CASE NO.: Appeal (civil) 2335 of 2006 PETITIONER: Oswal Woolen Mills Ltd. RESPONDENT: Punjab State Electricity Board & Anr. DATE OF JUDGMENT: 28/04/2006 BENCH: S.B. Sinha & P.K. Balasubramanyan JUDGMENT:
J U D G M E N T
[Arising out of SLP (Civil) Nos.1398-1442 of 2005]
WITH
CIVIL APPEAL NOS. 2334 OF 2006
[Arising out of SLP (Civil) Nos,15357-15358 of 2005]
S.B. SINHA, J :
Leave granted.
The appellant is a mill represented by its authorized representative.
For the purpose of its working, it at all material times was and still is a
consumer of electrical energy. It had for the said purpose taken electrical
connection from the respondent-Board. The connected load is 6664 KW. In
terms of the tariff framed by the Board, the Appellant herein (Company)
comes under the category of ‘general industry’. The Board on or about
21.01.1991 issued a circular whereby it proposed to levy surcharge @ 17
= % on the actual consumption of electricity in respect of those industrial
consumers who had been sanctioned load exceeding 5000 KW or
sanctioned contract demand exceeding 5000 KVA and had supply from a 11
KV line. The said circular stipulated that surcharge would continue to be
levied till conversion of supply to 33 KV or higher voltage by the
consumers. It is, however, not in dispute that a letter was issued to the
company intimating that for installation of 66 KV Sub Station, a site plan
was required to be supplied.
Yet again by circular dated 30.05.1991, it was stipulated :
“Continuation to CC No.5/91 dt. 21.1.91 vide
which it was decided to levy surcharge @ 17% on
general industrial consumers having sanctioned
load/demand exceeding 5000 KW/KVA and running at
11 KV till conversion of supply to 33 KV or higher
voltage. The matter has been reconsidered by the Board
and it has been decided that the surcharge @ 17 =% shall
be levied on such consumers who do not switch over
their supply system to 33 KV and higher voltage in line
with the following provisions :
i) A lead time of 12 months may be given to all the
existing consumers having load/demand above
5000 KW/KVA and running at 11 KV to convert
supply to higher voltage within stipulated period.
This period includes the time spent on getting
estimated cost of works, deposit of charges with
the PSEB and erection of 33 KV or higher voltage
works by the consumer as well as by the PSEB .
The time schedule for different activities involved
for erection/completion of higher voltage works
shall be fixed by the load sanctioning authority,
and any slippage/evasion in adhering to the laid
down targets on the part of the consumer shall
attract levy of surcharge @ 17 =%. In case after
the stipulated period, the higher voltage works of
the consumers are ready but the works of the
PSEB are not ready, surcharge shall not be levied
and also likewise if the Board’s works of higher
voltage are ready but the consumers are not ready
this surcharge shall be leviable
The validity of the said circular dated 21.01.1991 came to be
questioned by the company in a writ petition, filed before the High Court,
which was marked as CWP No.7069 of 1991. In the meanwhile, the said
circular letter was modified by the Board, in terms whereof it was stipulated
that a time of 12 months extendable upto the maximum of 18 months was to
be granted to all the existing consumers having load above 5000 KW/KVA
and running at 11 KV to convert supply system to higher voltage.
Another letter dated 19.09.1991 was issued by the Board intimating it
that electric supply had to be converted to 66 KV and hence the company
was required to show the place of installation of 66 KV sub-station, failing
which a penalty @ 17 =% would be levied. A further letter was issued by
the Board demanding a sum of Rs.34 lacs towards the tentative cost of
conversion. The writ petition filed by the company, however, was disposed
of stating :
“In the short reply filed on behalf of the Electricity
Board, it is stated that from the petitioners 17 =%
surcharge collected will be adjusted in the subsequent
bills. It is further mentioned that there would be
conversion from 11 KV to 33 KV or 66 KV. Certain
formalities are to be observed by both the parties in that
connection and one year’s time has been given to the
petitioners to comply with the directions. However, it is
made clear that the period of one year would start from
the pointing out of feasible point for installation of sub
station at the factory premises by the Board.”
[Underlining is ours for emphasis]
Yet again, without complying with the said directions, a demand was
made by the Board from the company for depositing the said amount of
Rs.34 lacs. On or about 14.02.1992, the company replied to the said letter
stating that the matter was pending adjudication before the civil court and
furthermore no other feasible point had been pointed out by the officers of
the Board so far. A site plan was again sought for from the company by the
Board by a letter dated 13.05.1992, wherein it was stated :
“Your kind attention is drawn to above references
and it is requested that the site plan and site for the
construction of 33/66 KV Sub grid must be shown to the
undersigned within 7 days and according to the
instructions of the Board required amount may be
deposited so that further action may be taken otherwise
17 =% surcharge will be levied.”
In exercise of its powers under Sections 46 and 49 of the Electricity
(Supply) Act, 1948, (for short, ‘the Act’) the Board made a tariff which
came into force with effect from 01.02.1994. Section (B) of the said tariff
refers to the schedule thereof the relevant portion of which reads as under :
“Schedule of Tariff
Schedule LS.-Large Industrial Power Supply
1. Availability
(i) This tariff shall apply to consumers having
industrial connected load above 100 KW. Their
contract demand shall not be less than 100 KVA
(85 KW).
(ii) No consumer availing supply of energy at high
tension 11000 volts and above (33 KV and above
for Arc furnace) shall increase his connected load
without approval of the Board. The consumer
availing supply at high tension shall indicate the
rating capacity of all the step-down transformer(s)
installed in his premises and shall not increase the
capacity of such step-down transformer(s) without
prior approval of the Board.”
Clause 3 of the Schedule of Tariff reads as under :
"(A) General Category a) Consumers with connected load less than 1000 KW 153 Paise/Unit
b) Consumers with connected load 1000 KW and
above :
Demand Charges Rs.90/KVA PLUS Energy Charges 128 Paise/Unit Maximum overall rate 163 Paise/Unit (B) Power Intensive Units a) Consumers with connected load less than 1000 KW 158 Paise/Unit
b) Consumers with connected load 1000 KW and
above
Demand Charges Rs.90/KVA
PLUS
Energy charges 133 Paise/Unit
Maximum overall rate 168 Paise/Unit
The energy charges under category (A) and (B)
above shall be without prejudice to the Monthly
Minimum Charges leviable under item 7 of this Schedule
L.S.
Note (i)
(ii) Surcharge of 17 =% on the above tariff shall be
leviable for all the Arc furnace load consumers
which are being given supply at 11 KV.”
From note (ii) of the aforesaid tariff, it is, therefore, evident that
surcharge @ 17=% thereupon was leviable only for all the Arc Furnace load
consumers which were being given supply at 11 KV. Moreover, these other
mills which were liable to bear the specified surcharge were specifically
mentioned in the tariff notification. It is also not in dispute that prior to
issuance of the said notification, executive orders had been issued levying
such surcharge. The said executive order, however, was later on made part
of the tariff.
However, on 26.07.1991, a notification was issued under Sections 46
and 49 of the Act inter alia stating :
“(b) For consumers with connected load of 1 MW and
above
Demand Charges Rs.60/- per KVA
Plus Plus
Energy charges Rs.83 paise/unit
Subject to max. rate of 107 P/Unit without
prejudice to the MMC under item 7 of this Schedule
LS
i)
ii) Surcharge of 17 =% on the above tariff shall be
leviable for all the Arc furnace load consumers
which are being given supply at 11 KV.
iii) ”
Questioning the said demand, admittedly, a suit was filed by the
company. The trial court as also the appellate court on the basis of the
materials brought on record came to the conclusion that the Board could
levy such surcharge only with effect from 13.05.1992.
By reason of the impugned judgment the High Court opined :
“Learned counsel for the appellant could not point
out any clause in the circular which stipulates the
modification or suppression of the earlier circular dated
21.01.1991 and 03.05.1991. In the absence of any
supersession of notifications, I am unable to hold that
such notification stood superceded by virtue of a fresh
notification dealing with revision of tariff for general
category consumers as well as contemplate levy of
surcharge for the ARC furnace load consumers. There is
no clause in the said circular that surcharge will be
leviable only on the ARC furnace. Still further, such
argument was not raised before the courts below.
Therefore, it is apparent that levy of surcharge by
notification dated 21.01.1991 and 03.05.1991 was never
superceded.”
A limited notice was issued by this Court on the special leave petition
filed by the company as to whether revision of tariff issued as per the memo.
No.10061/10761/CC/T/2/Rev./Vol.XIII dated 01.02.1994 was applicable to
the company or not. The Board has also approached this Court in regard to
the question as to whether the one year period should be calculated from
13.05.1992 or from the date of issuance of the notification.
Two questions, thus, arise for our consideration in these appeals : (i)
Whether the High Court is correct in holding that in view of the fact the
matter relating to payment of surcharge was governed by circulars, which
having not been superseded by the notification dated 21.01.1991 and
03.05.1991 the impugned demand was valid in law; and (ii) what would be
the proper interpretation of the judgment of the Division Bench of the
Punjab and Haryana High Court dated 29.01.1992
The Board is a creature of the statute. It is constituted in terms of
Section 5 of the Act. It is incorporated and can sue and be sued in its own
name in terms of Section 12 thereof. Section 46 of the Act provides for the
Grid Tariff and Section 49 thereof empowers the Board to make provision
for the sale of electricity by it to persons other than the licensees. While
exercising the said power the Board would be governed by the general
terms which may be issued by the State in terms of Section 79 of the Act.
Surcharge by way of additional rate or penalty can be levied only in terms of
a tariff notification. Such a power, therefore, can be exercised by the Board
only in exercise of its statutory power and not by reason of an executive
power. In terms of a circular letter issued by the Board, therefore, neither
any surcharge nor any penalty could be levied.
In the year 1991, indisputably, the said circular letter dated
21.01.1991 was followed by the tariff notification issued in terms of
Sections 46 and 49 of the Act. The subsequent circular letter dated
03.05.1991 was, however, not followed by any notification making the tariff
applicable with retrospective effect.
We have noticed hereinbefore that the tariff notification dated
26.07.1991 speaks of levy of such surcharge inter alia on Arc furnaces.
Similar is the position in regard to the notification dated 01.02.1994. The
Board, therefore, could levy surcharge only in terms of the notification and
not by reason of any circular letter. As in the notification, it has clearly been
stated that 17 =% surcharge on the above tariff should be leviable for all the
Arc furnace load consumers which were being given the supply at 11 KV,
the High Court clearly fell in error in arriving at the finding that by reason of
the said notification, the circular letters dated 21.01.1991 and 03.05.1991
were not superseded. The Board being a statutory authority, its power to
issue bills for consumption of the electricity would be governed solely by
the tariff notification. It being a statutory authority must act within the four-
corners of the statute.
The High Court, therefore, in our opinion was clearly wrong in
arriving at the finding that the earlier notifications dated 21.01.1991 and
03.05.1991 were not superseded. The High Court failed to pose unto itself
the correct question, namely, as to whether after issuance of the tariff
notification, the Board could levy any surcharge @ 17 =% on the tariff on
those consumers who did not have Arc furnace. The High Court, therefore,
misdirected itself in law in passing the impugned order.
The question which falls for consideration is from which date the
period of one year could have started. Although on the basis of the
aforementioned finding, the Company could have contended that from
13.05.1991, no surcharge could have been levied, but it did not raise such a
contention before the High Court.
We have seen that herein also a limited notice was issued.
It is not in dispute that for the purpose of giving effect to the offer
made by the Board in terms of its letter dated 30.05.1991, no surcharge
could have been levied immediately. A Division Bench of the High Court,
as noticed hereinbefore, by an order dated 29.01.1992 clearly stated that the
period of one year would start from the date when the feasible point is
pointed out.
The observation of the High Court in the earlier writ petition was in
the nature of a direction.
The submission of Mr. Ranjit Kumar, the learned Senior Counsel
appearing on behalf of the Board, in this behalf, cannot be accepted.
Normally the period should be counted from the date of issuance of the
notification and not from the date of the High Court’s judgment. The High
Court, however, made observations, whereupon both the parties acted. The
said observations were made in terms of the affidavit affirmed on behalf of
the Board itself.
The High Court’s direction leads only to one conclusion that the cut-
off date would be considered to be one in futuro, i.e., a date after 29.01.1992
alone was required to be fixed.
Once the final notice by the Board had been issued, the negligence on
the part of the consumer to point out the actual site had not been condoned
by the courts.
The High Court’s observations might be incorrect; but then the same
was accepted. As indicated hereinbefore, the parties acted thereupon. The
period of one year in terms of the judgment of the High Court, therefore,
was to start from the date when the feasible point for installation of Sub
Station at the factory premises by the Board was pointed out. Selection of a
site for the purpose of drawing 33 KV line was not an empty formality.
Several factors including the convenience of the Board were required to be
taken into consideration. In some cases probably compensation for
acquisition of land was required to be paid.
All the courts had arrived at a finding of fact, having regard to the
Board’s letter dated 03.12.1992 that the final notice in terms of the said
circular had been given only on 13.05.1992. The company had contended
that actual feasibility was found out on 28.05.1994, but as noticed
hereinbefore, the court did not accept its plea that even the date of the said
notice could not have been considered to be the date for the purpose of the
starting point of the period of one year.
For the reasons aforementioned, although Mr. R.K. Jain, the learned
Senior Counsel appearing for the company, may be right in his submission
that the Board has no jurisdiction to levy surcharge after 29.01.1992, but as
the said contention had not been raised and furthermore as notice was issued
by the court on a limited question, we are of the opinion that the company is
liable to pay the surcharge with effect from 13.05.1992. We may
furthermore notice that the actual amount of surcharge payable from that
date has already been paid by the company to the Board. However, in view
of our findings aforementioned, there cannot be any doubt that the surcharge
@ 17 =% was not required to be paid in terms of the tariff notification
dated 01.02.1994.
For the reasons aforementioned, the Civil Appeals arising out of
S.L.P. (Civil) Nos. 1398-1442 of 2005 preferred by the Company are
allowed to the aforementioned extent and the Civil Appeals arising out
S.L.P. (Civil) Nos. 15357-58 of 2005 preferred by the Board are dismissed.
In the facts and circumstances of the case, the parties shall pay and bear
their own costs.