C.S.P. Singh, J.
1. The petitioner is a public limited company, and owns and runs an aluminium factory at Renukoot in the district of Mirzapur. The aluminium industry is a power based industry, in the sense that electrical energy is essential for the manufacture of aluminium. On the 29th of October. 1959, it entered into an agreement with the State of Uttar Pradesh for the supply of 55,000 K. W. of electricity from the Rihand Hydel Station (Annexure I to the petition). Clause 12 (b) of the agreement provided that in case the total generation of energy of the Rihand Hydroelectric generation station was reduced by causes beyond the Government's control, then the energy available would be rateably distributed amongst all consumers. Clause 13 (b) of the said agreement made it incumbent for the company to Pay each bill within thirty days of the delivery thereof with five days of grace. In case the company disputed any item of the bill, it had to notify the Government in writing within thirty days of such dispute, but was not entitled to withhold payment. Clause 13 (d) provides for disconnection of the supply, in case the company neglected or refused to Pay any amount payable under the bills. Clause 21 provides for arbitration of disputes arising out of the agreement. On the 6th November. 1965, another agreement was arrived at between the petitioner and the State Electricity Board which had stepped into the shoes of the State Government for additional supply of 45 million Watts of electricity. Two other supply agreements were also entered into in 1968 and 1970 but we are not concerned with them in the present petition.
It appears that the Chief Engineer of the Electricity Board on the 1st November. 1966, sent a letter to the petitioner purporting to be under Clause 12 (b) (i) of the first agreement imposing a30% cut on consumption on account of low reservoir level of the Rihand Dam. This was followed by a notification under Section 22-B of the Electricity Act on the 5th November. 1966, directing that all energy supplied to consumers by licensees, which in the present case happened to be the Electricity Board would be subject to a 30% cut. This order was to remain effective till 30th June. 1967. Thereafter, the Board issued an order on the 20th February 1967 under Section 49 of the Electricity (Supply) Act. 1948 imposing a surcharge of 5.5 Paise per unit for energy consumed in excess of 70% of the normal monthly consumption. In the year 1967-68, 1968-69 and 1969-70, cuts were again imposed by the Board. A notification under Section 22B was also issued Imposing cuts. The cuts in these years were imposed on the basis that the reservoir level of Rihand was not of the optimum level so as to ensure a full supply of energy to consumers. The Board thereafter raised demands against the petitioner for excess energy consumption, and also certain other demands which were disputed by the petitioner company. On the 28th January, 1970, the Board and the petitioner entered into an arbitration agreement appointing Sri K. N. Wanchoo, retired Chief Justice of India as the sole arbitrator to decide the dispute which had arisen between the parties. This arbitration agreement which has been filed as Annexure 'III' to the petition sets out three heads of dispute and covers the period upto 1969-70. Clause 4 of this agreement is important for the purposes of the present case and may be quoted:--
'That all disconnection notices given by the Board for non-payment of theclaims pertaining to the matters mentioned in clause I above, shall stand withdrawn on the execution of this agreement.'
It appears that Sri K. N. Wandhoo was not available for arbitrating in the dispute. The parties then approached Sri A. K. Sarkar, another retired Chief Justice of India, but he too expressed his inability to take up the matter. Thereafter, the Board sent a letter on the 19th March. 1971 (Annexure VI to the petition) suggesting the name of Sri Hidayatullah, retired Chief Justice of India to act as arbitrator, and requesting the petitioner to send its acceptance to the proposal. The petitioner accepted the appointment of Sri Hidayatullah by its letter dated 26th March. 1972. This letter had not been filed, and as such I asked the Advocate-General to produce it. The letter was accordingly produced by the Advocate-General, andit does contain the acceptance of the petitioner to the appointment of Sri Hidayatullah as arbitrator.
The Board after receiving this letter eent a letter on the 23rd April. 1971, containing a revised draft arbitration agreement with a request to the petitioner to execute the same. The petitioner objected to this revised arbitration agreement and took up the stand that the earlier arbitration agreement was already complete and the matter should be referred to Sri Hidayatullah for arbitration. Further correspondence ensued between the parties, and thereafter the Board by its letter dated 27th November, 1971, (Annexure VIII to the petition) sent a fresh draft arbitration agreement for execution. Under this, disputes, upto the period 1970-71 were also sought to be referred. Clause 23 of this draft agreement contained a clause similar to Clause 4 of the first arbitration agreement of 28th Jan.. 1970 the result of which was to defer all notices of disconnection for a period of 45 days from the date of the award. In this letter, it was stated that the draft agreement should be signed not later than December 5, 1971. On the 8th December 1971, the Board sent a notice demanding an amount of Rs. 2,63,28,210.96 P as per statement enclosed with the letter, and also informed the petitioner that in ease payment of the aforesaid outstanding was not made within fifteen days from the date of receipt of the notice, the Board would under Clause 13 (d) of the agreement be compelled to disconnect the supply.
Although the letter does not state whether action was being taken under the supply agreement of 1959, it seems that it refers to the agreement of 1959. This notice has been filed as Annexure X to the petition. In this connection it is necessary to refer to one further fact. The petitioner, apart from taking electricity direct from the Board were also taking their supply from the Renusagar Electricity Company which is a subsidiary company of the petitioner. In order to safeguard against the possible failure to supply from the Renusagar power plant the petitioner had entered into a parallel supply agreement and emergency assistance for additional amount of electricity from the Board. This agreement was initially for a particular period and that period had expired, and the Board was not willing to renew the parallel supply agreement unless the petitioner entered into the arbitration agreement forwarded along with the Board's letter of the 27th November. 1972. The Board by its letter dated 28th January. 1972 which has been filed as Annexure XVI in Civil Misc. Writ Petition No. 618 of 1972 made this posi-tion clear. The petitioner has by this petition challenged the disconnection notice dated 8th December. 1971.
2. After the case was heard on a number of occasions, the case came up for hearing on the 3rd August. 1972. On that date, the petitioner expressed its willingness to execute the arbitration agreement as proposed by the Board in its letter of the 27th November. 1971, and the case was thereafter adjourned to enable the petitioner to execute and forward the said arbitration agreement. This the petitioner did by signing the agreement and sent it to the respondents under cover of its letter dated 4th Aug.. 1972. A supplementary affidavit has been filed stating the circumstances in which the petitioner had executed the arbitration agreement and forwarded it to the respondents. No counter-affidavit has been filed in reply by the respondents, and when questioned as to whether the respondents would like to file a counter-affidavit in reply, the Advocate-General stated that they would not do so, and will make arguments on the , affidavit already on the record.
3. Counsel for the petitioner has urged that there being clear arbitration agreement between the parties covering the subject matter of dispute, the respondents had no jurisdiction either under the terms of the supply agreement of 1959 or under Section 24 of the Electricity Act to disconnect the supply. With reference to the power exercised under Section 24 of the Electricity Act, it is contended that the respondents can have resort to this provision only in case there is 'neglect' on the part of the petitioner to pay the dues and inasmuch as the matter is bona fide disputed and stands referred to arbitration, there is no 'neglect' within the meaning of the Act, so as to warrant the exercise of power under that section. It is also contended that the power conferred by Section 24 of the Act is discretionary, and inasmuch as in the present case, the Board has entered into an arbitration agreement in respect of the dispute, it cannot exercise that power till after the expiry of 45 days from the date of the award.
4. The Advocate-General who appeared on behalf of the respondent-Board on the contrary contends that, there is no completed arbitration agreement, and further that even it exists that by itself cannot take away the statutory power of the Board conferred by Section 24 of the Electricity Act, to disconnect the supply. It has also been urged that inasmuch as the respondents are basing their rights to disconnect the supply also on the agreement of 1959,which is purely contractual in nature no writ should issue in the matter.
5. Considering the nature of the controversy it will be necessary to consider as to whether there is a completed arbitration agreement between the patties in respect of all or any of the topics in dispute. It has already been noticed that the parties entered into a completed arbitration agreement on the 28th of January 1970, appointing Sri K. N. Wanchoo retired Chief Justice of India as the sole arbitrator. Sri Wanchoo did not take up the matter. Thereafter the parties approached Sri A. K. Sarkar, another retired Chief Justice of India, but he too expressed his inability to take up the matter. The Board thereafter sent a letter on the 19th of March, 1971 suggesting the name of Sri Hidayat-ullah. Ex Chief Justice of India, and the petitioner accepted this offer by letter dated 26th of March. 1971. The question arises as to whether on the refusal or inability of Sri K. N. Wanahoo to act in the matter, the entire arbitration agreement fell through and had to be negotiated afresh, as contended by the Advocate-General, or with the acceptance of Sri Hidayatullah by the parties as the arbitrator the agreement was kept alive. Section 8 of the Arbitration Act provides a clue for resolving this question, and the relevant part may be quoted:--
'Section 8. Power of Court to appoint arbitrator or umpire -- (1) in any of the following cases-
(b) If any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be do not supply the vacancy:
any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.
(2) If the appointment is not made within fifteen clear days after the service of the said notice the court may ..... appoint an arbitrator or arbitrators or umpire ..... who shallhave like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties.'
Now Clause (b) which contemplates the filling in of vacancy applies only in case the agreement does not show that the vacancy should not be supplied. This clause relating to filling in of vacancyhas been put in the negative form, and as such the vacancy, can be supplied, unless the arbitration agreement contains something which would lead to the conclusion that the parties did not intend that the vacancy that had occurred should not be filled. Thus in a case where the agreement is silent about the filling up of the vacancy, it cannot be said that the intention of the parties was that the vacancy should not be supplied, and in such a case Clause (b) will have full application and the parties can by consensus supply the vacancy, This principle is in keeping with the common law principle that the law leans in favour of disputes being settled by arbitration. In the present case the arbitration agreement (Annexure III) does not contain anything that is suggestive of fact that the parties did not want, the vacancy to be filled up in case it occurred. Thus on Sri K. N. Wanchoo refusing to act., the parties were competent to appoint another arbitrator and in case they did so, the new arbitrator was competent to arbitrate on the same terms and conditions as the erstwhile nominated arbitrator. In the present case, the Board by its letter of the 19th March, 1971, expressly suggested the name of Sri Hidayatullah, and asked for acceptance of the terms on which he was willing to arbitrate in the matter. The petitioner unequivocally accepted the proposal contained in letter of the 19th March. 1971. The arbitration agreement as such became complete. The mere fact that Sri K. N. Wanchoo had refused to arbitrate in the matter did not render the arbitration agreement void, and this position is made crystal clear on a perusal of Section 8 of the Arbitration Act, which has already been extracted above. The major items of dispute are covered by this arbitration agreement, and the draft agreement which was sent subsequently by the Board covers only one more additional item.
6. Turning now to the question as to whether there was another arbitration agreement, covering the entire field of dispute, the Board had sent the draft to the petitioner along with its letter of 27th November. 1971, and had fixed 5th of December, 1971, as the time by which the petitioner should execute the agreement. This, however, was not done. But it appears that the Board did not treat the offer as having lapsed, as in its letter dated the 28th of Jan., 1972, which has been filed as Annexure 16 in Civil Misc. Writ No. 618 of 1972 the Board expressly stated that the parallel supply agreement will be renewed, provided that, the petitioner executed the draft agreement sent by it earlier. Although this letter was sent by the Board
In connection with parallel supply agreement, but Inasmuch as it invited the petitioner to execute the draft arbitration agreement sent earlier, the offer made by the Board earlier was kept alive and continued. This offer for referring the matter to arbitration, provided the petitioner agreed to execute a fresh arbitration agreement, was thereafter kept alive by the averments made in paragraph 39 of the counter affidavit filed in this petition on the 8th of March. 1972, wherein it is stated:
'The Board was always and is still willing to refer all the disputes pending between the parties to the arbitration of Sri Hidayatullah, but the petitioner is avoiding the same on flimsy and baseless grounds and is thereby depriving the Board of the huge sum of over three crores lawfully due to it.'
So far as the petitioner Is concerned, it did not execute the arbitration agreement, and took up the stand that there was already a concluded agreement on the 28th of January 1970 and no fresh agreement was necessary. The letter dated the 27th of November. 1971, which the Board sent to the petitioner contained an offer to refer the matter to arbitration provided that the petitioner executed the draft agreement sent along with that letter. Now Section 6 of the Contract Act provides the various ways in which the proposal may be revoked. Sub-sections (1) and (2) of this section may be quoted.
'Section 6. Revocation how made -- A proposal is revoked-
(1) by the communication of notice of revocation by the proposer to the other party:
(2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance.'
The Advocate-General contends that the Board had fixed the time limit of the 5th of December. 1971 for acceptance, and inasmuch as the petitioner did not execute the agreement by that date the proposal to enter into an arbitration stood revoked. I am unable to agree with this contention. In the first place, the Board by its subsequent letter of 28th January 1972 (Annexure 16 in Civil Misc. Writ No. 618 of 1972) renewed the proposal, and subsequently kept it alive by the averments made in paragraph 39 of the counter affidavit The letter of the 28th January. 1972. and the renewal of the proposal as contained in paragraph 39 of the counter affidavit do not prescribe any time limit, and as such the first part of Sub-section (2) does not apply. Although the averments made in paragraph 39 of the counter affidavitcontain an offer or proposal for entering into arbitration yet the question remains as to whether on account of the fact that the petitioner has in his rejoinder affidavit and also earlier taken up the stand that no fresh arbitration agreement was necessary, the offer could be said to have come to an end, on account of the refusal of the petitioner to execute the arbitration agreement. No direct authority has been cited before me that an offer of this nature comes to an end with the refusal of the offeree. It however appears to me that Sub-section (2) of Section 6 of the Contract Act is suggestive of the result that in case there has been a refusal on the part of the offeree the offer may be taken to have come to an end. This sub-section brings the life of a proposal to an end by the lapse of the time prescribed in such proposal, or by lapse of a reasonable time, and seems to embody the principle that on the lapse of the time, the proposal may be said to have been rejected by the other side. That being so if there is an express refusal to accept the proposal, it is difficult to see how a party can be subsequently bound by the proposal which it had made, and which had been rejected by the other side. Reference in this context may be made to a decision of the Chancery Division in Manchester Diocesan Council for Education v. Commercial & General Investment Ltd.. (1970-1 WLR 241). Buckley. J., while dealing with the question as to how long an offer can be said to be alive observed on page 247 as under:--
'It has long been recognised and as being the law that, where an offer is made in terms which fix no time limit for acceptance, the offer must be accepted within a reasonable time to make a contract (Chhity on Contracts. 22nd Edn. (1961), page go paragraph 89; Williams on Vendor and Purchaser. 4th Edn. (1936) p. 16; Halsbury's Laws of England, 3rd Edn. (1954). Vol. 8: p. 71. para-graph 124). There seems however to be no reported case in which the reason for this is explained. There appear to me to be two possible views on methods of approaching the problem. First, it may be eaid that by implication the offer is made upon terms, that, if it is not accepted within a reasonable time, it must be treated as withdrawn. Alternatively, it may be said that if the offeree does not accept the offer within a reasonable time, he must be treated as having refused it.'
It will be seen that the offer in case it is not accepted within a reasonable time is treated as having been refused. Thus Sub-section (2) of Section 6 is really a provision which equates the non-acceptance within a particular time with, refusal, and if the real principle is that the revocation of the proposal under Section 6(2) is really the result of implied refusal by the offeree. I see no reason to treat the proposal as continuing in a case where there is an express refusal. This however does not conclude the matter for in the present case there are certain facts which I shall refer to which show that the respondents treated the offer as continuing even after the stand taken up by the petitioner in his rejoinder affidavit.
7. This matter was heard last time on 3rd of August. 1972. On that date the petitioner's counsel stated that he was willing to execute a supplementary agreement containing the additional disputes, which were contained in the draft agreement sent to them by the Board. The Advocate-General appearing on behalf of the respondents however stated that the respondents were not agreeable to the execution of a supplementary agreement. Thereafter the petitioner agreed to execute the draft agreement as drawn up by the respondents and the matter was thereafter adjourned to enable the petitioner to execute the agreement. A supplementary affidavit has been filed by the petitioner stating these facts, and no counter affidavit has been filed in reply. The petitioner has already executed and sent the agreement as drawn up by the respondents but the Advocate-General appearing on behalf of the respondents now states that his clients are not willing to go in for arbitration. The offer to enter into arbitration in accordance with the freshly drawn up agreement had been made by the respondents. Though as a matter of law it may be said that the original offer came to an end with the refusal of the petitioner to execute the arbitration agreement in view of the stand taken up by them in the rejoinder affidavit, yet the offer as made was not treated by the Board to have been revoked by them. Inasmuch as on the date when the petitioner agreed to execute the arbitration agreement the respondents or the Advocate General who was appearing on their behalf, did not make any statement in court that they were not willing to enter into arbitration in case the petitioner still executed the agreement. On the contrary, the case was adjourned specifically in order to enable the petitioner to execute and transmit the agreement to the respondents. It appears that the Board is now having second thoughts in the matter, but inasmuch as it had factually kept its proposal for entering into the arbitration alive, even after the averments made in the rejoinder affidavit, the arbitration agreement became a completed one after the petitioner had executed it.
8. Even apart from these considerations, the respondents cannot disconnect the electric supply in exercise of the powers under Section 24 of the Act, as there has been no neglect on the part of the petitioner to pay the dues. Section 24 of the Electricity Act. so far as relevant, reads as under:
'Where any person neglects to pay any charge for energy or any sum other than the charge for energy due from him to a licensee ..... the licenseemay. after giving not less than seven clear days notice in writing to such person ..... cut off the supply.'
It will be seen that the power of a licensee to cut off the supply is dependent upon an act of neglect. Neglect to pay does not have the same connotation in law as failure or omission to pay. Neglect to pay means omission or refusal to pay without reasonable excuse. Both the words neglect, and negligence carry the same idea. In Blyth v. Birmingham Waterworks Co.. (1856) 11 Exch. 781 Alderson. B.. at page 784 considering as to what would be negligence spoke thus:
'Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do or doing something which a prudent and reasonable man would not do.'
Applying this principle to Section 24 of the Electricity Act, no reasonable consumer would be expected to pay an amount which he bona fide disputes with the supplying company. In the present case, the petitioner has disputed the demands made by the Board. It has not been shown that the disputes raised are not bona fide and are not reasonable, and that being so it cannot be said that the petitioner has neglected to pay the demands. Moreover in case the disputes raised by the petitioner were frivolous or baseless, the Board would be the last person willing to make the proposal to refer the disputes to the arbitration of successive Ex Chief Justices of India.
9. The Supreme Court in the case of Amalgamated Commercial Traders v. Krishnaswami. (1965) 35 Com Cas 456 (SC) while considering a case under Section 434(1) of the Companies Act, has held that there is no neglect to pay where a debt is bona fide disputed. Although that decision related to a case under the Companies Act the interpretation put on the words 'neglect to pay' was not based on any special phraseology used in that statute.
10. The Bombay High Court has taken the same view in two cases, viz., Nagpur Corporation v. N. E. L. & P. Co.,AIR 1958 Bom 498 and M S. E. Board v. Madhusudhandas. AIR 1966 Bom 160.
11. It may in this context be mentioned that the question as to whether there exists a bona fide dispute is mainly relevant for the demand of Rs. 36,89,018.22 P. which relates to the charges for the rateable cut for the period from October 1970 to May. 1971, for this is the only item which was not included in the first arbitration agreement of 28th January. 1970, and has been included in the second arbitration agreement. So far as the right of the Board to cut off the supply under Section 24 of the Electricity Act in respect of the demands other than this one. I shall presently show that on account of the fact that the arbitration agreement of the 28th January. 1972, is complete in all respects, it has no power left to act under that section.
12. Coming now to the question as to whether the Board can resort to its powers under Section 24 of the Act, even though there are concluded arbitration agreements in respect of the demands. Section 24 of the Act is an enabling section, and the Board is under no obligation to resort to the mode of disconnection for the realisation of its dues. The section does not postulate that as soon as there are arrears, the Board is duty bound to disconnect the supply of its consumers. This being so, it is settled law that where a provision has been made for the benefit of a person, he may waive or forgo or elect not to take advantage of such a provision. In the present case, inasmuch as the Board has entered into arbitration agreements and agreed to treat the disconnection notices as withdrawn, it can be safely said that it has elected not to exercise its rights under Section 24 and has waived the powers which it enjoys under this section. Further, the power under Section 24 can be exercised only in case requisite notices have been given to the consumer. The effect of the arbitration agreement is to withdraw the notices, and that being so the condition precedent for the exercise of the power of disconnection no longer subsists.
13. It is now necessary at this stage to consider the decision of the Guiarat High Court in the case of Shanti Lal R. Desai y. P. N Vyas, (AIR 1968 GUJ 179) on which strong reliance has been placed by the Advocate-General, and on the basis of which it has been urged that it is in only the cases provided for under Section 24 (2) that the right of disconnection emloyed by the licensee cannot be exercised and inasmuch 'as the present dispute is not one of such nature, the Board can exercise that right eventhough the matter has been referred toarbitration. This decision is not of any help to the respondents in the context of the present controversy, as the main contentions that have been advanced in the present case were not considered by the Gujarat High Court. Apart from this. I am also otherwise unable to agree with the contention of the Advocate-General. Section 24 (2) does not purport to cut down the fetters which are implicit in Section 24 (1) of the Act. Before the power under Section 24 (1) of the Act can be exercised, it must be established that there is neglect to pay, and that a. notice has been sent to the consumer. In case either of these conditions are not fulfilled, the power of disconnection cannot be exercised. In the present case, it has been seen that there is no neglect to pay within the meaning of Sub-section (1) of Section 24, and the notices sent have been deferred and as such the Board cannot exercise its powers of disconnection.
14. In this context another contention made by the Advocate-General may also be noticed. It has been contended that under Clause 13 of the supply agreement 1959. all bills had to be paid within thirty days of their presentation and even in case a dispute was raised, the consumer was bound to make payment, and Clause 13 (d). entitled the Board to disconnect the supply, not only, in cases there has been neglect to pay but also where there has been refusal to pay and it is suggested that in the present case, there has been both neglect and refusal on the part of the company to pay the dues. This argument would have had considerable force in case the arbitration agreement had not been concluded between the parties. By Clause 4 of the arbitration agreement of 28-1-1970. and Clause 23 of the subsequent agreement the notices given for disconnection stand withdrawn. The effect of these two clauses of the arbitration agreements, is that it cannot be said that there is either any neglect or refusal on the part of the petitioner to pay the amounts, moreover inasmuch as even under Clause 13 (d), the power of disconnection can only be exercised after fifteen days' notice in writing, and the notices by virtue of the arbitration, agreement being treated by parties as having been withdrawn, the Board cannot even under Clause 13 (d) of the agreement disconnect the supply.
15. The only question that now remains is as to whether it will be appropriate to quash the disconnection notices, inasmuch as according to the Advocate-General, it is based primarily on the rights of disconnection, which the Board has under Clause 13 (d) of thesupply agreement of 1959. In the first place, the contention made is not strictly correct, as the Board has also taken up the stand that the power of disconnection which, it is exercising is also referable to Section 24. Inasmuch as if has been held that Section 24 does not apply in the circumstances of the present case, there is no impediment in the quashing of the disconnection notices as the Board has no authority under the law to do so. This apart, the Board is under Section 18 of the Electricity (Supply) Act, bound to supply electricity to consumers, and as in the present case the effect of the disconnection would be to withhold supply of electricity to the company which the Board is statutorily bound to do it is necessary to quash the notices so as to prevent the Board from forsaking its statutory duties.
16. The result is that the petition succeeds. The impugned notice of disconnection dated 8th December. 1971 as quashed. The petitioner is entitled to its costs.