9911796707
TMI Blog1964 (3) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to a party to supply electrical energy in any specified area and to prescribe in the licence the limits of price to be charged by it for the supply. This section further provides that the provisions in the Schedule to the Act would, unless otherwise directed, be deemed to be incorporated in the licence. Paragraph XI of that Schedule states that a licensee would not be entitled to exceed the limits of price fixed in his licence. This paragraph, however, gives power to the Government to alter these limits on the recommendation ,of an Advisory Board appointed under s. 35 of the Act. It is not necessary to refer to the other provisions of this Act. The appellant had been supplying electricity under a licence issued in 1932 by the Government of Bombay under the Act of 1910. The licence fixed the limits of the prices which the appellant could charge but these limits were altered by an order made by the Government on December 30, 1942 under paragraph XI of the Schedule and stood thereafter as follows: A. For lights and fans annas /5/- (= 31 nP.) per unit and, B. For motive power, (i) upto 4 B.H.P. anna - /1/ (=O.06 nP.) per unit in addition to standing charge of ₹ 2 / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave rise to further disputes as a result of which two suits were filed against the appellant on March 31, 1959 in the court of the Civil Judge, Belgaum. The first of these suits was filed by the respondent Bathena acting for himself and all other consumers of electricity supplied by the appellant for purposes of motive power over 4 B.H.P. for the following reliefs: (a) That a declaration be granted by this Hon able Court that the standing charges of 2.69 nP. per B.H.P. per month and the excess sum of 0.04 nP. per unit of energy consumed, for motive power whether connected or otherwise, are illegal and unauthorised, inoperative and ultra vires of the Defendant company and the Plaintiff is not bound to pay the same and that the Defendant-Company have no authority to control or interfere in the supply of electric energy or its use, and that the restrictions imposed in Notice dated 25-9- 58 are illegal, bad in law, and, (b) an injunction restraining the Defendant- Company, its servants, its agents or its representatives from levying and recovering the excess and illegal charges, (such as standing charges and per unit of consumed energy at 0.04 nP.) from the plaintiff, by means o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise fixed by the Government. The dispute is as to the right to enhance them beyond that limit, and in this judgment I will be discussing such enhancement only. It is not in controversy that under the Electricity Act of 1910 it could not do so but as already stated, the appellant bases its claim to enhance the charge on the Electricity (Supply) Act, 1948 as amended by Act 10th of 1956 with effect from December 30, 1,956. It will be noticed that this amendment was in force When the revised rate came into force under the notice of September 25, 1958. The relevant provisions of this Act so amended are these: S. 57. The provisions of the Sixth Schedule and the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee, not being a local authority- (a) in the case of a licence granted before the commencement of this Act, from the date of the commencement of the licensee s next succeeding year of account; and, (b) in the case of a licence granted after the commencement of this Act, from the date of the commencement of supply, and as from the said date, the licensee shall comply with the provisions of the said Schedules accordingly, and any provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e enhanced Notwithstanding anything contained in the Indian Electricity Act, 1910 (9 of 1910), , and the provisions in the licence of a licensee . Nothing to the contrary, therefore, contained in the Act of 1910 or the licence can make the enhancement of the rates by the licensee in terms of this paragraph illegal. It would follow that the power under paragraph 1 of the Sixth Schedule would justify an enhancement of the rate beyond that fixed by the licence or any order of the Government. This seems to me to be perfectly plain. It will be remembered that paragraph XI of the Schedule to the Act of 1910 prohibited a licensee from charging a rate in excess of the maximum fixed by the licence. That provision, however, was repealed by Act 101 of 1956. This was obviously done because it was realised that paragraph 1 of the Sixth Schedule to the Act of 1948 made the prohibition in paragraph XI of the Schedule to the Act of 1910 quite ineffective. Then we have s. 70(1) of the Act of 1948 which provides that No provision of the Indian Electricity Act, 1910 (9 of 1910), or of any rules made thereunder or of any instrument having effect by virtue of such law or rule shall, so far as it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in the licence granted or any order made by the Government. I am wholly unable to agree that sub- s. (2) of s. 70 of the Act of 1948 requires the two Acts to be harmonised. In fact sub-s. (1) of s. 70 of the Act of 1948 provides that when there is inconsistency between the two Acts, the earlier Act is not to have effect. There can be no question of harmonising unless there is inconsistency and sub-s. (1) says what is to happen in case of inconsistency; it is that one is to give way to the other and not that an attempt should be made to harmonise the two. Furthermore sub-s. (2) of s. 70 of the Act of 1948 says that Save as otherwise provided in this Act the later Act is not to be read as in derogation of the earlier Act. When, therefore, it is otherwise provided in the Act of 1948, this Act might be read as in derogation of the Act of 1910. Now s. 57 of the Act of 1948 and paragraph 1 of the Sixth Schedule to it clearly provide that the provisions therein contained are to override the provisions of the earlier Act. It would thus be against the express terms of the Act of 1948 to attempt to harmonise the power to enhance the rates given to the licensee by it with any of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on October, 1, 1949. It is somewhat difficult to understand these observations. As I have earlier said, no question as to the legality of any charge made before the suit or at any rate, before November 1, 1958, arises in this case. Therefore, even if the appellant had not revised its charges prior to the amendment, no grievance on that account can be made on the plaint on which the present suit is based. Furthermore I do not see why the burden of proving that those charges were the charges duly revised under the Act of 1948 prior to its amendment should be upon the appellant. No issue on this question also appears to have been framed by the trial Court at all. Even the plaint does not say that what the appellant had done was to continue an illegal charge. I repeat that whether the charges made before November 1, 1958 were illegal or not, is not a question that arises for decision in these cases. Admittedly the notice of September 25, 1958, revised the unit charge and, therefore, in fact there was no continuation of an earlier illegal charge, assuming the earlier charge to have been illegal. The High Court, however, also held that the appellant was under a statutory duty unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion whether the enhanced rates are illegal because they take the clear profit beyond the amount of the reasonable return, and to give any relief on that basis. The reasons for this view will now be stated. Paragraph 1 of the Sixth Schedule to the Act of 1948 no doubt prohibits the licensee from enhancing his rates beyond a figure which would make his clear profit exceed the amount of reasonable return. The Act, however, at the same time provided the consequences of a breach of the prohibition. Thus the fourth and the last proviso in paragraph 1 of the Sixth Schedule to the Act of 1948 states, Provided further that if the rates of supply fixed in pursuance of the recommendations of a rating committee constituted under section 57A are lower than those notified by the licensee under and in accordance with the preceeding proviso, the licensee shall refund to the consumers the excess amount recovered by him from them . One consequence of the breach of the prohibition, therefore, is the liability to refund the difference between the enhanced rate which has to be notified under the third proviso and that fixed by the rating committee. But a rating committee may not have been consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that would be to destroy the uniformity of rate chargeable by a licensee. Such a situation could not have been intended. Again the Act of 1948 did not give to the consumer the right to have a rating committee constituted. This was obviously because it would be impossible to work a public utility concern like an electric supply business if every consumer could get a rating committee to go into the question of rates. There may then be a continuous succession of rating committees and there would be no fixity of the rates chargeable. The convenience of all had to be kept in mind. Power was hence given only to the Government to take steps when a licensee committeed a breach of its obligations. Therefore, in my opinion, the High Court was in error in holding that the appellant should have shown that the enhancement did not result in its clear profit exceeding the amount of reasonable return and in deciding in favour of the respondents on that basis. I hold that the respondents were not entitled to canvass in a Civil Court any question as to the rates of a licensee being in excess of the limit prescribed in paragraph 1 of the Sixth Schedule to the Act of 1948. A Civil Court could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of supply but that does not make the contention of any substance. There was nothing in the notice to show that the supply would be restricted. Further it is neither alleged in the plaint nor does it appear from anything on the record, that there was in fact any restriction in the supply. That being so, the failure to give notice to the Government of the restriction in the supply is wholly immaterial. I have not, further been shown any provision under which notice to the Government of a restriction in the supply of electricity is necessary. It is certainly not required by anything in paragraph 1 in the Sixth Schedule to the Act of 1948. I am, therefore, of the opinion that there is no reason to hold that the appellant was not entitled to levy the charge mentioned in its notice of September 25, 1948. I come now to the standing charge of ₹ 2.69 per B.H.P. per month. As in the case of the other charge and for the same reasons, I am not concerned with any question as to its legality in respect of any period prior to the suit. It has to be remembered that there is no complaint that this rate had been increased by the notice. Lastly, as already stated, a Civil Court cannot go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant had exceeded the limit. As in the other case, in this case also I am not concerned with the legality of any charge made prior to the date of the suit; the only question is the legality of the charge made since March 31, 1959. That question has to be decided under the Act of 1948 as amended in 1956. It follows that in this case also the respondents can get no assistance from the decision in Babulal Chhaganlal(I.L.R. [1955] Bom. 42) even if that case was rightly decided. 1, therefore, think chat this appeal also succeeds. In the result I would allow both the appeals with costs throughout. AYYANGAR, J.-These two appeals which come before us by virtue of special leave granted by this Court are against a common judgment of the High Court of Mysore in two Second Appeals preferred to it by the respective respondents in the two appeals. They raise for consideration a question of the legality of certain rates charged by the Appellant-company for the supply of electricity to the respondents for power and for light and fans respectively. The Appellant-company is a licensee who is engaged in the business of supplying electricity in the town of Belgaum and other places. A licence fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y what is known as War Costs Surcharge was permitted to be levied, but it did not make any practical difference as the permitted increases over the mnaximum was identical. The War Costs Surcharge was continued up to the year 1946 when the Government of Bombay enacted a statute entitled the Bombay Electricity (Surcharge) Act of 1946 which came into force on September 30, 1946. It was a temporary enactment which under sub s.(4) of s. 1 was to be in force for a period of three years only so that it lapsed on October 1, 1949. The Provincial Government was under s. 3 of that Act empowered to fix rates of surcharge and under s. 5 of that Act the existing surcharge viz., the War Cost Surcharge were to be deemed surcharges fixed under s. 3. As a result of this piece of legislation the position that emerged was that though the original licence issued under the Electricity Act, 1910 which empowered the Government to fix the maximum of the rates that could be charged by licensees for the supply of energy was determined by the order dated December 30, 1942, still practically almost from the commencement of the operation of that order a 33- 1/2 per cent. surcharge was permitted to be levied b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inconsistent with any of the provisions of this Act, have any effect; deemed to prevent the State Government from granting, after consultation with the Board, a licence not inconsistent with the provisions of the Indian Electricity Act, 1910, to any person in respect of such area and on such terms and conditions as the State Government may think fit. (2) Save as otherwise provided in this Act, the provisions of this Act shall be in addition to, and not in derogation of, the Indian Electricity Act, 1910. We are drawing attention to this provision to indicate the inter-relation between the two Acts-the Electricity Act, 1910 and the Supply Act, 1948. We shall now briefly narrate the course of the proceedings which have led to the present appeals. Two suits were filed by consumers of electrical energy in Belgaum receiving their supplies from the Appellant in the court of Civil Judge, Belgaum, both being representative suits under O.I.r.8 (if the Civil Procedure Code. The first suit no. 133 of 1959 was in relation to the supply of energy for power. In the plaint it was pointed out that before November 1, 1958 the Appellant was charging the plaintiffs ₹ 2 /11 / - per B.H. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y charge beyond 31 nP. per unit and an injunction restraining the Appellant from charging this illegal excess. The defence of the Appellant was based on the provisions contained in the Supply Act of 1948, the contention being that the charges they continued to levy or which they intended to levy by virtue of the notice of September 25, 1958, were well within the limits prescribed by the Supply Act of 1.948 and consequently the plaintiffs in neither suit were entitled to any relief. The learned trial Judge held on an examination of the provisions of the two Acts-the Electricity Act and the Supply Act-and their schedules that even after the coming into force of the Supply Act the maximum limit of charge fixed by Government under the Electricity Act of 1910 continued to govern the maximum rate that could be cleared and as admittedly the rates charged or threatened to be charged by the Appellant were in excess of those rates, it granted to the plaintiffs in each suit the declaration and injunction they sought. The Appellant thereupon filed appeals to the learned District Judge and contended that the Supply Act of 1948 effected such a radical change in the method of determining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, and shall, subject to any such additions, variations or exceptions which the State Government is hereby empowered to make, apply to the undertaking authorised by the license: (the clause contains a proviso which is omitted as immaterial). Section 23 requires the licensee not to show undue preference to any person and enacts that save as aforesaid, make such charges for the supply of energy as may be agreed upon, not exceeding the limits imposed by his license . In the schedule that is referred to in s.3(2)(f) which is headed Provisions to be deemed to be incorporated with, and to form part of, every license granted under Part 11, so far as not added to, varied or excepted by the license , Paragraph XI which is the one material for our purpose reads: Save as provided by clause IX, sub-clause (3) (a saving not now relevant) the prices charged by the licensee for energy supplied by him shall not exceed the maxima fixed by his license, or, in the case of a method of charge approved by the State Government, such maxima as the State Government shall fix on approving the method. It was in exercise of the powers conferred by the State Government under s.3(2) of this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs were commenced: - 57. The provisions of the Sixth Schedule and the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee, not being a local authority- (a) in the case of a licence granted before the commencement of this Act, from the date or the commencement of the licensee s next succeeding year of account; and (b) in the case of a licence granted after the commencement of this Act, from the date of the commencement of supply, and as from the said date, the licensee shall comply with the provisions of the said Schedules accordingly, and any provisions of the Indian Electricity Act, 1910, and the licence granted to him thereunder and of any other law, agreement or instrument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of section 57A and the said Schedules. 57A. (1) Where the provisions of the Sixth Schedule and the Seventh Schedule are under section 57 deemed to be incorporated in the licence of any licensee, the following provisions shall have effect in relation to the said licensee, namely: -- (a) the Board or where no Board is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... underdone modification as a result of the amendment effected by Act 101 of 1956 and some argument has turned on these changes. We shall set out para 1 and also para 11 of this Schedule as they stood when originally enacted and as they now read. As enacted the first two paragraphs ran: 1. The licensee shall so adjust his rates for the sale of electricity by periodical revision that his clear profit in any year shall not as far as possible exceed the amount of reasonable return: Provided that the licensee shall not be considered to have failed so to adjust his rates if the clear profit in any year of account has not exceeded the amount of the reasonable return by more than thirty per centum of the amount of the reasonable return. 11. (1) If the clear profit of a licensee in any year of account is in excess of the amount of reasonable return, one-third of such excess, not exceeding 7 1/8 per cent. of the amount of reasonable return, shall be at the disposal of the undertaking. Of the balance of the excess, one-half shall be appropriated to a reserve which shall be called the Tariffs and Dividends Control Reserve and the remaining half shall either be distributed in the form of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tariffs and Dividends Control Reserve and the remaining half shall either be distributed in the form of a proportional rebate on the amounts collected from the sale of electricity and meter rentals or carried forward in the accounts of the licensee for distribution to the consumers in future, in such manner as the State Government may direct. (2) The Tariffs and Dividends Control Reserve shall be available for disposal by The licensee only to the extent by which the clear profit is less than the reasonable return in any year of account. (3) On the purchase of the undertaking under the terms of its licence any balance remaining in the Tariffs and Dividends Control Reserve shall be handed over to the purchaser and maintained as such Tariffs and Dividends Control Reserve. Paragraph 17 of this Schedule contains the definitions and among the terms there defined is clear profit -an expression used in paragraphs 1 11. As nothing material turns on the manner in which the clear profit is to be computed which is described in para 17 we do not think it necessary to refer to the details contained there. The questions raised before us are principally three: (1) The effect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear profit in any year shall not, as far -,is possible, exceed the amount of reasonable return . We shall reserve for later consideration the meaning of the expression so adjust his rates . But one thing is clear and that is that the adjustment is unilateral and that the licensee has a statutory right to adjust his rates provided he conforms to the requirements of that paragraph viz., the rate charged does not yield a profit exceeding the amount of reasonable return. The conclusion is therefore irresistible that the maxima prescribed by the State Government which bound the licensee under the Electricity Act of 1910 no longer limited the amount which a licensee could charge after the Supply Act, 1948 came into force, since the clear profit and reasonable return which determined the rate to be charged was to be computed on the basis of very different criteria and factors than what obtained under the Electricity Act. In support of the submission that notwithstanding the Supply Act the maxima fixed by the State Government was still binding on the licensee and that any adjustment within 1st paragraph of Sch. VI should be within the limits of this maxima we were referred to a deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ything contained in the Indian Electricity Act and the provisions in the licence of a licensee . We, therefore, consider that the first submission of learned Counsel for the Appellant that the limit imposed by the maxima prescribed by the State Government ceased to be in force after the Supply Act of 1948 came into force is well-founded. The next question for consideration is whether the action of the appellant-company in continuing to charge the rates that it was permitted to charge by virtue of the War Cost (Surcharge) Rules and the Bombay Electricity (Surcharge) Act, 1946 i.e., by making an addition of 33 1/3 per cent. to the maxima which he was permitted by the notification dated December 30, 1942 is lawful. This would have a vital bearing on the point involved in Civil Appeal 591 of 1963 which relates to the unit charge for light and fans for domestic consumption as well as on the legality of the standing charges for the supply of power which is raised in Civil Appeal 590 of 1963. It would be recalled that in these cases the Appellant has merely continued the charges that it was making before September 30, 1949 even after that date, there being no variation in the rates cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the charge was necessary in order to ensure (a) that a licensee obtained a reasonable return or that the profit that he made exceeded or fell below the amount of reasonable return that the rates had to be modified. In other words, where no change is needed, it might be presumed that no adjustment was needed. In view of the machinery that is provided for complaints in the event of the licensee deriving more than a reasonable return as contemplated by the Vlth Schedule we consider that the failure consciously to adjust the rates by working out the details so as to reach at the same rate as was charged previously does not constitute a failure to adjust the rates as required by paragraph 1. This leads us to the further questions (1) as to whether assuming that the rates had been adjusted by the licensee as required by paragraph 1 and the licensee is charging the rates so adjusted whether the rates now charged (a) for lights and fans, and (b) as standing charges for the Supply of motive power, could be successfully impugned as not conforming to the requirements of the Vlth Schedule, (2) and closely related to this, and that is the third question we have specified earlier, whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by more than the maximum specified i.e., 30 per cent. The other paragraphs of the Vlth Schedule deal with the creation and disposal of certain funds and reserves to which it is not necessary to refer. We thus reach the position that there could be a unilateral adjustment of the rates by a licensee but that such an adjustment must not leave him with more than the reasonable return plus another 30 per cent, this being an absolute limitation on the power to adjust . Where the amount of reasonable return is exceeded paragraph 2 comes into play and the excess over the reasonable return is distributed in the manner laid down in that paragraph. We have next to consider that effect of the amendment to para 1 of the Vlth Schedule brought about by Central Act 101 of 1956 by which the maximum rate permitted to a licensee became reduced from one which yielded him not more than 30 per cent. beyond the reasonable return to one which yielded him not more than 15 per cent. The result of this would obviously be that there should have been a further adjustment by licensees so as to conform to the revised pattern. Here again, the question would arise whether there should be a conscious rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat on and after November 1, 1958 it would be charging the enhanced unit rate together with the previously existing standing charges of ₹ 2.69 per B.H.P. per month The only point that was suggested as invalidating the notice to the Government was that the Government were not informed that the licensee was effecting an enhancement of the rates as regards the standing charges and that the notice was, therefore, bad. We do not consider that there is any substance in this objection. ₹ 2.69 was the charge which had been made prior to the notice as standing charges and if, as we have held, that was the rate which must be deemed to have been adjusted and which the appellant was entitled to charge when Sch. VI as it originally stood, the continuance of the same charge after the amendment of the Schedule would not make it an enhancement. There is however one circumstance to which it is necessary to advert. As already stated, the rate charged prior to the Supply Act, 1948 and which was continued thereafter would be a lawful rate only if the profit that it left to the licensee was less than 30% over the reasonable return. This was the position when the Supply Act, 1948 came int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount recovered by him from them. The argument of the learned Solicitor-General was that as the Supply Act had by s. 57A made special provision and ,created a special machinery for the determination of a proper rate to be charged by a licensee on its consumers, a suit in a civil court by the consumer for obtaining the same relief was impliedly barred. The procedure prescribed by s. 57A was (1) where a consumer complained that a rate charged was excessively high he should first approach the Board or where there was no Board, the State Government, (2) the Board or the State Government should, on considering the ,complaint, be prima facie satisfied about the reasonableness of the complaint and it was in their discretion to appoint a Rating Committee, (3) if the Board or the State Government decided that it was not necessary to appoint a Rating Committee there was an end of the matter. If, however, a committee was appointed the Rating Committee would take evidence and, applying the provisions of the Act and the Schedules, would arrive at a rate which would yield the licensee an amount not less than the reasonable return that is provided for him under the Act. It was submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the scheme of s. 57A could obviously not have contemplated a procedure by which one consumer went to a civil court and obtained redress, the civil court holding that the rate charged so far as the particular plaintiff was concerned was illegal and therefore entitling him to a refund of a particular sum, while another consumer approached the Government who appointed a Rating connection that he invited attention to the provision for it did provide, for a different amount of refund. This is doubtless a serious argument which requires careful examination. In this context and in support of this submission stress was laid down on the words the licensee has failed to comply with any of the provisions of the Sixth Schedule occurr in in s. 57A-(1)(a)(i) and it was urged that for any and every default of the licensee resort must be had to the Board or the Government and could not be had to the civil courts. But from these provisions it does not, in our opinion, follow that the jurisdiction of a civil court is barred in respect of the infraction of every obligation cast on a licensee by Sch. VI. Broadly speaking, the utmost that could be urged would be that the bar to the jurisdiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The proviso casts an absolute obligation on the licensee not to exceed this limit. There is thus a statutory prohibition against the licensee of fixing a rate which would yield such excessive profit, and if he does so he would not be acting in terms of the Vlth Schedule at all or by virtue of a power conferred by that Schedule and therefore he would be amenable to the jurisdiction of the court which would be competent to issue an in junction restraining him from charging that rate. No doubt, the proviso also adds that if he does so he would be failing to comply with the requirement of the main part of paragraph 1. It would therefore follow that in a case where in adjusting his rate the licensee fixes it so high as to contravene this proviso, it would be open to the a-,grieved consumer to approach the Board or the State Government to appoint a Rating Committee. But from this circumstance we are not prepared to hold (a) that the action of the licensee in charging a prohibited rate is any the less an illegality not countenanced by the statute and (b) that where such an illegality is made out the jurisdiction of a civil court to afford relief is ousted. It is possible to hold, and w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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