries concerned. It is further stated that the quality, the quantity and manner of supply has also to be taken into account in assessing the usefulness of the energy for industrial purposes and if it is shown that the supply actually made did not conform to these vital aspects of supply then the undertaking to pay the minimum guaranteed amount should itself have to go and any other construction would result in grave injustice besides being also inequitable and unconscionable. The further plea is that the Board during the period in dispute di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d energy has been supplied or not to the consumer. Therefore, it is not permissible for the consumer industries in these appeals to invite a decision as to the liability or otherwise of the consumers to pay the minimum guaranteed charges undertaken, notwithstanding the factual position that the supply made was actually 40% or even more though not of the extent of total contract demand agreed to between the parties under the respective contracts. That apart, countenancing such claims to be agitated in proceedings under Article 226 of the Constitution would amount to the extraordinary jurisdiction being permitted to be availed to rewrite the contract and read just contractual liabilities and thereby undertaking an adjudication of rights of parties flowing under a contract - a function normally assigned to the ordinary civil courts of the land. Apart from making such submissions on the merits of their claim, on the basis of the very decision of the High Court and drawing sustenance to substantiate such claims, the consumer industries also attacked that portion of the judgment which purported to confine the declaration of law made for future application only by applying the principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , this Court while applying the decision in 1976 (2) SCC 877 (supra) construed clause 13 of the contract between parties in that case which specifically provided for the proportionate reduction of the annual minimum guarantee bills, as merely entitling the consumer to a proportionate reduction only and not completely avoid payment of annual minimum guarantee bills, even in cases where there was failure on the part of the Board to supply electrical energy as per demand of the consumer under the contract. In Bihar State Electricity Board, Patna Others vs M/s Green Rubber Industries Others (1990 (1) SCC 731, this Court, while repelling a challenge to the clause in the agreement which provided for payment of minimum guaranteed charges irrespective of whether energy was consumed or not, observed that the same was reasonable and valid for the reason that the supply of electricity to a consumer involves incurring of overhead installation expenses by the Board which do not vary with the quantity of electricity consumed and also for the reason that those installations have to be continued and must be maintained until the agreement itself comes to an end. Such a stipulation was also cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he energy is drawn over any thirty minute period in a month. While explaining the two part tariff system meant for big/bulk consumers of electricity, this Court has emphasised and reiterated the justification and reasonableness of the same, observing the following: Normally speaking, a factory utilises energy at a broadly constant level. May be, on certain occasions, whether on account of breakdowns, strikes or shutdowns or for other reasons, the factory may not utilise energy at the requisite level over certain periods, but these are exceptions. Every factory expects to work normally. So does the Electricity Board expect - and accordingly produces energy required by the factory and keeps it in readiness for that factory - keeping it ready on tap, so to speak. As already emphasised, electricity once generated cannot be stored for future use. This is the reason and the justification for the demand charges and the manner of charging for it. There is yet another justification for this type of levy and it is this: demand charges and consumption charges are intended to defray different items. Broadly speaking, while demand charges are meant to defray the capital costs, consumption ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly or restricted supply, though on facts the case considered by the Court was not found to be one such. We have carefully considered the submissions of the learned counsel appearing on either side, in the light of the provisions of the 1910 Act and 1948 Act, the contract entered into between the parties, the general conditions for supply and the tariff rates prescribed as well as the governing principles as laid down by this Court. The terms and conditions of supply, as envisaged in the contract and the statutory provisions and general conditions have been standardised for uniform application among consumers with variations merely necessitated by the different class or categories of consumers and there is no scope otherwise for expecting any scope for individual or free bargaining right in this regard by each consumer with the Board. Therefore, it is futile for a consumer to contend that the Board was at the dictating end and the parties were not equally positioned in settling the terms of the contract. The further attempt made to contend that the failure on the part of the Board to effect supply up to the contract demand level relieved the consumers from the obligation undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t factor is also to be determined with reference to the supply of electrical energy made during a month. The minimum consumption of energy guaranteed, as per the tariff notification, is also in terms of a monthly minimum. While that be the position, it is futile for the consumers to contend that they will not be liable to abide by the minimum guaranteed charges undertaken, unless on every day of the month/year and during the twenty four hours or round the clock the load factor and power supply agreed to be made, at one and is the same level without any shortfall, tripping or low voltage. The provisions of Section 56 of the Contract Act, 1872 sought to be relied upon have no relevance or application to the cases on hand. Countenancing of such claims would not only defeat the very purpose, object and aim of providing for a minimum charges guarantee clause but would ultimately result in mutilation of the very fabric of tariff structure rendering thereby the schemes of generation and supply of power at the agreed concessional rates uneconomical and non-viable for the Board. This would also result in the re-writing of many of the clauses in the contract and rendering nugatory the tariff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g this extreme stand either under any of the provisions of the Act or the regulations made thereunder or under the provisions of the contract entered into between the parties and tariff schedule notified and made binding upon the consumers. This would, if accepted, give credence to the plea vaguely and indirectly projected as though the contract demand is the minimum supply undertaken to be made by the Board, whereas in contrast clause 23 of the general conditions for supply of electrical energy by the Board applicable to all consumers in unmistakable terms stipulate that the maximum demand agreed to be supplied and taken under the agreement shall be the consumers contract demand and that if as a matter of fact in any given case the consumption exceeds this level, then only the contract provides for additional charges to be paid by the consumers. As a matter of general principle, any stipulation for payment of minimum guarantee charges is unexceptionable, in a contract of this nature wherein, the Board which undertakes generation, transmission and supply of electrical energy has to, in order to fulfil its obligation lay down lines and install the required equipment and gadgets a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bleness or legality of the same cannot be considered either in the abstract or in isolation of all these aspects. It is for this reason that all over and the consumer is also made to share the constraints on Boards economy even during such periods. In fact the tariff inclusive of such a provision for payment of a minimum guaranteed sum irrespective of the supply/consumption factor appears to be the consideration for the commitments undertaken by the Board as a package deal and it is not possible or permissible to allow the consumer to wriggle out of such commitments merely on the ground that the Board is not able to supply at any point of time or period the required or agreed quantum of supply or even supply up to the level of the minimum guaranteed rate of charges. Tinkering with portions of contracts for any such reasons, merely on considerations of equity or reasonableness pleaded for and vis-a-vis one party alone will amount to mutilation of the whole scheme underlying the contract and render thereby the very generation and supply of electrical energy economically unviable for the Board. Consumers, who enter into such commitments openly and knowing fully well all these hazards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committed an error in overlooking the facts placed on record in the form of statements showing the units which were made available to the consumers during the periods in question and the units determined on which the minimum charges became payable and that those statements sufficiently substantiated the position that the units made available were more than sufficient to cover the payment of minimum charges and the contentions to the contrary that the Board had not been able to supply even 40% of the contract demand to insist upon the payment of minimum guaranteed charges has no basis or merit of acceptance. In this connection, our attention has been drawn by the counsel on either side to those materials and particulars placed along with the counter affidavits/Return of the Board filed before the High Court, the annexures thereto and some of the correspondence between the officers of the Board and the consumers concerned. Unfortunately, even the Division Bench, before which the matters were posted for further hearing and disposal pursuant to the opinion given by the Division Bench, did not undertake to adjudicate this vital aspect of the issues involved which, in our view, became ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b (AIR 1967 SC 1643) and the observation contained therein that the doctrine of prospective overruling can be invoked only in matters arising under the Constitution and that it can be applied by the Supreme Court of India. The decision in Golak Naths case as such was subsequently overruled by the decision reported in Kesavananda Bharati vs State of Kerala (AIR 1973 SC 1461) though not specifically on this point. Reliance has also been placed upon the decision reported in M/s K.S.Venkataraman Co. vs State of Madras (AIR 1966 SC 1089) even to contend that if the High Court had no such power, this Court while hearing an appeal from such judgment of the High Court, will equally cannot exercise such powers. This submission of the learned counsel overlooks the vital fact in that case that not only the High Court was found to exercise under Section 66 of the Income Tax Act, 1922, a special advisory jurisdiction the scope of which stood limited by the section conferring such jurisdiction but even the appeal to the Supreme Court having been made only under Section 66 A (2) of the said Act was noticed to hold that the jurisdiction of this Court also does not get enlarged and that the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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