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TMI Blog1989 (11) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 2700 and a fresh agreement was executed on May 2, 1981. On May 29, 1981 the firm was given fresh connection of 45KVA. According to the firm it requested the Board on 19.6. 1981 to cut off the connection. The firm received the bills for minimum guaranteed charges for the months of June, July, August and September, 1981, though according to it no electricity was consumed by it during that period. According to the Board on failure to pay the bills, the supply was disconnected on 28th September, 1981. The firm ultimately received a demand notice in October, 1981 for the minimum guaranteed charges from June, 1981 to August, 1981 amounting to ₹ 22,95 1.50p. The firm having not paid the amount, the Board sent a requisition to the Certificate Officer who sent a notice to the firm on July 6, 1984. Rejecting the contention of the firm that it was not liable to pay, the Certificate Officer proceeded to pass an order for attachment of the firm's property wherefore the firm filed a writ petition in the High Court of Judicature at Patna under Article 226 and 227 of the Constitution of India for quashing the bills as well as the certificate proceedings. Before the High Court the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard and enforced from time to time irrespective of whether energy to that extent has been con- sumed or not. (Such minimum charges are re- ferred to as the minimum guaranteed charges in other places in this agreement.) That part of minimum guaranteed charges as is not billed monthly, the assess- ment for the same will be generally made at the end of the year commencing from the 1st April, and ending with the 31st March of the following year which is the financial year of the Board. In case any agreement is entered into in between this period the above said part of the minimum guaranteed charges will be proportionate to the period for which the Consumer is connected. Any bill on account of the minimum guaranteed consumption for the year or part thereof will be submitted by the end of June in each year. From a perusal of the above clause it would be clear that the minimum guaranteed charges would be payable by the consumer irrespective of whether energy to that extent has been consumed or not. Indeed, there would be no need for such a provision if the charges were to depend only on the energy actually consumed. Clause 5 of the agreement is to the following effect: (a) Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is copy of the agreement to have such date filled in by the Board. Clause 9 Provides: (a) The consumers shall not be at liberty to determine this agreement before the expiration of two years from the date of commencement of supply of energy. The consumer may determine this agreement with effect from any date after the said period of giving to the Board not less than one calendar month's previous notice in writing in that behalf and upon the expira- tion of the period of such notice this agree- ment shall cease and determine without preju- dice to any right which may then have accrued to the Board hereunder, provided always that the consumer may at any time with the previous consent of the Board transfer or assign this agreement to any other person and upon sub- scription of such transfer this agreement shall be binding on the transferee and the Board and take effect in all respects as if the transferee had originally been a party hereto in place of the consumer who shall henceforth be discharged from all liability under or in respect thereof. (b) In case the consumer's supply is discon- nected by the Board in exercise of its powers under this agreement and/ or la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anteed charges must be held to have continued. Mr. Soli J. Sorabjee submits, and we think rightly, that the High Court overlooked this important stipulation in the agreement which was binding on both the parties. However, as the respondents are not before us, it is necessary to con- sider the reasonability of the stipulation as to minimum guaranteed charges as argued by the learned counsel for the appellant Board. Was there any power of the Board to enter into the agreement? If so, to what extent? The Indian Electricity Act, 1910, hereinafter called 'the Act'. provides the law relating to the supply and use of electrical energy. As defined in s. 2(11) of the Act State Electricity Board in relation to any State means the State Electricity Board, if any consituted for the State under section 5 of the Electricity (Supply) Act, 1948 (54 of 1948) and includes any Board which functions in that State under sections 6 and 7 of the said Act. The appellant--the Bihar State Electricity Board is a Board. As defined in section 2(h) licensee means any person licensed under Part II to supply energy. The appellant Board is such a licensee under this provision. As defined in secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, 18 TLR 64, the agreement between the appellant company and the consumer to supply electricity in clause 4 provided that the consumer shall have the option at or after the expiration of five years from the date of installation of purchasing the installation at a price. CI. 7 said: The consumer shall until purchase as aforesaid pay quarterly to the supply company for the use of the installation 3/4d. per Board of Trade Unit for every unit of electrical energy supplied to the said premises and the minimum payment in any year shall be Is. for each eight-candle power lamp or its equivalent installed. During the period from Mid-summer to Michaelmas, 1900, the defendant did not use any electricity supplied by the plaintiff, and the question was whether under the agree- ment the defendant was bound to pay the minimum payment provided for by cl. 7, even though in fact he had used none of the plaintiff's electricity during the quarter. The Lord Chief Justice in giving judgment said that it was suffi- ciently clear that the installation was put in on the terms that the customer should have the right to purchase the installation after five years, and during that five years the cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration. Section 48 of the Supply Act empowers the licensee to carry out arrangement under that Act. In Watkins Mayor Co. v. Jullundhur Electric Supply Co., AIR 1955 Punj. 133 (136), it was observed that the whole scheme of the Act seems to show that the provision made in any contract for a minimum charge was really to provide for a fair return on the outlay of the licensee, and it was for this reason that the law allowed the contract of this kind to be entered into. Clause XI A of the schedule to the Act, as it then stood, provided: A licensee may charge a consumer a minimum charge for energy of such amount and determine in such manner as may be specified by his licence, and such minimum charge shall be payable notwithstanding that no energy has been used by the consumer during the period for which such minimum charge is made. The Court accordingly held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake it or leave it. It is a type of contract on which the conditions are fixed by one of the parties in advance and are open to acceptance by anyone. The contract, which frequently contains many conditions is presented for acceptance and is not open to discussion. It is settled law that a person who signs a document which contains contractual terms is normally bound by them even though he has not read them, even though he is ignorant of the precise legal effect. In view of clause 4 having formed one of the stipulations in the contract along with others it cannot be said to be nudurn pactum and the maxim nudum pactum ex quo non oritur actio does not apply. Considered by the test of reasonableness it cannot be said to be unreasonable inasmuch as 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 the installation has to be contin- ued irrespective of whether the energy is consumed or not until the agreement comes to an end. Every contract is to be considered with reference to its object and the whole of its terms and accordingly the whole context must be considered i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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