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Andhra Pradesh State Electricity Board, Hyderabad and anr. Vs. the Andhra Pradesh Carbides Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectElectricity
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Appeals Nos. 872, 858, 835, 837 and 905 of 1980
Judge
Reported inAIR1985AP283
ActsElectricity (Supply) Act, 1948 - Sections 46 and 78-A
AppellantAndhra Pradesh State Electricity Board, Hyderabad and anr.
RespondentThe Andhra Pradesh Carbides Ltd. and ors.
Appellant AdvocateM. Chandrasekhara Rao, Standing Counsel
Respondent AdvocateK. Srinivasamurthy, Addl. Adv. General
Excerpt:
- - 905/84 was also impleaded as a party-respondent in the writ petitions as well as the four other writ appeals which are all filed by the board. the board disconnected the power supply in the early hours of the morning on 12-6-1983 for the failure of the company to pay a sum of rs. the board, none-the-less ,expressed itself that it would not like to have any confrontation with the state government ,and it was prepared to make available the supply, at the rates specified by the state government under protest. it had again brought to the notice of the government that grant of such concessions to the company would imply hidden subsidy and would jeopardise the further development of the board and its activities and brought to the notice of the state government certain recommendations.....1. these writ appeals arise out of a common judgement dt. 19-1-1984 of madhava rao,j. disposing of w.p.nos. 5155 to 5157 and 5222 of 1983 substantially in favour of the respondent-writ petitioner, the a.p.carbides limited ('company' for short) and against the appellant a.p.state electricity board ('board' for short). the state government, the appellant in w.a.no. 905/84 was also impleaded as a party-respondent in the writ petitions as well as the four other writ appeals which are all filed by the board. 2. various disputes had arisen between the company and the board, regarding the amounts payable to the board on account of electricity, supplied to the company for its factory at dinnedevarapadu of kurnool district, a backward area. the board disconnected the power supply in the early.....
Judgment:

1. These writ Appeals arise out of a common judgement dt. 19-1-1984 of Madhava Rao,J. disposing of W.P.Nos. 5155 to 5157 and 5222 of 1983 substantially in favour of the respondent-writ petitioner, the A.P.Carbides Limited ('Company' for short) and against the appellant A.P.State Electricity Board ('Board' for short). The State Government, the appellant in W.A.No. 905/84 was also impleaded as a party-respondent in the writ petitions as well as the four other writ appeals which are all filed by the Board.

2. Various disputes had arisen between the Company and the Board, regarding the amounts payable to the Board on account of electricity, supplied to the Company for its factory at Dinnedevarapadu of Kurnool district, a backward area. The Board disconnected the power supply in the early hours of the morning on 12-6-1983 for the failure of the Company to pay a sum of Rs.107 lakhs claimed by the Board against the Company towards interest charges. In W.P. No.5156/83,the Company sought restoration of the electricity supply by a Writ of Mandamus. The disconnection was made shortly after G.O.Rt.No.62, Energy, Environment, Science and Technology (PrII) Department, dt. 10-6-1983 was issued by the State Government. The Company filed W.P.No. 5155/83 to quash the said G.O.Rt.No.62dt. 10-6-1983. Prior to G.O.Rt.no.61, dt.10-6-1983, the Board was supplying electricity to the Company and was charging the Company certain rates in terms of G.O.Rt.no.1798, certain rates in terms of G.O.Rt.No.1798, Irrigation and Power (PrII)Department. Dt. 29-12-1981 and letter No.937-Pr.II/82-83, dt.31-5-1982. In W.P.No.5157/83, the Company sought a Mandamus against the Board to supply electricity to it regularly and continuously and to collect the charges for electricity in terms of the aforesaid G.O.Rt.No.1798, dt. 29-12-1981 and the letter dt. 31-5-1982. The Company claimed refund of Rs.128.21 lakhs from the Board which, according to the Company, was paid to the Board in excess. The Company, therefore, filed W.P.No.5158/83 for a Mandamus directing the Board to refund the aforesaid sum of Rs.128.21 lakhs. The Board served a letter on the Company on 20-6-1983, requiring the Company to pay to the Board a total sum of Rs.4,24,08,637.40 towards electricity charges and deposit in cash a sum of Rs.92,90,400/- towards deposit together with a sum of Rs.100/- for re-connection fee. The Company filed W.P.No.5222/83 to quash the demand made by the aforesaid Board'' letter dt 20-6-1983. All the aforesaid writ petitions were vigorously contested both by the State Government and by the Board. The learned Judge, while dismissing W.P.No.5158/83, had disposed of the remaining four writ petitions with certain directions, substantially in favour of the Company. The dismissal of W.P.No.5158/83 has become final and is not subject-matter of any of these appeals.

3. G.O.Rt.No.62, dt.10-6-1983 was held to be only prospective and not retrospective in its operations. W.P.No.5155/83 was disposed of accordingly. The Board preferred W.A.No.872/84 and the State Government preferred W.A.No.905/84 against the aforesaid directions issued in W.P.No.5155/83. W.P.No.5156/83 was allowed granting a Mandamus against the Board to restore the connection of electricity supply. The learned Judge held the disconnection to have been made for improper reasons and had, therefore, issued the Mandamus. The Board preferred W.A.No.835/84 against the mandamus so issued against it in W.P.No.5156/83. In allowing W.P.No.5157/83, the learned Judge directed energy to be supplied in terms of G.O.Rt.No.1798, dt. 29-12-1982, which the learned Judge considered to be a part of the contract entered into between the parties on 4-6-1982 and that if any terms and conditions are to be worked out, it is for the parties to approach a Court of Law but not in that writ proceeding. The Board preferredW.A.No.837/84. The learned Judge while quashing the Board's letter dt.20-6-1983, allowed W.P.No.5222/83 directing the Board to serve a fresh demand notice to the Company, if necessary,in the light of the directions, granted in favour of the Company in W.P.No.5155 and 5157 of 1983. The Board preferred W.A.No.858/84.

4. For a proper appreciation of the various submissions made before, us, the following facts, which are set out in a chronological order, became material. The facts can be conveniently grouped periodwise.

5. The first period relates from March, 1974 culminating inG.O.Ms.No.45 (Irrigation and Power Department) dt.4-1-1978. From the papers relating to this period, which are made available to us, the following facts emerge. The Andhra Pradesh Industrial Development Corporation was proposing to set up a calcium carbide unit and was enquiring the Electricity Board whether the Board would be in a position to supply its energy requirement. The Chief Minister of the State was also approached on behalf of the Company whether the Board would be in a position to supply its power requirements at 9 paise per unit, the said rate to continue for a minimum period of 10 years. By about 1975, the cost of generation was working out at 9.53 paise per unit. Electricity energy was then being supplied to other power intensive industries during that period at a special tariff rate of 11 paise per unit. The Board informed the State Government in the beginning that the special tariff rate of 11 paise will not be applicable to the calcium carbide project as the cost of power consumed does not form large percentage of the cost of finished product but that, however, it was prepared to give rebate of 25% of the energy charges payable at the tariff rate applicable to non-power intensive industries. The Board by its letter dt.3-8-1976 agreed to make available the power through 132/iiKV sub-station located near the project sit, provided that the estimated cost is paid as voluntary loan contribution by the company. By another proceeding of the Board dt. 26-11-1976, the Board also agreed to supply power at 11 paise, subject to escalation as may be ordered by the Board, from time to time. There was escalation by about August 1977, on account of increase in the cost of fuel and salaries and wages of staff. The tariff rate for the power intensive industries was, at that time, raised to 12.20 paise per unit and the Company was duly informed about the rise in the tariff rate. The State Government was giving some direction sot the Board as is evident from the Government's letter dt.4-10-1977 to supply the power at 11 paise per unit, the said rate to supply for five years subject to review after three years. The Board was taking the stand that 25% rebate will not be available in favour of consumers who are afforded the facility of special tariff rates and that during 1976-77 the cost of generation had gone up to 12.67 paise per unit. The Board indicated to the State Government that it would charge the company at the rate of 12.2 paise per unit and that, if the State Government considers that the Company should be charged at a lower rate, the State Government may subsidise the consumer directly. The State Government appears to have mad some earlier commitment to the Industrial Development Bank of India, one of the financiers of the Joint Sector Undertaking that power would be made available to the project at 11 paise per unit. When, therefore, the Board expressed its unwillingness to supply any power to the Company at 11 paise per unit, the State Government issued G.O.ms.no.45, dt.4-1-1978, in purported exercise of its power to issue directions under Sec. 78A of the Electricity(Supply) Act, 1948 ('Act' for short). In issuing that G.O.the State Government had set out that it had already committed itself to the Industrial Development Bank of India that the power would be supplied at 11 paise per unit. The G.o. therefore, directed the Board to supply the required power, at the rate of 11 paise per unit, for a period of five years, subject to review after three years.

6. The second period relates from 4-1-1978, the date on which G.O.ms.No.45 aforesaid was issued till the issue of G.O.Rt.No.1146 (Irrigation and Power Department), dt. 11-9-1980. During this period, the Board was in diverse ways expressing its protest about the validity of the directions, issued by the State Government , in purported exercise of its power under Sec. 78-A of the Act. The Board was point out : (1) Tariff rate of 12.2 paise per unit was applied to all other power intensive consumers and if power is to be supplied to the Company at 11 paise per unit, it will be challenged by other power intensive consumers, as violating Aret.14 of the Constitution; (2) Writ Petitions were already pending in the High Court, at the instance of M/s Nava Bharat Ferro Alloys Corporation, questioning the rate of tariff at 11 paise and 12.02 paise, as against earlier supply of power to them at 6/6.5 paise per unit, as per earlier commitment of the Government. Under certain interim directions issued by the High Court, the Nava Bharat Corporation was paying 11 paise per unit. If power is to be supplied to the Company at 11paise, which is not the rate applicable to other power intensive consumers, it may prejudice the interest of the Board in the writ petitions filed by Nava Bharat Corporation; (3) By 1978, the present cost of generation is around 12.67 paise and, as per latest data, the cost of generation came to 13.4 paise and the tariff rate has necessarily to be further raised from the then existing 12.2 paise per unit. The Board, none-the-less , expressed itself that it would not like to have any confrontation with the State Government , and it was prepared to make available the supply, at the rates specified by the State Government under protest. The Board then calculated the estimated loss per year at Rs.15.60 lakhs and requested the State Government to reimburse the Board, with the estimated loss of 46.80 lakhs for three years 1978-79, 1979-80, and 1980-81 or, in the alternative, the Board maybe permitted to adjust the same against the interest payable by it to the State Government. When there was some delay on the part of the Board to give a positive commitment to the Company of its willingness to supply power at 11 paise per unit, the State Government wrote to the Chairman of the Board by letter dt. 26-3-1978 to confirm the willingness of th4 Board, as otherwise the Industrial Development Bank of India was not releasing the funds in favour of the Company and the State Government further expressed itself:

'The issues raised by you as to the subsidies etc., can be settled between the Government and the Electricity Board in due course...................................................'

As if in protest, the Board addressed the letter dt.2-5-1978 to the Company:

'In compliance with the directive issued by the Government of Andhra Pradesh in exercise of its statutory power under Sec. 78-A of the Electricity (Supply)Act, 1948 you are hereby informed that the Andhra Pradesh State Electricity Board is willing to supply to the Calcium Carbide project proposed to be set up by you at Kurnool, H.T.Electricity at 11 paise per unit for a period of five years commencing from the date of first supply electricity which shall not be later than September, 1978 subject to statutory terms and conditions of supply notified by the Board under Sec. 49 of the Electricity (Supply) Act, 1948. The rate is liable to the reviewed after the first three years. The rate now fixed is exclusive of any taxes, duties or levies proposed by the State or Central Government or any other competent authority on the electricity supply or in the context of supply of electricity.'

Simultaneously, the Board while enclosing a copy thereof addressed the Government qualifying the same that the Board had issued that letter subject to the views expressed by the Board in its letter dt. 13-2-1978 (the protest letter). The Board further expressed itself:

'We would add that there is a serious doubt as to whether the Government can, under S. 78-A of the Electricity (Supply) Act, direct the Board to supply electricity to an individual consumer at a particular rate. The Board is commanded not to discriminate between its consumers. The Supreme Court has also ruled that the Board is governed by Art. 14 of the Constitution of India. It is doubtful whether obedience to a directive under Sec. 78-A will serve as a protection against a constitutional embargo. It is desirable that this issue be examined in depth by you although in the present case the Board does not desire to challenger the directive. It apprehends that this procedure is not in accordance with law.'

The State Government, in its letter dt. 30-12-1978, took initially the stand justifying its power to issue such directions under Sec. 78-A of the Act and had taken a rather stiff attitude in requiring the Board to implement the orders already issued by the Government in that regard. The Board did not, however, all the matters to stand at that. It had again brought to the notice of the Government that grant of such concessions to the Company would imply hidden subsidy and would jeopardise the further development of the Board and its activities and brought to the notice of the State Government certain recommendations made by the Administrative Reforms Committee and the Planning Commission and requested the State Government to make good an amount of Rs.81.9 lakhs towards the estimated loss for the three years as in the meanwhile, the tariff rate to power intensive consumers had gone up to 16 paise per unit. The Board, therefore, requested the State Government to pass on the subsidy directly to the industry and permit the Board to charge the industry at the rates applicable from time to time. As this letter of the Board raised several controversies, a meeting was held between the concerned Secretaries of the Government Departments on 11-12-1979. The Secretaries at the meeting agreed in principle that in such cases in future, instead of giving any concession in the power tariff as indicated by the Industrial Development Bank of India, in favour of any industry, at attempt should be made to establish the viability of the project and the commercial return and the capacity of the industry to repay the loan. This meant that the State Government have decided not to commit itself in future in any manner, in favour of the financial banks, regarding the rate at which power would be supplied to the industry. So far as the Calcium Carbide Industry (the writ petitioner) is concerned, the meeting decided that the power tariff could be revised and brought on par with the prevailing tariff of the Board and the Industries Department was directed to pursue the matter further with the Industrial Development Bank of India before necessary orders can be issued revising the tariff. The decision was hen taken that in the event the tariff rate could not be revised and the existing commitment should be honoured, the State Government should grant by way of subsidy the amount lost by the Board (by this time the existing tariff rate to power intensive industries had gone up to 21 paise per unit.) The Industries Department was directed to provide in its budget the amount that would have to be paid to the Board, on account of subsidy. The Company had meanwhile established its factory and requested the Board to commence supply of energy by the first week of May, 1980.The Board wrote to the State Government in April 1980 for issue of orders before the end of April, 1980, for enabling the Board to bill the consumer at power intensive tariffs prevailing from time to time. The State Government was last reminded about this matter by the Board's letter dt. 17-7-1980 and we then have G.O.Rt.No.1146, dt. 11-9-1980. In terms thereof, the State Government , still professing to act under Sec. 78-A of the Act, directed the Board.

'to extend the power tariff of 11 paise plus central excise together constituting 14 paise per unit till 31-3-1981 and that thereafter the normal power intensive tariff as applicable to other consumers from time to time shall be applicable to M/s.A.P.Carbides Limited, Kurnool, provided the Company agreed to revise the agreement accordingly. The Andhra Pradesh State Electricity Board shall take action to obtain revised agreement in the light of the above from Ms. A.P.Carbides Limited, Kurnool, and release supply immediately so that the unit could go into trial production without delay.'

7. The third period relates to the events which tool place between 11-9-1980 the date on which the aforesaid G.O.Rt.No.1146 was issued and G.O.Rt.No.1798, Irrigation and Power (Pr.II) Department, dt. 29-12-1981 was issued. During this period, the Company entered into the first agreement dt. 16-9-1980 with the Board. Clauses 9 and 9-A of this agreement become material in this context:-

'Clause. 9: Obligations of Consumer to Pay all charges levied by Board.

From the date this Agreement comes into force, we shall be bound by and shall pay the Board maximum demand charges, energy charges, surcharges, meter rents and other charges, if any, in accordance with the tariff applicable and the terms and conditions of supply prescribed by the Board from time to time for the particular class of consumers to which we belong, subject to the provisions of Clause 9-A mentioned hereunder in respect of energy charges.

9.A: We undertake to pay for the power supply to our above mentioned factory at the rate of 11 paise plus central excise together constituting 14 paise per unit till 31-3-1981 and thereafter normal power intensive tariff as applicable to other consumers from time to time shall be applicable to our factory also which has been agreed to by the Board pursuant to the directive of the State Government in G.O.Rt.No.1146, dt. 11-9-1980 under sec. 78-A, Electricity (Supply) Act. The above special tariff is subject to a monthly minimum payment computed at the aforesaid rates on 408.325 units per KVA of contracted or recorded demand whichever is higher.'

The power was supplied with effect from 19-9-1980 onwards as a consequence of which, in substitution of the aforesaid agreement dt.16-9-1980, the Company entered into the second agreement dt. 13-11-1980, which contained identical terms as in the first agreement. The State Government in its letter Irrigation and Power Department dt. 15-9-1980 requested the Board to work out the loss of revenue which the Board might suffer till 31-3-1981 and intimate the figures so that the subsidy payable to the Board by the Industries Department could be provided for in the budget. The Board accordingly in its letter dt. 23-12-1980 requested the State Government to make a tentative budgetary provision for Rs.40,39,569.09 p. the figure worked out till 31-3-1981 on minimum consumption charges subject to the right of the Board to claim a larger amount by way of loss of revenue if the actual consumption is above the minimum consumption. After 31-3-1981, the Board went on reminding the State Government to reimburse the Board in a sum of Rs.40.40 lakhs. The Board disconnected the power supply to the Company on 29-4-1981 for non-payment of certain amounts due by the Company. Thereafter, the Board began to claim form the Company every month various amounts towards minimum charges due to the Board, in terms of the agreement. By the end of December 1981 such arrears came to about Rs.2,54,09.830.15p. There was some correspondence during this period between the Company on the one hand and the A.P. Industrial Development Corporation and the State Government, on the other hand, after considering which, the State Government issued G.O.Rt.no.1798, Irrigation and Power (Pr.II) Department, dt. 29-12-1981, the material portions of which are:

'2. It has been brought to the notice of Government that during December 1980, M/s A.P.Carbides Limited, got into difficulties and re-started its operations in March, 1981. Meanwhile, the Andhra Pradesh State Electricity Board disconnected power supply on 29-4-1981 to the above Company for non-payment of outstanding electricity dues. The Company, being a joint venture, the Andhra Pradesh Industrial Development Corporation represented to Government about the cost overrun of this unit and indicated that the Financial Institutions would not be in a position to finance the Project overrun, if the concessions are not extended to this unit, at least for the initial period of three years. This position was examined by the Power Tariff Committee at its meeting held on 16-10-1981 under the Chairmanship of the Chief Secretary to Government. On a further representation received form the Andhra Pradesh Industrial Development Corporation, the Government have re-examined the whole matter.

3. In modification to the orders issued in G.O.Rt.No.45, Irrigation and Power Department dt. 4-1-1978 and G.O.Rt.No.4-1-1978 and G.O.Rt.No.1146, Irrigation and Power Department dt. 11-9-1980, the Government of Andhra Pradesh, under S. 78A of the Electricity (Supply) Act, 1948, hereby direct that the Andhra Pradesh State Electricity Board shall extend the following concessions to M/s A/P/Carbides Limited, Kurnool, and incorporate in the agreement:

(i) Provision of power supply at 18 paise, 19 paise, and 20 paise per unit for the first, second and third year respectively, from the date of commissioning of the unit (normal tariff to be charged form the 4th year onwards):

(ii) Extension of the period of agreement for 5 years from the date or reconnection of power;

(iii) Acceptance of consumption charges in terms of concessional rate a proposed at item (I) above to be for only 2 months. The amount of Voluntary Loan Contribution paid already on behalf of the Company to be adjusted towards consumption deposit; and

(iv) (not material).'

Pursuant to this G.O., the Company ultimately entered into the third agreement dt. 4-6-1982 with the Board. The most relevant circumstance to be noticed is that, in this agreement, Clause 9-A which was appearing in the prior two agreement is singularly absent. Clause 9 of the agreement obligates the Company to pay to the Board, at the prevailing tariff rates. Certain clarifications were earlier sought by the Board, regarding particular periods for which the rates set out in G.O.Rt.no.1798, dt.29-12-1981 should be applicable. The Board first asked the State Government by its letter dt, 16-1-11982 to make good Rs.308.34 lakhs. Which is the loss of revenue the Board had suffered and raised the presumption that the G.O.Rt.No.1798, dt. 29-12-1981 should be implemented from 19-9-1980, the date on which the plant was commissioned. The Government, in its letter dt. 11-1-1982 appears to have taken the stand that it was the intention of the Government to bill the consumption only on actuals and not on the basis of minimum consumption charges. The Board then asked the State Government to suitably modify the G.O.to that effect and issue a revised directive clarifying:

(i) 'Date of applicability of the rates of 18, 19,20 paise per unit and date from which normal tariff is applicable;

(ii) Whether minimum charges are leviable till the date of reconnection or only actual consumption is to be billed at the above rates....................'

There was a further letter dt. 11-5-1982 from the State Government to the Board, direction the Board to restore the power supply immediately to the Company at the normal tariff and terms applicable to all power intensive units and as regards the collection of arrears from the company.'

'The Board is informed that this issue may be examined and decided in the light of whatever decision Government may take after receipt of the recommendations of the Committee mentioned in para 3 above and that further orders of the Government in the matter may be awaited.'

What was stated in para 3 of this letter was that the Government, by G.O.ns.No.294 dt. 30-4-1982, constituted a Committee to formulate a policy in regard to the concessions to be extended in regard to power tariff and terms of supply to enable industrial units to tide over financial crisis or to rehabilitate any unit which has become sick. Shortly thereafter by letter dt. 31-5-1982, the State Government, in modification of their earlier letters dt. 11-1-1982 and 11-5-1982, directed:

'In addition to the charges for the actual power consumed till the date of reconnection, the A.P.State Electricity Board shall also charge to M/s A.P.Carbides Limited, Kurnool, the interest on the total investment made by the A.p.State Electricity Board for earmarking supply to unit minus Voluntary Loan Contribution amount deposited by the Company. The orders issued in the G.O.third cited (G.O.Rt.No.1798 dt, 29-12-1981) are hereby revised:

If, for any reason, it is not possible for the Government to reimburse the loss if any incurred by the A.P.State Electricity Board in extending the above concessions during the year 1982-83 itself, it has been agreed, in principle, that the losses if any incurred by the A.P.State Electricity Board in extending the above concessions will be reimbursed by Government to the Electricity Board in a year or two.

The Board is requested to take necessary further action in the matter immediately and restore power supply to the industry.'

By a letter dt. 2.6.1982, the Board informed the Government that it would charge the consumer for actual energy at the rate stipulated with effect from 19-9-1980, but that after 18-9-1983, however, the Board would charge the consumer at the power intensive tariffs notified by the Board from time to time and that having regard to the conditions of the contract governing the repayment of the voluntary Loan Contribution, the consumption deposit payable by the consumer may, therefore, be directed to be deposited immediately. It was also stated that the Board proposes to charge the Company on a provisional basis, interest at 12% on Rs.582 lakhs being the proportionate cost of generation and transmission and service like works and requested the Government to reimburse the Board in a sum of Rs.280 lakhs or adjust the same against the interest payable by the Board to the Government. It was presumably because of these matters still to be decided between the Board and the Government, nothing was stated in the agreement dt. 4-6-1982, regarding the concessional rates of tariff. Clause 9-A which was existing in the earlier agreements, has been altogether omitted. Pursuant to the agreement dt. 4-6-1982, supply of electricity to the Company was resumed on 5-6-1982.

8. The period from 5-6-1982 till 12-6-1983 constitutes the fourth and last of the periods. During this period, the Board was demanding the Company to pay a sum of Rs.107 lakhs towards interest charges over the period 19-9-1980 to4-6-1982, the period during which the Board agreed to charge the Company on actuals for the electricity consumed by the Company, at the rates varying from 18 paise, 19paise and 20 paise. The Company was questioning this claim made by the Board towards interest and the Board furnished to the Government details of calculation as to how the Board had raised another dispute that the concessional tariff rates have to be worked out from 5-6-1982, the date on which electricity supply was restored and not from 19-9-1980, the date on which the unit was commissioned. The company was requesting the State Government, by its letter dt.6-9-1982, to clarify this point and adjudicate on the other disputes. The matter was pending consideration with the Government till 10-6-1983 on which date the Government, in suppression of all the earlier G.O.'s issued G.O.Rt.No.62, Energy Environment, Science and Technology (Pr.II) Departmental, dt. 10-6-1983, which is impugned in W.P.No. 5155/83. In this G.O. the Government had expressed itself:

'The Government have reviewed the entire position and decided that there would be no discrimination in favour of any individual unit or industry and that the Government will not on account of electricity dues subsidise any industry, and that the Andhra Pradesh State Electricity Board is free to exercise its powers to effect recoveries and dues from any consumer including M/s. A.P.Carbides Limited, Kurnool.'

9. An errata was issued on 15-6-1983 to read the aforesaid G.O.as G.O.Rt.No.142 instead of G.O.Rt.no.62. It was in the wake of this G.O.that the Board had disconnected power supply at 3 a.m. on 12-6-1983 for non-payment of interest charges of Rs.107 lakhs from June 1982 onwards.

10. The Board by its letter dt. 20-6-1983 informed the Company that it was owing to the Board a total sum of Rs.4,24,08,637-40 p. towards arrears due for consumption charges. The Board also demanded the Company to make a cash deposit of Rs.92,90,400/- towards consumption deposit charges and a further amount of Rs.100/- towards re-connection fee. 12 data sheets, one supplemental bill, two statements and a revised demand for consumption deposit with data sheet were also enclosed to this letter. The Company was further requested to note that the Board would claim separately additional charges for belated payment of the arrears due for el4ectricity charges.

11. The Committee appointed pursuant to G.O. Ms.No.294 dt. 30-4-1982, met on 10-5-1982 and 18-5-1982. The said Committee consisted amount others of the Chairman of the Board and Secretaries of the Industries Department; Finance; and Energy, Environment, Science and Technology Departments of the State Government. They went into the question of granting power tariff concessions to sick industries. A copy of their report is made available to us. It is to be seen from that report that the Board was taking the stand that, even in fixing tariffs to industries, there were certain in fixing tariffs to industries, there were certain built-in concessions and it would be very difficult for the Board to agree t any further concessions. The Board was, therefore, asserting that, if any further relief is given to the sick industries such relief may be made available from allocations made, in favour of the Industries Department. The Committee, however, felt that the sick industrial units were also promoted or assisted by organisations like the A.P.Industrial Development Corporation, A.P.State Finance Corporation and that a co-ordinated team effort, on the part of the concerned departments or agencies of the Government is called for and that it would be not only necessary but, in the fitness of things, that some concessions are extended to these sick units by the Board also. At the same time, the Committee felt that it would be unrealistic to expect the Board which is supposed to function on commercial lines to bear the brunt of the entire loss. A scheme was formulated to classify the sick units into different categories and a standing committee was recommended to be entrusted with the responsibility of scrutinising in detail the cases of each sick industry and propose the power tariff concession that should be extended to each of them. It is in the background of this report and the various other facts which were set out supra that we have to consider the various points raised before us in these writ appeals.

G.O.Rt.No.62 dt, 10-6-1983 - Prospective or Retrospective:

We are in agreement with the learned single Judge that the aforesaid G.O.(it is in fact G.O.Rt.no.142 after the errata was issued) is prospective and not retrospective. The relevant file, which resulted in the issue of the aforesaid G.O.was made available to us. It is evident from the correspondence that had preceded the issue of the G.O>that till then the Board was billing the Company, at the concessional tariff of 18/19/20 paise, as provided for in G.O.Rt.No.1798 dt. 29-12-1982. That G.O>directed the Board to incorporate in the agreement the various concessions specified therein. In the agreement dt. 4-6-1982, no doubt, no specific reference to those concessions was made by way of providing a separate Clause 9-A, as it was usual for the parties when the prior agreements came into existence, but the absence of a separate Clause 9-A, in our view, is immaterial. Such absence can neither obscure the reality nor enable the Board to submit that, because of the absence of such special Clause 9-A, the Board became entitled to bill the company at the normal rates of tariff, applicable to power intensive consumers. We cannot overlook the admitted fact that, notwithstanding the absence of a special Clause 9-A, the Board has been consistently billing the Company, at the concessional rate of tariffs mentioned in G.O.Rt.No.1798.

12. We may, in this context, refer to a passage from Chitty on Contracts (23rd Edition , page 581):

'Where the agreement of the parties has been reduced to writing and the document containing the agreement has been signed by one or both of them, it is well established that the party signing will be bound by the terms of the written agreement whether to not he has read them and whether or not he is ignorant of their precise legal effect. But it by no means follows that the document will contain all the terms of the contract, and sometimes contracts are made by word of mouth or in documents which have not been signed by the parties affected. In such cases, it will be necessary to prove which statements, or stipulations, were intended to be incorporated as terms of the contract.'

13. To a similar effect, are the observations made in Halsbury's Laws of England (4th Edition, Volume -9. Para 285 page 163):

'Even where the assent of the parties to an agreement is signified in some manner other than on a document containing or referring to its terms, it is still possible for the terms contained in a document to become part of the agreement between the parties. That document may even be the terms of another contract between the parties, or of a draft agreement between them, or of a contract between one of them and a third party. All that is required is a clear intention on the part of all parties to the agreement that the terms contained in a document to become part of the agreement between the parties. That document may even be the terms of another contract between the parities, or of a draft agreement between them, or of a contract between one of them and a third party. All that is required is a clear intention on the part of all parties to the agreement that the terms contained in that one document be incorporated into their agreement.'

Again at para 287 (page 165), it was stated:-

'Where expressly or by implication written terms have been incorporated into an agreement, the general rule is that extrinsic evidence may not be given to contradict or vary its effect. Nevertheless, such evidence may be introduced to cure uncertainty, and is always admissible to show any of the following matters:

(1) that the written terms were not intended to express the whole of the agreement between the parties, as where there is an overriding oral promise, or the written agreement is subject to an oral condition precedent;

(2) that the party putting forward the document has misrepresented the contents.'

14. To a similar effect the observations made in Firm Moti Lal v. Bombay Port Trust Railway AIR 1939 All 649 and United Bank of India Ltd. v. N.S.Bank : AIR1962Cal325 . Taking a comprehensive view of the circumstances which resulted in the agreement dt. 4-6-1982, we are clearly of the view that there was mutual agreement regarding the tariff rates as between the Board and the Company though subsequently there arose slight disputes as to the periods, during which such rates should be operative. Those rates are the result of directions given by the State Government under Sec.78-A of the Supply Act. Having given such directions, it is not open to the Government to withdraw such concession retrospectively and enable the Board to realise the amount, due to it from the company, in accordance with the tariffs normally charged by the Board from power intensive industries.

15. In Madras Aluminium Co.ltd. v. Tamil Nadu State Electricity Board C.S.No.308 of 1977, D/- 22-10-1984 the question arose whether, in respect of power supplied under an agreement to supply the same on concessional rates, the Board was competent to claim a higher tariff than the one, which the consumer was previously paying . The Division Bench of the Madras High Court held that the Board cannot claim after the lapse of some years enhanced tariffs from an anterior date. So far as the A.P>Carbides is concerned, there is an agreement understood alike by the Company, the Board and the Government that the tariffs would be charged for at concessional rates. It is not, therefore, open to the State Government to withdraw such concessions with retrospective effect. It can do so at best only from 10-6-1983, the date of G.O.Rt.No.62.

16. It is submitted on behalf of the Board that going by the terms used in G.O.Rt.No.62, the Government made it clear to the parties, namely, the Board and the Company that the Board is free to charge all its dues from the Company. In the view we have taken that the Government has no such power to withdraw a concessional tariff retrospectively, it makes no difference even if the Government used the language in the G.O.suggestive of giving it a retrospective effect. The necessary consequence of this finding will be the dismissal of W.A.No.872/84 preferred by the Board and W.A.No.905/84 preferred by the State Government.

17. Competence of the State Government to issue Directions under Sec. 78-A of the Supply Act: Under Sec. 78-A of the Supply Act, the Board, in the discharge of its functions, shall be guided by such directions on questions of policy as may be given to it by the State Government. The State has got manifold functions including the giving of encouragement to entrepreneurs to set up industries either in the private sector, public sector or joint sector. In the initial periods, the industries would be requiring supply of power at concessional rates. If the matter was to be left to the Board, the Board may not be in a position to offer any concessions to such entrepreneurs. It is clear that the Government steps in and gives directions to the Board as may be necessary to supply power for those new industries at concessional tariffs, during the formative years. Setting up of heavy industries would generate not only more employment but also more returns to the State by way of commercial taxes, excise duties etc. The State would also be genuinely interested in locating some industries in backward areas with a view to develop that part of the State and add to the economic development of such backward region. To encourage the setting up of such industries in such backward areas, the State Government has to give some inducements, which could persuade entrepreneurs to set up their industries in such backward areas. In our view, the fixation of tariffs is also a longer policy decision which the Board can effectively intervene by acting under Sec. 78-A of the Supply Act and in giving necessary directions to the Board.

18. In one of the early cases which came up before this Court in W.A.No.359 of 1974 and batch, this question arose before a Division Bench consisting of Obul Reddi, C.J. and Lakshmaiah, J. whether a certain decision taken by the State Government on12-4-1973was a policy decision. There was a difference of opinion between the two learned Judges and the matter was subsequently referred to Sambasiva Rao, J. (as he then was). Obul Reddi, C.J.held:

'Sec.49(3) does not prevail over the powers vested in Government by Sec. 78-A. it is open to the Government to lay down its policy in the matter of fixation of tariff rates; but nay policy decision of its must be in consonance with the requirements of sub-sec. (3) of Sec. 49. The requirements of sub-sec.(3) of S. 49 must be satisfied.'

Sambasiva Rao, J.

'In this connection the power of the Government to issue directions under Sec. 78A of the Act on questions of policy should also be borne in mind. Once a direction is given on a policy matter, which must necessarily include in its ambit the rates that should be charged from consumers, the Board is bound to be guided by them,'

19. In M/s Nava Bharat Ferro Alloys Ltd. v. A.P.S.E.B.W.P.No.4405 of 1977, D/-5-12-1980 a Division Bench of this Court expressed itself:-

'The location of the plant had no bearing on the question of granting concessional rates, which is really a policy decision to be taken in a larger context.'

20. A Division Bench of the Madras High Court in Madras Aluminum Co.Ltd.case (supra C.S.No.308 of 1977, D/-22-10-1984) observed:

'Under Sec. 78-A of the Supply Act, in discharge of its functions, the Board shall be guided by such direction on questions of policy as may be given to it by the State Government. Since thedischarge of its functions include agreeing to supply at a special rate for a specified period of time, the Government could give direction under this section to the Board in regard to the rate of supply with reference to a case falling under Sec. 49(3) if it was considered to be a policy matter.'

21. Reliance is, however, placed on behalf of the Board on a decision of another Division Bench of this Court in M/s.Poddar Project Ltd. Multi Steels v.A.P.S.E.Board : AIR1982AP189 to contend that the fixation of tariffs is not a major question of policy and the State Government has, therefore, no right to issue any direction under Sec. 78-A of the Supply Act. On going through the said decision, we find that the earlier Division Bench decisions of this Court, referred to above were not cited in Poddar's case (supra) and the Division Bench proceeded on the footing that, because the G.O> did not expressly refer to be a directive under Sec. 78-A of the Supply Act, it cannot be construed as a direction issued by the Government under Sec. 78-A. We are of the opinion that the Poddar's case (supra) stands to be distinguished on the further ground that there pursuant to the directions given by the State Government under Sec. 78-A no agreements were entered into between the Board and the consumer whereas with regard to the A.P.Carbides, whenever ,a direction was given by the State Government, the Board though expressing a protest was, none-the-less, entering into the necessary agreements with the A.P.Carbides agreeing to supply power at the tariffs stated by the State Government.

22. Mr. Chandrasekahra Rao relied on A.M.mani v. State Electricity Board AIR 1968 Ker 76 and A.P.S.E.Board v. N.R.Rao : AIR1969AP328 , to submit that the board is an autonomous corporation, having its own statutory existence and it is not open to the State Government to direct the Board to function, in any particular manner. In the former case, the question related to the age of retirement of the employees of the Board and, in the latter case, the dispute related to the right of the Board to have its own policy of making certain appointments. These two cases do not, in our view, help the Board to contend that the State Government cannot act under Sec. 78-A and direct the Board to fix a particular tariff in respect of an industry recently started or to revive a sick industry.

23. Wade in his book on Administrative Law (5th Edn.at page 143) observed:

'There was to be a distinction between board policy and day-by-day administration, the former being the sphere in which the Government might intervene ad the latter belongs the sphere of independent self-management.'

At page 145, under the heading 'Ministerial Control' the learned author stated:

'The nationalising statutes listed above contain many differences, but a common pattern can be seen throughout. The provisions are that the power of appointment and removal of members of the corporation is vested in the Crown or in a minister, and that the minister may give to the corporation 'direction of a general character.' This formula, vague though it may be , is intended to express the distinction between the control over the general policy in the public interest, for which some minister is responsible to parliament, and the ordinary business management of the industry, in which the corporation is supposed to be free from interference..........'

'To judge by the small number of formal directions, however, would be highly misleading. In reality ministerial interference is frequent and pervasive. The important financial powers can be exercised informally; and in the background are the more generally powers, which cast a deep shadow over the corporations' precarious independence. The minister has a powerful lever in his control over the appointment and tenure of the chairman and members. A chairman who is appointed for short term, perhaps three years, and who hopes for renewal of his appointment, is in no position to resist pressure from the minister, however informally applied, the supervising ministers are in constant touch with the corporations and they exercise much influence merely by holding the trump cards, without having to play them. Chairman feel unable to act as public spokesmen for their industries, in case they may offend the minister.................................................................Chairman complain (usually after retirement) that the corporations have no genuine commercial independence and no freedom to follow long-term policies, since they are under constant political pressure and ministers do not look beyond the immediate crisis of the moment. The commercial independence that the corporations were intended to enjoy has therefore failed to materialize. They have fallen prey to political and bureaucratic influence. This is objectionable constitutionally as well as managerially, since ministers have exercised a great deal of power without accounting for it publicly and without giving Parliament the opportunity to criticise................................................................A minister himself told the Select Committee that there was 'an appalling record of private arm-twisting' in the relations between ministers and corporations chairmen. With a view to bringing the situation into the open the Government in 1978 proposed that ministers should be given power to issue specific as well as general directions to the corporation, but that the directions should be laid before Parliament at the time and, in suitable cases, made subject to affirmative resolutions; and that were directions led to financial loss, the corporations should be compensated. The Select Committee welcomed these proposals, but before action was taken on them there was a change of government and the emphasis shifted to denationalisation.'

The above quoted passage has been, in our view, a realistic presentation of the manner in which the autonomous statutory corporations function in reality. We are of the opinion that the State Government has the necessary power to have given direction to the Board, regarding tariff rates at which the Board should make available the supply to A.P.Carbides. Date of commissioning of the unit: 19-89-1980 or 5-6-1982.

24. As appears from the Board's administration report 1980-81 (page 9) the extra H.T. sub-station meant for supplying H.T. power to A.P.Carbides was commissioned on 12-9-1980. There is no dispute that the unit was first commissioned on 19-9-1980 at which point of time the Board and the Company were governed by the terms and conditions of the agreement dt. 16-9-1980, later substituted by the second agreement dt. 13-11-1980. The Company had later its own other difficulties as a consequence o which the unit could not be run and the Company fell into arrears of the electricity dues. The Board had, therefore, disconnected the power supply to the Company on 29-4-1981 and began to claim various amounts due to it towards minimum charges in terms of he aforesaid agreements dt. 16-9-1980 and 13-11-1980. When, therefore, the Government issued G.O.Rt.No.1798 resumption of power supply at varying rates 18/19/20 paise for the first, second and third year respectively from the date of commissioning of the unit. The supply of electricity to the Company was against resumed on 5-6-1982, the date on which reconnection was given.

25. One of the controversies between the Company and the Board relates to the meaning to be attached to the words.'commissioning of the unit'. The learned single Judge did not resolve this controversy,but merely stated that it is for the parties to approach a Court of law and relief cannot be given to either in these proceedings. The Additional Advocate-General had naturally submitted that if this dispute could not be resolved in the writ petition, the learned single Judge should have dismissed W.P.no.5157/83, instead of allowing that writ petition directing the Board to supply power in terms of the agreement dt.4-6-1982 entered into between the parties which agreement, according to the learned single Judge, had also taken into account the concession granted in favour of the Company in terms of G.O.Rt.No.1798 dt 29-12-1981. We are not inclined to accept such an extreme contention. Moreover, it is represented to us that the Company has already instituted a suit in that regard and the same is now pending. So we refrain from expressing any opinion on the question . So Writ Appeal No.837 of 1984 must also fail.

26. Minimum consumption charges and actuals:

The Company, which went into production on 19-9-1980, subsequently got into difficulties and was unable to pay the Board the amounts due to it as current consumption charges. A study of the statement of account reveals that by the end of April, 1981 the Company was due to the Board towards such consumption charges the balance amount of Rs.16,46,058.30 p. even after adjusting a portion of the consumption deposit, initially made by the Company. It is common ground that disconnection made on 29-4-1981 was for a proper reason,namely, the failure on the part of the Company, in paying the arrears of current consumption charges due by then to the Board.

27. Conditions Nod.2.22;33 and the terms and conditions of supply provide for the necessary liability of the consumer to pay the minimum charges. By the date 5-6-1982 when power supply was restored, the Company was faced with a demand from the Board in a total sum of Rs.2,82,34,933.35p. towards the minimum consumption charges.

28. The law is settled upholding the right of the Board to demand payment of minimum charges due to it, in terms of the agreement, entered into between the Board and the consumer. The reason is that, once the Board enters into a contract with a consumer, it would be necessary for the Board to generate such quantum of electricity as would be sufficient to meet the demand of all its consumers. For that purpose, the Board would have to incur recurring expenditure, which cannot be cut down by the fall in the demand of electricity by any of its consumers. The expenditure required for maintaining the supply to the consumer has, therefore, to be incurred, irrespective of whether the consumers actually utilised the energy generated by the Board or not. In order to ensure that this supply is made without any interruption and to enable the Board to maintain such supply in an efficient and economical manner, it would be necessary for the Board to collect the minimum charges. It is enough, if reference is made to Amalgamate Electricity Co.Ltd. v. Jalgaon Municipality : [1976]1SCR636 ; M/s Hyderabad Vanaspathi v. A.P.S.E.B.(1977)2 APLJ 358 and Mukand Iron & Steel Works v. M.S.E.Board : AIR1982Bom580 .

We have necessarily to keep in view this liability which the Company had incurred during that period, towards minimum consumption charges with a view to appreciate certain events which had taken place subsequent to the restoration of electricity supply made to the Company on 5-6-1982.

29. On a representation made by the Company to the Government, the Government, in its letter dt. 11-1-1982, informed the Board that it was the intention of the Government that the Board should bill the Company only on actuals and not on the basis of minimum consumption charges. This decision taken by the Government was, therefore, involving an amount of about 3 crores.

30. Notified tariffs and concessional tariffs:

Originally by G.O.Ms.No.45 dt. 4-1-1975 the Board was directed to supply electricity to the Company at the rate of 11 paise. Subsequently by G.O.Rt.No. 1146 dt. 11-9-1980, the Government directed the Board to supply electric power to the Company at the rate of 14 paise effective till 31-3-1981 and thereafter to charge the normal power intensive tariff applicable to other consumers. It was shortly after 31-3-1981 that the Board disconnected the power supply on 29-4-1981, at a time when the Company had to pay to the Board the normal power intensive tariff as applicable to any other industry. The A.P> Carbides became a sick industry and it was with a view to revive that industry that some more further concessions were granted in favour of the Company directing the Board to supply power at the concessional rates of 18/19/20 paise. We have earlier referred to the periods during which those rates should be applied. The normal power intensive rates prevailing at that time were '11 paise immediately prior to 1975; 12.2 paise in 1977; 16 paise in 1978; 18.5 paise in September 1979; 21 paise in November 1979; 25 paise in 1980; 32 paise in 1981; and 45 paise in 1984'. The correspondence we have earlier referred to left no doubt that the Board was refusing to make the supply available to the A.P.Carbides at any rate less than the rates aforesaid and the Government assured the Board that it would compensate the Board in all amounts which the Board would suffer in making the supply available to the A.P.Carbides as per directions given by the Government under Sec. 78-A of the Supply Act.

31. From the file relating to G.O.Rt.No.142 which is made available to us, it is noticed that the total loss sustained by the Board was arrived at Rs.5.47 crores(vide page 69 of the file). This loss was apportioned as between the consumer at Rs.1.07 crores and as against the Government the balance of Rs.4.40 crores. It is thus to be seen that the difference in charges between the notified tariffs and the concessional tariffs allowed in favour of A.P.Carbides is about Rs.2.47 crores. The Government had so placed itself as to compensate the Board in the aforesaid sum of Rs.2.47 crores. The Board was repeatedly demanding the Government to pay that amount or at least permit the Board to deduct those amounts from the interest which the Board had to pay to the Government on account of loans advanced by the Government to the Board. The Government was assuring the Board that it would make available those amounts to the Board in a year or two if not immediately and the Industries Department was addressed to make the necessary provision in its budget.

32. Interest on the total outlay:

When, therefore, the liability of the State Government to compensate the Board was mounting up, the Government directed the Board by its letter dt. 31-5-1982 to charge the Company the interest on the total investment made by the Board for earmarking supply to the unit. By the same letter, the Government had also suggested that the voluntary loan contribution amount deposited by the Company may be deducted from such interest. It is not disputed that the voluntary loan contribution of Rs.77 lakhs was initially made by the A.P.I.D.C. on behalf of the Company, and that such deposit was carrying interest at 6% 38.5 lakhs being 50% of such deposit, was repaid in March, 1982. In terms of the conditions governing such voluntary loan contribution, the balance still remaining due need be paid only in May, 1983. The Board took the stand that, as the voluntary loan contribution was not paid by the Company but by the A.P.I.D.C. it is not possible to appropriate that amount towards the interest on the total investment made by the Board for earmarking the supply. The Board has furnished the particulars that the total investment for earmarking such supply came to Rs.5.82 crores and the interest at 12% for the period 19-9-1980 to3-6-1982 has come to Rs.1.07 crores as against the Company's liability to pay the Board to total sum of Rs.3.84 crores towards minimum charges.

33. The Board was repeatedly demanding the Company during the period June 1982 to January 1983 to make the payment of Rs.1.07 crores. The Company never responded to that demand nor raised any protest about the correctness thereof during this period. Subsequently, however, the Company began to dispute the correctness of the total amount spent by the Board for earmarking the supply and also the rate of interest. We have given the necessary opportunity to the learned Counsel appearing for the Company to produce any correspondence prior to January, 1983 when the Company raised any protest regarding this demand made by the Board for the payment of Rs.1.07 crores. We were told that no such record is available. We are clear in our minds that there was an understanding between the State Government and the Company that the Company cannot always depend on the favour of the State Government for getting power supply at rates less than the tariffs applicable to other similarly placed industries. The suggestion would, therefore, appear to have been made to the Company to bear at least a portion of the total loss which the Board had suffered and which the Government had undertaken to pay the Board. If only the Company had paid the Board this amount of Rs.1.07 crores, all these disputes would not have surfaced at all. From the file relating toG.O.Rt.no.142, we have noticed that some questions were put in the Legislative Assembly enquiring about the losses caused to the Board in extending power supply to A.P.Carbides. It was after such questions were put, the then State Government constituted a Committee to lay down the general policy to be adopted for extending concessional power tariffs in favour of sick units. These disputes stood unresolved till 16-5-1983 by which date,there was a change in the complexion of the political party in power. By that date the Company did not pay the amount of Rs.1,07 crores and the Board was pressing the Government to compensate for the loss it had sustained on account of making the power available to A.P.Carbides. The Government had, therefore, taken a Cabinet decision, doing away with any concessions on account of electricity dues in favour of any industry.

34. We have earlier stated that G.O.Rt.no.62(142) is only prospective. So far as the Board's rights against the Company are concerned, the Board could only enforce its claim against the Company to recover the aforesaid sum of Rs. 1.07 crores due to it by way of interest. The Board cannot seek to recover any amounts as minimum current consumption charges for the period from September 1980 to June 1982.

35. We accordingly fix the Company's liability to the Board at the aforesaid amount of Rs.1.07 crores, leaving the Board and the Government to adjust their disputes between themselves regarding the balance of the amounts which the Government had obliged itself to pay the Board on account of making the electric supply available to the Company at concessional rates. The records produced before us do not reflect as to whether the balance of Rs.38.5 lakhs is still available with it as voluntary loan contribution and whether it was returned back to the Company or A.P.I.D.C. While, therefore, directing the Company to pay the aforesaid sum of Rs.1.07 lakhs to the Board, we also give the corresponding direction to the Board to deduct any amount which may still be available with it out of the voluntary loan contribution amount inclusive of any interest which may have accumulated thereon.

36. Consumption Deposit:

From the papers made available to us , it appears that the Company deposited only a part of the initial consumption deposit which the Company was required to make, but even such part deposit was appropriated by the Board towards part satisfaction of current consumption charges by the end of April 1981. From about August 1981; the Board was calling upon the Company to deposit the amounts of Rs.67,76,800/- towards the consumption deposit. Even regarding this matter, the Government, while issuing G.O. Rt.No.1798 dt. 29-12-1981, directed the Board to accept as consumption deposit charges for two months instead of three months, the charge to be calculated at the tariffs specified in that G.O. In terms of that G.O., the Government extended another concession as well in favour of the Company directing the Board to adjust towards such consumption deposit any amount paid by the Company towards voluntary loan contribution. In view of the directions we have given regarding the adjustment of such voluntary loan contribution towards the interest payable by the Company to the Board, no amount will be available from out of the voluntary loan contribution to be adjusted towards the consumption deposit. With the increase in the tariffs, the Board was demanding the Company to make a deposit of Rs.92,90,400/-. The calculation -sheet indicating the manner in which the said amount has been arrived at, is filed before us. As appears from such calculation -sheet, the deposit represents three times the average current consumption charges. In K.C.Works v. Secretary, A.P.S.E.B. : AIR1979AP291 , a Division Bench of this Court had, after an exhaustive discussion of the law bearing on the subject, upheld the reasonableness and validity of the Rule,requiring the consumption deposit being made in cash. We are, however, informed that, so far as power intensive industries are concerned, there is a separate Board proceeding requiring such cash deposit to be only for twice the average monthly consumption charges and for the balance of the amount, it was adequate, if the power intensive consumer offered bank security to the satisfaction of the Board, The Board's right to demand the Company to make the cash deposit and offer bank security in the amounts indicated above cannot any longer be questioned. We accordingly direct the Company to make the deposit in cash in a2/3rds share of Rs.92,90,400/- within two months from this date and furnish bank guarantee in favour of the Board within two months from this date for the balance 1/3rd amount.

37. Pursuant to interim directions given by this Court, it appears that the Company deposited a sum of Rs.30 lakhs. In making the cash deposit as now directed the necessary liberty is given to the Company to deduct the said amount of Rs.30 lakhs and deposit only the balance to be deposited in cash in terms of this order.

38. Legality of the demand made by the Board's letter dated 20-6-1983:

By the aforesaid letter the Company was called upon by the Board to pay a total sum of Rs.4,24,08,637-40 Ps. towards electricity consumption charges and also deposit in cash a sum of Rs.92,90,400/- towards the consumption deposit together with a sum of Rs.100/- for re-connection fee. We have earlier dealt with the demand made by the Board relating to the consumption deposit which is a distinct and severable item.

39. The sum of Rs. 4,24,08,637.40ps. is made up of three items: (1) Rs.3,05,80,991-65ps. Claimed as arrears during the period from September, 1980 till the end of May, 1982; (2) Rs.96,85,646.05 Ps. Claimed by way of supplementary bill for the period from June, 1982 till May, 1983; and (3) Rs.21,41,999-70 ps. Claimed as current consumption charges for May, 1983.

40. The first of the aforesaid amounts is claimed as the balance due to the Board consequent on G.O.Rt.no.62 dt. 10-6-1983. According to the Board, it became entitled to claim this entire amount which represents minimum consumption charges payable on par with other power intensive industries. We have held G.O.Rt.No.62 dt 10-6-1983 to be only prospective and not retrospective. It follows that the Board will not be entitled to recover any part of this amount which is attributable to the difference indicated above. The Board will be entitled to recover instead as already found by us the interest of Rs.107 lakhs minus the remaining voluntary contribution deposit.

(The Board is given the liberty to serve a fresh demand on the Company for paying such arrears computed within one month from the date of service of such demand.)

41. The second amount claimed in its letter represents the difference in the amounts calculated on the concessional tariffs and the normal tariffs applicable to power intensive industries. In the view we have taken that G.O.Rt.No.62 dt 10-6-1983 is only prospective, the Board will not be entitled to recover any part of this amount. The demand made in the Board's letter dt. 20-6-1983 for recovering this portion of the amount is accordingly quashed.

42. The Board claimed the sum of Rs.21,41,99-70 ps. At the tariff applicable to other power intensive industries from the Company in respect of its consumption for the month of May, 1983. The Board is entitled to claim the tariff only at the concessional rate of 20 paise per unit for such arrears and not at any other higher rate. The Board is accordingly directed to issue a fresh demand for the current consumption charges for the month of May, 1983, computing the tariff at the concessional rate of 20 paise per unit. The Company made some payments to the Board pursuant to the interim directions given by this Court. The Board is directed to take into account any such amounts paid by the Company in part satisfaction or full satisfaction of whatever claim it has towards the arrears of current consumption charges upto and inclusive of the month of May, 1983. The learned single Judge did not, in our view, properly determine these crucial questions which fell for consideration in W.P.No. 5222/83. It is common ground that whatever amounts were due to the Board as current consumption charges, the Board was serving demand notices against the Company. There is no need for the Board again to serve a fresh demand notice against the Company.

43. It will be relevant in this context to refer to the relevant conditions nos.32,4,32.3 and 28 of the Terms and conditions of Supply which are applicable alike to the petitioners. Those conditions require that there is an obligation cast on the consumer to first pay the amounts covered by the bills under protest, if necessary, and bring to the notice of the local office of the Board if there has been any excess billing made against the consumer. Failure to make such deposit of the amounts demanded, gives a right to the Board to disconnect electric supply. The Company is not, therefore, correct in rushing to the Court without faithfully observing the obligations cast on it in terms of the relevant conditions aforesaid. W.A.Ni.858/84 will, therefore, have to be allowed in part in accordance with the direction as indicated and issued to both the Company and the Board.

44. Disconnection - Legality:

Electric supply was disconnected on 12-6-1983 for the failure of the Company to pay a sum of Rs.107lakhs claimed by the Board against the Company towards interest charges. As to be seen from the letter of the Board to the State Government dt. 14-6-1983, such disconnection was made in pursuance of the orders issued in G.O,Rt.No.62 dt 10-6-1983. The said G.O.never authorised the Board to effect the disconnection. The right to effect disconnection is no doubt available to the Board. Under Condition No.26, the disconnection could be made for non-payment of any amount due to the Board on any account. The amount duetothe Board need not necessarily be on account of arrears of current consumption charges. It can also be for the failure on the part of the Company in making the consumption deposit, as demanded by the Board, Consistent, however with the case of the Board that G.O.Rt.No.62 dt 10-6-1983 has retrospective effect, the Board could not have taken punitive measures by way of disconnecting the electric supply for the non-payment ofRs.1.07 crores as the said amount claimed by way of interest was not payable in terms of the said G.O. The Board could only have collected the difference as arrears of current consumption charges./ As, in this case the Board did not purport to disconnect the electric supply for non-payment of any arrears of current consumption charges or the consumption deposit, we are unable to find any fault with the conclusion arrived at by the learned single Judge that the disconnection was made improperly and in haste.

45. In the result, W.A.nos. 835,837, 872 and 905 of1984 are each dismissed, but in the circumstances, without costs.

46. W.A.No.858/84 is allowed in part, disposing of the said appeal and W.P.No.5222/83 which gave rise to that appeal with the following directions:

(1) The Company do pay to the Board the sum of Rs.1.07 crores within two months from the date of this order.

(2) The Board shall appropriate towards the aforesaid amount any amount available with it as voluntary loan contribution,inclusive of interest payable thereon, in accordance with the terms on which such voluntary contribution was deposited.

(3) The Board shall also give credit to the amount paid by the Company towards interest in pursuance of the interim directions given by this Court in these proceedings.

(4) The Company shall deposit within tow months from this date a 2/3rd share of Rs.92,90,400/- and furnish bank guarantee in favour of the Board within two months from this date for the balance 1/3rd amount.

(5) The Board shall appropriate the sum of Rs.30 lakhs paid by the Company under this head in terms of the interim directions granted by this Court and the Company shall, therefore, be entitled to the credit of the same towards the aforesaid 2/3rd share of the amount.

(6) The Board is directed to serve afresh bill for the current consumption charges for May, 1983 computing the tariff at the rate of 20 paise per unit and serve separate bill against the Company for the payment of the said amount.

(7) The Company shall pay within one month from the date of service of such demand the amounts as claimed by the Board, if any,

47. The parties, in the circumstances, are directed to bear their respective costs. Advocate's fee in each appeal is fixed at Rs.250/-.

48. Order accordingly.


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