High Court Jharkhand High Court

Jharkhand State Electricity Bo vs M/S Laxmi Ispat Udyog & Anr on 5 July, 2011

Jharkhand High Court
Jharkhand State Electricity Bo vs M/S Laxmi Ispat Udyog & Anr on 5 July, 2011
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           IN THE HIGH COURT OF JHARKHAND AT RANCHI
                        L.P.A. No. 466 of 2010
                                   with
                        L.P.A. No. 465 of 2010
                                   ------

           1.Jharkhand State Electricity Board
           2.The General Manager cum Chief Manager,
              Hazaribagh Electric Supply Area
           3.The Electrical Superintending Engineer,
              Hazaribagh Electric Supply Area,
           4.The Electrical Executive Engineer,
              Hazaribagh Electric Supply Area....    Appellants in both cases

                                     Versus

           1.M/s. Laxmi Business & Cement Co. Pvt. Ltd.
           2.Jharkhand State Electricity Regulatory Commission....   ......
                                                Respondents (In L.P.A 466/2010)
           1.M/s Laxmi Ispat Udyog
           2.Jharkhand State Electricity Regulatory Commission....   ...
                                                Respondents (In L.P.A 465/2010)
                                  --------

           CORAM:       HON'BLE THE ACTING CHIEF JUSTICE
                         HON'BLE MR. JUSTICE P.P. BHATT
                           ------
           For the Appellants        : M/s Anil Kr. Sinha, V.P. Singh, Sr. Adv
                                       R. Shankar, V.K. Prasad, D. Kumar,
                                       A. Prakash, P.K. Singh.
           For the Res.No. 1         : M/s M.S. Mit tal, Sr. Adv.
                                       A. Kumar, N.K. Pasari
           For the Res. No. 2        : S. Srivastava.

           Reportable                                Dated 05th July, 2011
                                     -----

By Court        Heard learned counsel for the parties.

           2.   The appellant-Jharkhand State Electricity Board, Ranchi, is

           aggrieved against the oder passed by the learned Single Judge

           dated 17th September, 2010         in W.P.(C) No. 2613 of 2010 and

           W.P.(C)2626 of 2010,       by which both the writ petitions were

           allowed, holding that after coming into force of the new tariff as

           prescribed   by     the   Jharkhand   State   Electricity   Regulatory

           Commission, the appellant-Board cannot fall back upon either

           tariff of the year 1993 and insertion of Schedule to the tariff in

           they year 1999 or upon the contract on the basis of which the

           appellant-Board used to charge "Demand Charge" from the
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respondent-consumer obviously under the tariff of 1993 as well

as by virtue of the condition in the contract.

3.       Brief facts of the case are that before coming into force of

the Electricity Act, 2003, there was Indian Electricity Act, 1910

and Electricity Supply Act, 1948 and the parties were governed

by the Act of 1910 and 1948. The respondent-consumers entered

into a contract with the appellant-Electricity Board and agreed

that they would be liable to pay the "monthly minimum demand

charge on the basis of the actual minimum demand of the month

or 75 % of the contract demand, whichever is higher and energy

charges based on load factor of 25%, 30 %, 50 % etc." That

condition is incorporated in the tariff of the year 1993 in Column

15.2. and in consonance with that condition, the same condition

was incorporated in the agreement executed by the respondent-

Jharkhand State Electricity Regulatory Commission in Clause

4(C ).

4.       The condition 4(C) is that "maximum Demand Charges for

supply in any month will be based on the maximum KVA demand

for the month or 75 % of the contract demand, whichever is

higher subject to provisions of Clause 13. For the twelve months'

service, the maximum Demand Charges for any month will

however be based on the actual monthly maximum demand for

that month." The respondents were paying the Demand Charges

according to the tariff of the year 1993 as well as under the

terms of the contract referred above.

5.       The new Electricity Act, 2003 came into force from

10.06.2003

and as per Section 85 of the Act of 2003 the State

Regulatory Commission in the State of Jharkhand was also

constituted and by invoking the provision of Section 86 of the Act

of 2003, the new electric Tariff Order was issued and was made
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effective form 1st January, 2004. The contention of the

respondent-writ petitioner in the writ petition was that after

coming into force of the new Tariff Order 2003-04, the appellant-

Electricity Board can charge any amount from the respondent

which is provided in the Tariff Order of 2003-04 and not as per

tariff order/Schedule of 1993 or under the agreement executed

between the Board and consumer.

6. The contention of the Electricity Board was that the all

acts done and contract executed between the parties prior to

coming into force of the Act of 2003 have been saved by Section

85 of the Act of 2003, therefore, the respondent is bound by the

terms of contract which has been executed under the provisions

of the Electricity Act, 1993 as well as Electricity Supply Act, 1948

and the condition contained in that contract has not been

challenged by the respondents. It is also submitted that not only

that, but the Jharkhand State Electricity Regulatory Commission

itself was fully conscious of the fact that some of the issues have

been left by the Commission while giving out the Tariff Order of

2003-04 and it has been made clear in the last column i.e.,

column no. 1.4 in the Tariff Order 2003-04 itself, it was made

clear specifically that “all other terms and conditions in respect

of Meter Rent, Supply at Lower Voltage, Capacitor Charge,

Circuit-Breaker Charge, Electricity Duty, rebate, security deposit,

surcharge for exceeding contract demand etc. shall remain the

same as existing in the State”. Therefore, by clause 1.4 referred

above, the Commission declared that the issues which have not

been dealt with and decided by the tariff 2003-04 are made to

continue as they were prevailing prior to Tariff Order 2003-2004

as they were existing in the State. It is submitted that the

Jharkhand State Electricity Regulatory Commission has not
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decided and deleted the condition of the payment of the

Demand Charges in the manner as given in Clause 5.2 of the

Tariff Order/Schedule 1993 as well as the contract entered into

between the parties. It is also submitted that the learned Single

Judge has wrongly held that the Clause 4(C) of the agreement

cannot operate in view of Clause 11 of the agreement which

provides that the agreement shall be construed in consonance

with the amendment made in law in future and, therefore, after

coming into force of Act of 2003 and the Tariff Order of 2003-04,

the appellant cannot take benefit of Clause 4(C) or the condition

contained in Clause 15.2. of the Tariff Order of 1993.

7. Learned counsel for the Board also submitted that the

learned Single Judge wrongly relied upon the earlier judgment of

this Court delivered in W.P.(C) No. 5150 of 2007, Jharkhand State

Electricity Board Vs. M/s KumarDhubi Steels Pvt. Ltd decided on

17th April, 2009 and dismissal of the S.L.P against the said

judgment dated 17th April, 2009 is of no consequence as the

judgment of this Court has not been upheld by the Hon’ble

Supreme Court on merit and only S.L.P has been dismissed. It is

submitted that in the said case, M/s KumarDhubi Steels Pvt. Ltd,

the issue was with respect to the dispute about the charging of

the amount at different rates for initial first twelve months and

the said judgment had not laid down the law on this issue that

the Electricity Board cannot charge the amount which has not

been prescribed as such in the said Tariff Order and which has

not been denied specifically by the Electricity Regulatory

Commission in such order.

8. We have considered the submissions of the learned

counsel for the parties and perused the facts of the case. It is

true that the Electricity Regulatory Commission in the Tariff
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Order of 2003-04 at page 84 observed that, the difference

between fixed charge and minimum charges is that while fixed

charges are charged from consumers irrespective of

consumption, minimum charges are levied only when the bill of

the consumer is less than a pre-specified amount. And thereafter

the Commission considered the question of levying of

fixed/Demand Charges and observed as follows:

“Ideally, the fixed, Demand Charge should
be levied in proportion to the demand placed by
an individual consumer on the system. This is so
because it facilitates the utilitity in designing an
appropriate system to cater to the supply needs
of the consumer and is, therefore, a just and fair
mechanism for recovering fixed costs of the
system. Thus, the fixed/Demand Charge should be
proportionally related to the load of the category.
In the existing tariff structure, all consumer
categories are paying a fixed charge on the basis
of their load except the domestic consumers and
unmetered commercial consumers who are paying
a fixed charge on a part connection basis. The
Commission has not change the basis for levying
fixed charge on this category in this Tariff Order
as the information and database of the Board is
not adequate. The Commission, however, intends
to move in this direction in future and directs that
the Board should made efforts to update its
existing database on connected load.”

9. The Electricity Board submitted proposal for prescribing the

tariff which is incorporated at page 111 and in the column in the

form of Table 5.27, in which there is a reference of Demand

Charge and it has been stated that the existing Demand Charge

is Rs. 125/- per KVA per month and the Electricity Board

proposed to increase it to Rs. 200/- from Rs. 125/-. In the said

proposal as mentioned in Table 5.27, there is one more

component I.e. “Annual minimum guarantee (AMG) charge”. In

the Table 5.27 under the heading “AMG” charges in column no. 2

there is mention as to how this amount is being charged, which

is the similar mode of calculating of charge as of Demand Charge

but there is no confusion to us because annual minimum

guarantee “AMG” charge is separate and distinct than the
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Demand Charge and the AMG has been abolished by the specific

Tariff Order of 2003-04 as ordered by the Commission in the

Tariff Order 2003-04 at page No. 119.

10. We are concerned with the Demand Charge only, rather to

say not concerned with the Demand Charge itself but the manner

in which the Demand Charge can be calculated for the purpose of

raising demand against the consumer charging of the Demand

Charge “has been allowed in Tariff Order 2003-04 @ Rs. 140/- as

mentioned at page 141 of the Tariff Order. As we have already

noticed that a formula was given in Clause 15.2 in the tariff of

1993 as well as in the contract on the basis of which the Board

was charging the Demand Charge on the basis of the actual

consumed units but was charging the said amount irrespective of

the consumption of the units of electricity. Now the contention of

the respondent-writ petitioner is that they are liable only

according to the units consumed by them and not according to

the formula. We found from Board’s proposal contained in Table

5.27 that the Electricity Board consciously (or may

inadvertently) submitted its proposal only to the effect that

existing annual Demand Charge is Rs. 125/- per KVA per month

and the Board wants to increase it to Rs. 200/- per KVA per

month. This proposal of the Board was considered and ultimately

the Demand Charge was allowed by the Tariff Order of 2003-04

which is mentioned at page 141 by which only it has been

approved that the Electricity Board shall be entitled to charge Rs.

140/- per KVA per month. It appears that so far quantum is

concerned, instead of increasing it from Rs. 125/- to Rs. 200/- per

KVA per month as proposed by the Board, the Tariff Order of

2003-04 increased it to Rs. 140/- only.

11. In view of the above reasons, we cannot hold that
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Electricity Regulatory Commission has not considered the

proposal of the Electricity Board with respect to their claim for

Demand Charge and the manner in which it will be charged. At

this juncture, we may observe here that the Electricity Board

repeatedly approached the Electricity Regulatory Commission

and every time it was made clear to the Board by the

Commission that the Commission has not allowed the Electricity

Board to charge beyond what has been given in the Tariff Order

of 2003-04 and that fact has been taken note of by the Single

Bench of this Court earlier in the case of M/s KumarDhubi Steels

Pvt. Ltd then again in the impugned judgment passed by the

learned Single Judge. It is also clear that even then during

pendency of the writ petition before Single Bench, the Electricity

Board approached the Electricity Regulatory Commission again

by submitting a representation to the Commission to give

clarification in this regard and it is not in dispute that the

representation of the electricity Board has been rejected again

by the Regulatory Commission.

12. In view of the above facts, we are of the considered

opinion that the appellant-Board cannot take help of Clause 5.1.

wherein Electricity Regulatory Commission wherein it has been

observed that some of the matters have not been dealt with and

they shall continue to be the same as they were in existence in

the State because of the reason that there is a specific proposal

made by the Electricity Board for the Demand Charge as well as

the manner in which it will be charged and this proposal was

considered by the Electricity Regulatory Commission and

thereafter Tariff Order has been issued. Even if it was an

inadvertent mistake on the part of the Electricity Board in

submitting its proposal of non-disclosure of the manner, in which
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Board wanted to charge Demand Charge from the consumer,

then that mistake must have come to the knowledge of the

Board long back when the dispute arose for the first time;

therefore, they had opportunity to challenge the Tariff Order by

preferring an appeal which remedy admittedly they have not

availed and the Tariff Order of 2003-04 has attained its finality.

At this juncture, we may also observe that in the Tariff Order

2003-04 all financial aspects have been considered by the

Electricity Regulatory Commission and specifically it has been

mentioned at many places what would be the loss to the Board

and how it stands compensated. Therefore, the Electricity

Regulatory Commission must have taken into consideration the

revenue which the Electricity Board would receive by charging

Rs. 140/- per KVA per month on account of Demand Charge and

we cannot presume that this amount has not been calculated

while issuing Tariff Order of 2003-04.

13. The order of the Hon’ble Supreme Court in the case of

BSES Ltd. Vs. Tata Power Co. Ltd. & Ors reported in (2004) 1

S.C.C 195 laid down that the Electricity Board can charge only

such tariff which has been approved by the Commission and

charging of a tariff which has not been approved by the

Commission is an offence which is punishable under Section 45

of the Act and the provisions of the Act and Regulations show

that the Commission has the exclusive power to determine the

tariff and that the tariff approved by the Commission is final and

binding and it is not permissible for the licensee, utility or any

one else to charge a different tariff.

14. Therefore, after the Act of 2003 and constitution of the

Electricity Regulatory Commission and issuing Tariff Order by the

said Commission, the Electricity Board has no jurisdiction to
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charge as per the earlier Tariff Order of 1993 or the contract

which has been made a live contract by Clause 11 and contains

not only stagnant conditions and those terms and conditions

mentioned in the contract in consonance of Tariff Order/Schedule

stand automatically changed and modified in accordance with

the amendment in Tariff Order. The clauses like Clause 11 are

made in the contract so that upon change in law or bylaw, the

parties need not to execute fresh contract again and again.

15. It would be worthwhile to mention here that in view of

provisions of Section 61 and 62 of the Electricity Act, the

jurisdiction to prescribe tariff has been exclusively given to the

Electricity Regulatory Commission and in view of the laws laid

down by the Hon’ble Supreme Court in BSES Ltd. Vs. Tata Power

Co. Ltd. & Ors (supra), the Electricity Board has no jurisdiction to

charge beyond the Tariff Order of 203-04.

16. In view of the above reasons, so far merit in the L.P.As is

concerned, we find none.

17. Learned counsel for the Board submitted that the award

of interest cannot be justified in the matter where the consumer

paid the Demand Charges as demanded by the Electricity Board

and has raised dispute by filing writ petition in the year 2010. We

find some force in the submission of the learned counsel on this

count because of the simple reasons that the respondents

approached this Court by preferring writ petitions in the year

2010 only and, therefore, the respondents cannot be held

entitled to interest for all the amount which they have already

paid to the appellants whenever they received the electricity

bills. In view of the above reasons, we are of the considered

opinion that the respondents shall be entitled to the interest over

the excess recovery made by the appellants from 17th
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September, 2010 i.e, from the date of the order passed by the

learned Single Judge. The award of the cost is also quashed.

18 Hence, the L.P.As are partly allowed to the extent of

revision in interest in the terms aforesaid.

(Prakash Tatia, A.C J)

(P.P. Bhatt, J)

Dey/-Alankar/-