{"id":9804,"date":"1971-08-17T00:00:00","date_gmt":"1971-08-16T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/mirzapur-electric-supply-co-ltd-vs-u-p-state-electricity-board-on-17-august-1971"},"modified":"2018-08-31T00:47:43","modified_gmt":"2018-08-30T19:17:43","slug":"mirzapur-electric-supply-co-ltd-vs-u-p-state-electricity-board-on-17-august-1971","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/mirzapur-electric-supply-co-ltd-vs-u-p-state-electricity-board-on-17-august-1971","title":{"rendered":"Mirzapur Electric Supply Co. Ltd. vs U.P. State Electricity Board, &#8230; on 17 August, 1971"},"content":{"rendered":"<div class=\"docsource_main\">Allahabad High Court<\/div>\n<div class=\"doc_title\">Mirzapur Electric Supply Co. Ltd. vs U.P. State Electricity Board, &#8230; on 17 August, 1971<\/div>\n<div class=\"doc_citations\">Equivalent citations: AIR 1972 All 127<\/div>\n<div class=\"doc_author\">Author: R Gulati<\/div>\n<div class=\"doc_bench\">Bench: R Gulati<\/div>\n<\/p>\n<pre><\/pre>\n<p>ORDER<\/p>\n<p>  R.L. Gulati, J.   <\/p>\n<p> 1. This is a petition under Article 226 of the Constitution. The petitioner is a private limited company carrying on business in the name of Mirzapur Electrict Supply Co. Ltd.\n<\/p>\n<p> 2. Since 1929 the petitioner held a licence from the State Government under the Indian Electricity Act, 1910, for supply of electricity to the towns of Mirzapur and Vidhyachal. The petitioner had its own generating plant. The first respondent, the U. P. Electricity Board, Lucknow by an order dated January 15, 1962, directed the petitioner to close<\/p>\n<p>down its generating station and to take the supply of electricity from the Board. The generating station was closed on February 20, 1962 and the Board has been supplying electrical energy to the petitioner since then. The total load of electrical energy which was being supplied from the Board from time to time has been increasing and went up about 3,000 KVA. In June 1961 the petitioner demanded an increase in the load by 1000KVA. The Board wrote back to the company saying that the increased demand will be met only when the petitioner delivered to the Board a duly signed and executed agreement, a draft whereof had been sent to the petitioner several years back. The draft agreement contains a clause which requires the company to deposit a security and says that this demand of the Board is wholly unauthorised and illegal. The company has prayed for a writ of mandamus directing the respondents to supply the enhanced demand without requiring the petitioner to deposit the security of rupees one lac.\n<\/p>\n<p> 3. The short ground upon which the petitioner objects to the deposit of the security is that the relationship between the petitioner and the Board is governed wholly by Section 36 and Schedule III of the Electricity (Supply) Act, 1948. There is no provision, according to the petitioner, in that Act authorising the Board to demand a security from the petitioner. The respondent&#8217;s case is that the relationship between the petitioner and the Board is not governed exclusively by Section 36 and Schedule III of the Act. The relationship should be governed by mutual agreement and the Board is within its right to demand a security to safeguard its own interest. It has been stated in the counter-affidavit filed on behalf of the respondents that the monthly bill for the supply of electrical energy to the petitioner company comes to about Rs. 1,40,000\/- and the Board shall be put to an additional expenditure of about Rs. 40,000 per month when the increase in the load is sanctioned. It has been further alleged that the petitioner company is already in arrears to the tune of Rs. 7 lacs and the Board is not prepared to increase its commitment without safeguarding its own financial interest. It has further been stated on behalf of the respondent that under Section 26 of the Act Board has all the powers and obligations of a licensee under Act 9 of 1910 and the Board as a licensee has the power and the authority to demand a security from the petitioner company whose status is no better than that of a consumer.\n<\/p>\n<p> 4.        Now, turning to the rival contentions  to me it  appears  that  the  ap-\n<\/p>\n<p>proach of both sides is wrong.    It is true that  the  relationship  between  the  Board and  the  petitioner  company  is  governed in   certain     matters   by   Section   36   and Schedule III.    Similarly the Board does enjoy the rights of a licensee according to the provisions contained in Section 26 of the Act.     But this  position  does  not  provide an answer to the question that falls for consideration in this case.    The first thing to be determined is as to the nature of the  transaction  between  the   Board   and the     petitioner     company.     The      Board holds a monopoly for the production and supply  of   electricity.     It  is  engaged  in what  is  essentially a  commercial  enterprise   like   so   many   State-owned, enterprises.     The   petitioner  company  is   also engaged   in   business;      its   sole  purpose being   to   earn   profits   from  the   business of supply of electricity to its consumers. In other words, the relationship between the parties is that of seller and purchaser of  goods.     Such   a  relationship  is  essentially   governed   by   a   contract   between the parties.     By virtue of statutory provisions already noticed above,  the ambit of   contract  is   controlled   in   certain   respects.    The control is two-fold.    The first control   is   that   the   petitioner   company cannot purchase its requirement of electricity from  any other  source  than  the Board.    The  second  control  is with  regard   to   the   price.     The   Board   cannot charge price higher than that is provided   in   Schedule   III.     But  that  is   about  all. The Act is not exhaustive and it does not purport   to restrict the right of the   parties to negotiate and agree upon other  vital conditions governing such a contract. For instance there is nothing in the Act which precludes  the  parties  from  agreeing  and to the manner and time of the payment of    the    price   of   electricity.    Likewise there is  no  provision in  the Act which prohibits the parties from agreeing upon a   condition   meant     to     safeguard     the mutal   interest   under   the   contract.     If one  may  say so,   the  Board  is like  the producer   of   goods      and   the   petitioner company is its distributor or selling agent Such  a   relationship  between  the  parties is invariably governed by a mutual contract.    It is not uncommon in a transaction of this nature that the producer of goods takes  from  its  distributor  a  security     with   a   view  to   safeguarding   the payment of the price of the goods supplied and for ensuring the fulfilment of the other  conditions  of  the  contract.     It  is, therefore,   not   correct   to   say   that   the demand of the Board to require the petitioner company to sign an agreement and to furnish a security in accordance with one of the terms of the contract is unauthorised  or  illegal.\n<\/p>\n<p> 5.        From the counter-affidavit filed on behalf of the respondents it appears<\/p>\n<p>that the monthly bill for the supply of<br \/>\nelectricity to the petitioner company is<br \/>\nto the tune of Rs. 1,40,000 and the<br \/>\nBoard expects to incur an additional expense of Rs. 40,000\/- per month, if the<br \/>\nsupply load is increased as demanded by<br \/>\nthe petitioner company. The petitioner<br \/>\ncompany is already in arrears to the tune<br \/>\nof Rs. 7,00,000\/-, In such circumstances<br \/>\nthe Board, in my opinion, is perfectly<br \/>\njustified in insisting that the petitioner<br \/>\ncompany should furnish security. From<br \/>\nthe counter-affidavit it further appears<br \/>\nthat the petitioner company has already<br \/>\nsigned the agreement and has delivered<br \/>\nit to the Board, but it has added a note<br \/>\nagainst Clause 23 relating to the security.\n<\/p>\n<p>The note reads:&#8211;\n<\/p>\n<p>  &#8220;The question of security deposit as demanded should be kept in abeyance, pending negotiation and final decision is reached and as agreed to by the licensee in due course does not arise since there was not a condition at the time of closing down of generating station under the instruction of Government of U. P.&#8221;\n<\/p>\n<p> 6. This note clearly amounts to  refusal on the part of the petitioner company to furnish the security. As has already been pointed out, there is nothing in the Act which prohibits the Board from demanding the security. It is not the case of the petitioner company that similar security is not being demanded by the Board from other licensees and the petitioner company is being subjected to discriminatory treatment, or that the amount of security is unreasonably high. In any event, the matter is entirely to be decided by the parties by mutual agreement and I do not see how this Court can be called upon to interfere.\n<\/p>\n<p> 7. The petition appears to be misconceived. It fails and is dismissed with costs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Allahabad High Court Mirzapur Electric Supply Co. Ltd. vs U.P. State Electricity Board, &#8230; on 17 August, 1971 Equivalent citations: AIR 1972 All 127 Author: R Gulati Bench: R Gulati ORDER R.L. Gulati, J. 1. This is a petition under Article 226 of the Constitution. The petitioner is a private limited company carrying on business [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[9,8],"tags":[],"class_list":["post-9804","post","type-post","status-publish","format-standard","hentry","category-allahabad-high-court","category-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Mirzapur Electric Supply Co. Ltd. vs U.P. 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