ORDER
Shantanu Kemkar, J.
1. Both these petitions involve common questions of law and facts and as such are being decided by this common order.
2. Through Writ Petition No. 3670/2000 the petitioner has challenged the order dated 24.5.1999 (Annexure P-14) passed by the respondents No. 1 and 2 Madhya Pradesh Electricity Board (for short Board) by which the Board has rejected it’s application seeking permission to install and run Captive Power Plant of 4.1 MW (4100 KVA) capacity in its unit No. 1 and the order dated 17.1.2000 (Annexure P-26) passed by the Board by which the Board has rejected the petitioner’s request for reduction in contract demand from 5000 KVA to 1000 KVA in respect of the same unit No. 1. The petitioner is also seeking direction to the Board to grant it the permission with retrospective effect, i.e., w.e.f. 1.7.1999 to set up Captive Power Plant of 4.1 MW and to permit it to reduce its contract demand from 5000 KVA to 1000 KVA retrospectively w.e.f. 1.7.1999 and re-determine the minimum charges accordingly and issue corrected electricity bills w.e.f. 1.7.1999.
3. Through Writ Petition No. 3838/2000 the petitioner has challenged the order dated 22.3.1999 (Annexure P-12) by which the Board has rejected it’s application seeking permission for installation of Captive Power Plant of 4.1 MW (4100 KVA) in its industrial unit No. 2 and to direct the board to accept the surrender of total power connection and re-determine the minimum charges retrospectively from 31.7.1999 on the basis of surrendering of the total connection and to cancel all the bills raised after 1.8.1999, treating the surrender of connection w.e.f.31.7.1999.
4. Briefly stated, the petitioner Company is having its two units of Yarn Manufacturing at village Simrai district Raisen. According to the petitioner the substantial part of the Yarn produced by its units is exported to foreign countries. It is averred that in order to compete with the export market strict quality adherence and quality production is required to be maintained by it. The desired high quality production of Yarn can only be achieved by continuous uninterrupted supply of electricity. It is further averred that in order to ensure quality production of high level it is also necessary to run the humidification plant of the units continuously, without any interruption. Thus, the petitioner’s case is that for producing the quality yarn it needs quality electricity supply which includes supply on fixed voltage without fluctuations.
5. Initially, the petitioner started its unit No. 1 with 1000 KVA of electricity supplied by the Board, thereafter on its application dated 7.8.1995 for installation of its own 2 Diesel Generator sets of capacity 1525 KVA the petitioner was accorded conditional permission by the Board vide letter dated 16.8.1995 (Annexure P-8) and letter dated 19.9.1995 (Annexure P-9) to use the Generator sets as standby Generator sets which shall not be used in parallel with the Board’s supply and shall be used only during the period of failure of the Board’s supply. Thereafter the petitioner was also permitted to install its own standby Generator set of 1000 KVA with similar condition. After the installations of its own standby Generator sets the petitioner applied for 5000 KVA power connection from the Board. The said application was allowed by the Board and an agreement dated 25.6.1998 (Annexure P-3) to that effect was executed between the petitioner and the Board.
6. In the meantime realizing the shortage of electricity and the Board’s inability to supply the electricity as per the demand, the Board circulated the guidelines of the captive power policy of the State Govt. vide its circular dated 27.12.1996 (Annexure P-11) and motivated its consumers to install their own captive power plant. The State Govt. also realizing the shortage of the electricity, in order to overcome it and for encouraging the installation of own captive power plant by the consumers amended it’s captive power policy vide notification dated 16.10.1998 (Annexure P-12) requiring the Board to accord permission to the consumers for installing the captive power plant within 45 days from the date of application from the consumer for the same.
7. It is stated by the petitioner that acting upon the said circular and the captive power policy of State Govt., an application dated 22.1.1999 (Annexure P-13) was submitted by it for granting permission to it for installing in its unit No. 1 heavy fuel operated generating set of 5W.P. Nos. 3670/2000 & 3838/2000 capacity 4.1 MW for captive power plant. Since the said application was not considered within 45 days as per the time limit fixed in the amended captive power policy (Annexure P/12), the petitioner vide letter dated 1.6.1999 (Annexure P-15) informed the Board that it has installed 4.1 M.W heavy fuel operated generator set. The petitioner also informed that on installation of 4.1 MW Diesel Set its requirement of electricity from the Board has reduced drastically and requested the Board to reduce its existing contract demand of 5000 KVA to 1000 KVA w.e.f. 1.7.1999. Thereafter since the petitioner was not informed about its prayer for reduction of the contract demand the petitioner vide letter dated 30.6.1999 (Annexure P-16) informed the Board that it shall be reducing the contract demand from 5000 KVA to 1000 KVA w.e.f.1.7.1999 pursuant to its letter dated 1.6.1999.
8. The petitioner’s application dated22.1.1999(Annexure P/13) was rejected by the Board vide order dated 24.5.1999 (Annexure P-14). The Board also issued bills of the electricity to the petitioner on the basis of contract demand. On 17.1.2000 (Annexure P/26) the Board rejected the petitioner’s request for reduction in contract demand from 5000 KVA to 1000 KVA for its unit No. 1. Feeling aggrieved by the order dated 24.5.1999 and the order dated 17.1.2000 and also the demand notices issued by the Board for non-payment of the dues and the penal demand for illegal and unauthorized installation of the captive generators of 4.1 M.W capacity, the petitioner has filed W.P. 3670/2000.
9. In W.P. No. 3838/2000 the petitioner’s grievance is about refusal of the permission by the Board to install and run 4.1 MW (4100 KVA) captive power plant against contract demand of 2500 KVA for its unit No. 2. Initially the petitioner entered into an agreement on 13.6.1997 (Annexure P-3) with the Board for supply of contract demand of 3500 KVA for its unit No. 2. Thereafter on petitioner’s application the Board permitted the petitioner vide letter dated 7.3.1998 (Annexure P-5) to install and run its own two D.G. sets of total capacity 5900 KVA with the stipulations that it shall not be worked in parallel with the Board’s supply system and shall be used as standby sets only during the period of failure of the Board’s supply. Thereafter, on petitioner’s request for reduction in contract demand it was reduced to 2500 KVA w.e.f. 1.4.1998. The petitioner’s application based upon the aforesaid circular of the Board and the captive power policy of the State Govt. seeking permission to install its own 4.1 MW (4100 KVA) DG Sets was rejected by the Board vide order dated 22.3.1999 (Annexure P-12) on the ground that the petitioner has already been allowed to install generator sets of capacity of 5900 KVA. Feeling aggrieved, by the order dated 22.3.1999 the writ petition No. 3838/2000 has been filed for quashment of the order dated 22.3.1999 and for direction to accord the permission of 4.1 MW captive power plant and also to accept the surrender of total contract demand retrospectively w.e.f. 31.7.1999 and for quashment of the bills raising demand from 1.8.1999.
10. The Board in its return and additional return filed in both the petitions has stated that the installation of its own generating set of 4.1 MW in both the units was done by the petitioner without obtaining prior permission of the Board. The petitioner on the basis of unauthorized installation of its own 4.1 MW capacity Generator sets arbitrarily assumed reduction in contract demand without consent from the Board and in order to escape the liabilities and consequences of the aforesaid unauthorized act of installation and running of its captive power plant on its part, has filed these petitions. It is stated that the petitioner’s applications for installation and running of its own generator sets have been duly considered and have been rightly rejected by the Board. It is further stated that having regard to the application filed by the petitioner with regard to unit No. 1 seeking permission to install the captive power plant in which the petitioner had disclosed that its maximum achieved contract demand is 4500 KVA as against already existing 5000 KVA contract demand it was not found feasible to allow the petitioner’s prayer, more particularly, for the reason that the petitioner had already been permitted to install 2 generator sets of 1525 KVA and one generator set of 1000 KVA. So far as the request for reduction in the contract demand as prayed by the petitioner it is stated that the said request was not based on any compelling circumstances but was made due to installation of the unauthorized DG set of 4.1 MW, in the circumstance the request to reduce the contract demand was rightly declined in view of the agreement. As regards unit No. 2 it is stated that the petitioner’s application seeking permission to install and run 4.1 M.W Captive Power Plant for its unit No. 2, was duly considered by the Board and on finding that the petitioner has already been permitted to install D.G. Sets of capacity 5900 KVA as against its contract demand of 2500 KVA it was not deemed proper to permit the petitioner to install additional D.G. set of 4.1 M.W. and to permit it to reduce the contract demand to nil. It is further stated that the petitioner’s case would be governed by the agreements entered into between the parties and in view of the terms of the agreements, the captive power policy of the State. Govt. is not binding upon them. The Board also raised a preliminary objection by filing a separate application that the petitioner is having an alternative remedy and instead of availing alternative remedy available under Section 44(3) of Electricity Supply Act, 1948 (for short `Act’) requiring the dispute to be referred to the arbitration before the authority constituted under the Act it has directly approached this Court by filing these petitions, therefore, the petitions be dismissed on the ground of availability of alternative remedy.
11. Shri Ajay Mishra, learned senior Counsel for the petitioner referring to the various clauses of the agreements entered into between the petitioner and the Board as also the clauses of the circular issued by the Board, the guidelines and the captive power policy of the State Govt. contended that the action of the Board is wholly illegal, unjustified and arbitrary. He contended that as per the captive Power policy notified by the State Govt. the petitioner was eligible for grant of permission to set up captive power plant for the capacity of twice of the contract demand of the industrial units. He submitted that the rejection of the petitioner’s applications by adding capacity of its existing standby short duration support generators is illegal and contrary to the condition imposed by the Board while permitting the petitioner to install the D.G. sets as standby sets. He argued that in the year 1994, the petitioner started facing shortage in the power supply of the Board as the Board imposed peak load period restriction, thereby obstructing uninterrupted continuous supply of power necessary for the petitioner’s units. During the said period the Board imposed restriction to the industrial consumers not to use more than 10% of their connected load between 4.00 p.m. hours to midnight. In the circumstances, the permitted load was too low and it was not possible for the petitioner to run its units during the aforesaid period and it became impossible to the petitioner to perform the manufacturing process. In order to meet the requirement of electricity in the aforesaid peak load restriction the petitioner applied for installation of standby diesel generating sets. The permissions were granted to the petitioner with a stipulation that the petitioner shall use the D.G. sets as standby sets only during the period of failure of the power supply by the Board and shall not use the said standby generators in parallel with the Board’s power supply system. He submitted that the Generator sets installed by the petitioner pursuant to the permission granted to the petitioner are by its type and make are only short duration support generators and cannot be used as parallel mode of supply of electricity. In this background and having regard to the conditions imposed by the Board while permitting the installation of standby D.G. sets, the rejection of the petitioners prayer for the set up of captive power plant of 4.1. M.W. in both the units, taking into consideration and adding the capacity of its standby D.G. sets is wholly erroneous. He further submitted that the rejection of applications in respect of both the units is against the circular of the Board and the captive power policy of the State Govt. So far as the refusal of the permission to reduce the contract demand he submitted that the agreement as well as the captive power policy of the State Govt. permits reduction of the contract demand. The petitioner having installed its own Diesel Generator sets as per the circular of the Board and the captive power policy of the State Govt. cannot be compelled to use the Board’s supply. He further submitted that in view of the amended captive power policy in which the concept of the compelling circumstances which was the requirement of the agreement for allowing reduction in the contract demand has been given complete go by and the amended captive power policy permitted the reduction of the contract demand even up to zero.
12. As regards the preliminary objection about the availability of the alternative remedy of arbitration before the authority constituted under the Act learned senior Counsel for the petitioner submitted that the Central Electricity Authority constituted under the Act to act as an arbitrator itself had issued guidelines (Annexure P/29) for giving sanctions by the State Govt. for installation of captive power plants and the said guidelines having been flouted by the Board it was not necessary for the petitioner to have approached to the said authority. He also submitted that the preliminary objection has been pressed by the Board only at the time of final hearing of the cases, thus at this belated stage the objection be rejected and the petitions may be decided on merits, instead of directing to the petitioners at this point of time to approach the authority by way of an arbitration.
13. Shri Ajay Mishra, learned senior Counsel for the petitioner further submitted that the Board having permitted number of industries/consumers as shown in the chart Annexure R/3, to install and run additional captive power plant on the basis of the aforesaid guidelines and the captive power policy of the State Govt. and also permitted them to reduce the contract demand cannot be allowed to refuse the permission to the petitioner on the ground that the captive power policy of the State Govt. is not binding upon them and also cannot be permitted to raise the ground that the petitioner is bound by the agreement. In support of his contentions reliance has been placed on the judgments in the case of Bala Prasad Rajoriya V. Superpack v. M.P. State Electricity Board and Ors. 2002 (4) MPLJ 572, Associated Cement Companies Ltd. v. M.P. Electricity Board and Ors. 2001 (1) MPLJ 641, Maihar Cement, Satna v. M.P. State Electricity Board, Jabalpur 2003 (3) MPLJ 308, Bangalore Medical Trust v. B.S. Muddappa and Ors. , Suman Gupta and Ors. v. State of J. and K. , State of Punjab v. Nestle India Ltd. and Anr. JT 2004 (Suppl.2) SC 283, Beg Raj Singh v. State of U.P. and Ors. , Carew and Co. Ltd. v. Union of India AIR 1975 SC 11 W.P. Nos. 3670/2000 & 3838/2000 2260, and Maharashtra State Judicial Service Assn. and Ors. v. High Court of Judicature at Bombay and Ors. .
14. Shri M.L. Jaiswal, learned senior Counsel for the Board contended that the Board examined the petitioner’s applications seeking permission for installing 4.1 MW Generator sets in correct perspective. On examination about unit No. 1 it was revealed that the petitioner’s contract demand was 5000 KVA and in addition to it the petitioner had already been permitted to install DG sets of capacity 4160 KVA in its unit No. 1 in the circumstances the permission to install additional 4.1 MW (4100 KVA) set was not allowed as the petitioner’s maximum demand was only 4500 KVA as per its application (Annexure P-13). He argued that the policy of the State Govt. allowing installation of captive power plant is not binding on the Board. The petitioner who unauthorizedly installed and started operation of the DG set of the capacity 4100 KVA is not entitled for grant of discretionary relief under Article 226 of the Constitution of India. He further argued that the standby sets are also part of the captive power plant and as such merely on the basis of conditional permission to install the standby sets it cannot be presumed that the petitioner used the same only on failure of the powers supply and has not used it as a parallel mode of supply of electricity. The petitioner having already availing contract supply of 5000 KVA and 4160 KVA through standby DG sets in its unit No. 1 it was rightly not allowed to install captive generation sets. Similarly he supported the rejection of the petitioner’s application for unit No. 2. He further submitted that the petitioner having failed to satisfy compelling reasons as required under Clause 13(d) of the agreement for reduction in contract demand the Board has committed no error in exercising its discretion in rejecting the petitioner’s prayer for reduction of the contract demand. In support he placed reliance on the judgments passed in the case of , World Tel. Inc. and Anr. v. Union of India and Ors. ( M.P. Electricity Board and Anr. v. Manju Singh Chauhan (Mrs.) , Bisra Stone Lime Co. Ltd. v. Orrisa State Electricity Board and Anr. and Poddar Projects Ltd. (Multi Steels) v. The A.P. S.E. Board and Ors. .
15. In order to appreciate the contentions raised by learned senior Counsel for the parties and to decide the controversy involved in this petition it would be appropriate to quote relevant clauses of the agreement entered into between the parties, provisions of Electricity (Supply) Act, 1948, the circulars issued by the Board and the relevant clauses of the Captive Power Policy of the State Govt.
Clause 13 of the Agreement reads thus:
13 (a) The Consumer will be permitted such additional supply in excess of the contract demand as may be agreed upon by the Board and the Consumer after the latter has given due notice in writing of his desire to have the contract demand altered.
(b) In the event of the Board agreeing to make such additional supply available, the Consumer shall pay such contribution towards the cost of making such additional supply available as may be determined by the Board.
(c) If such additional supply is made available by the Board the contract demand specified in Clause 1(a) hereof shall be increased to the same extent.
(d) On being satisfied that for certain compelling reasons the Consumer is not or will not be in a position to consume electricity sufficient to have maximum demand equal to his contract demand, the Board may in its discretion allow the Consumer when request in writing is received in this regard, to reduce his contract demand to such extent and from such date as the Board may decide. Such reduction in the contract demand will be allowed not more than once during the period, of the Agreement remains in force but it shall not effect the consumer’s liability to pay the amount of the minimum guarantee, mentioned in Clause 21(a) hereof.
Clause 38(a) of the Agreement reads thus:
38(a) The Consumer shall conform to conditions of supply prescribed by the Board from time to time in its booklet “General conditions for supply of Electrical Energy” and also the provisions of the Indian Electricity Act, 1910, and of Electricity (Supply) Act, 1948 and any modification or re-enactment thereof, for the time being in force, and to the rules and regulations thereunder for time being in force in so far as the same respectively may be applicable. A copy of the booklet “General Conditions for Supply of Electrical Energy” has been supplied by the Board to the Consumer and the Consumer hereby acknowledges the receipt thereof.
Section 44 of the Electricity (Supply) Act, 1948 reads thus:
44. Restriction on establishment of new generating stations or major additions or replacement of plant in generating stations. – (1) Notwithstanding anything contained in any other law for the time being in force or in any license, but subject to the provisions of this Act, it shall not be lawful for a licensee, or any other person not being the Central Government or any Corporation created by (a Central Act] [or any Generating Company], except with the previous consent in writing of the Board, to establish or acquire a new generating station or to extend or replace any major unit of plant or works pertaining to the generation of electricity in a generating station:
Provided that such consent shall not, except in relation to a controlled station be withheld unless within three months from the date of receipt of an application.
(a) for consent to the establishment or acquisition of a new generating station the Board-
(i) gives to the applicant being a licensee an undertaking that it is competent to, and will, within twenty-four months from the said date, afford to him a supply of electricity sufficient for his requirements pursuant to his application; or
(ii) shows to the applicant that the electricity required by him pursuant to his application could be more economically obtained within a reasonable time from another appropriate source;
(b) for consent to the extension of any major unit of plant for works as aforesaid, the Board-
(i) gives to the applicant being a licensee an undertaking that within twenty-four months from the said date either the station to which the application pertains will become a controlled station in terms of Section 34, or the Board will make a declaration to the applicant in terms of Section 35 offering him a supply of electricity sufficient for his requirements pursuant to his application, or the Board will make a declaration to him in terms of Section 36; or
(ii) Shows to the applicant that the electricity required by him pursuant to his application could be more economically obtained within a reasonable time from another appropriate source or by other appropriate means;
(c) for consent to the replacement of any major unit of plant or
works, the Board-
(i) gives to the applicant being a licensee an undertaking that within eighteen months from the said date either the station to which the application pertains will become a controlled station in terms of Section 34 or the Board will make a declaration to him in terms of Section 36; or
(ii) shows to the applicant that the electricity required by him pursuant to his application could be more economically obtained within a reasonable time from another appropriate source or by other appropriate means.
(2) There shall be stated in every application under this section such particulars as the Board may reasonably require of the station plant or works, as the case may be, in respect of which it is made, and where consent is given thereto, in acting in pursuance of such consent, the applicant shall not, without the further consent of the Board, make any material variation in the particulars so stated.
[(2A) The Board shall, before giving consent under Sub-section (1), to the establishment or acquisition of a new generating station or to the extension or replacement of any major unit of plant or works, consult the Authority, in cases where the capacity of the new generating station or, as the case may be, the additional capacity proposed to be created by the extension or replacement exceeds twenty-five thousand watts.]
(3) Any difference or dispute arising out of the provisions of this section shall be referred to the arbitration of the Authority.
Section 78A of the Act reads thus:
78A. Directions by the State Government. – (1) In the discharge of its functions, the Board shall be guided by such directions on questions of policy as may be given to it by the State Government.
(2) If any dispute arises between the Board and the State Government as to whether a question is or is not a question of policy, it shall be referred to the Authority whose decision thereon shall be final.
The guidelines under the Captive Power Policy of Govt. of M.P. circulated by the Board vide letter dated 27.12.1996 reads thus:
To,
The Pihikhedi Indsutries Association,
E-7/638, Shahpura Extn. Arera Colony, Bhopal-462016 (M.P.)
Sub : Guidelines under the Captive Power Policy of the Government of Madhya Pradesh
Dear Sirs,
The Government of Madhya Pradesh declared Captive Power Policy, for installation of the captive power plants in the State, vide letter No. 368/F/142/13/95, Bhopal dated 11.6.1996. Certain modifications are made in the policy by the State Government vide letter No. 9681/F-3/142/13/95 dated 5.11.96. Based on above guidelines for the entrepreneurs for installation of captive power plants in the State are framed. A copy of which is enclosed herewith for giving wide publicity among the members of your association.
With regards,
Yours faithfully
Encl : As above (B. Krishnamoorthy)
Chief Engineer (Commercial) MPEB : Jabalur
The relevant guidelines of Captive Power Policy are extracted below:
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1@421@2os ekStwnk vkS|ksfxd bdkb;kWa tks mRikfnr dSfIVo ikoj dk mi;ksx vius Lo;a ds mi;ksx ds fy, ^^LVsaM ckbZ** ds :Ik esa djuk pkgsaxh c’krsZ e/;izns’k fo|qr e.My ls U;wure nj ds vk/kkj ij U;wure fo|qr [kir djrh jgsa A
1@431@2
1@441@2 —–
1@451@2
1@461@2
1@471@2
vuqefr gsrq izfdz;k %&
3-1 dSfIVo ikoj miHkksDrk dks IykaV dh {kerk ds vuqlkj fuEufyf[kr e/;izns’k fo|qr e.My ds vf/kdkfj;ksa dks ifjf’k”V v esa n’kkZ;s izi= esa vkosnu djuk gksxk A
1/4v1/2 1000 fdyks okWV rd dh {kerk ds fy, & lacaf/kr o`Rr ds v/kh{k.k vfHk;ark 1@4 lapkyu ,oa la/kkj.k 1@2
1/4c1/2 1000 fdyks okWV ls vf/kd dh {kerk ds fy,