Skip to content


U.P. State Electricity Board Vs. Smt. Lakshmi Devi Sehgal and anr. - Court Judgment

LegalCrystal Citation
SubjectElectricity
CourtAllahabad High Court
Decided On
Case NumberSpecial Appeal No. 2 of 1971
Judge
Reported inAIR1977All499
ActsElectricity Act, 1940 - Sections 2(1); Electricity (Supply) Act, 1948 - Sections 2(7); Contract Act, 1872 - Sections 23; Constitution of India - Article 226
AppellantU.P. State Electricity Board
RespondentSmt. Lakshmi Devi Sehgal and anr.
DispositionAppeal dismissed
Excerpt:
.....have no implied powers to enter into contracts whereby the performance of their duties to the public is prevented or unduly restricted. but, here we are dealing with, a statutory corporation, the powers and obligations of which have been well defined by the statute creating it, it being a statutory licensee, its duties towards the consumer to supply electricity arise not only by virtue of the agreement but also by the provisions of clause vi of the schedule to 1910 act. it is well known that no contract would be enforced which is contrary to the general policy of the law or is detrimental to the interest of the consumer, which the state has to protect in the interest of the public good. in the well known case of calcutta discount co......most efficient and economical manner. it confers the power upon the board to frame tariffs, and to supply electricity to any person not being a licensee upon such terms and conditions as it thinks fit. (see section 49). the board by section 26 has been given all the powers and obligations of a licensee under the indian electricity act, 1910. the section declares that the act shall be deemed to be the licence of the board for the purposes of that act. the second proviso states further 'that the provisions of clause vi of the schedule to that act shall apply to the board in respect of that area where distribution mains have been laid by the board and the supply of energy through any of them has commenced.'thus the electricity supply act not only brought into existence a corporate body.....
Judgment:

Prem Prakash, J.

1. This special appeal arises from the decision of a learned single Judge of this Court in Writ Petition No. 1026 of 1969, 'brought by Smt, Lakshmi Devi Sehgal (hereinafter referred to as the consumer) against the U. P. State Electricity Board (to be described hereinafter as 'the Board'), directing it by a writ in the nature of mandamus to replace at its cost, the stolen transformer, cost of which the Board by its order dated 24-10-69 had directed the consumer to deposit, to maintain and continue the supply of electricity, in terms of the agreement between the Board and the consumer, as amended by the Board's memorandum dated 12-12-1968 adding to the conditions of supply, a fresh condition No. 23 (a) providing:

'If in any case the transformer in rural area outside the premises of a consumer from which he is receiving supply is stolen then the consumer will have to bear the cost of its replacement. If, however, there are more than one consumer then cost will be shared in proportion to the H.P. contracted by each.'

The fresh condition was added to the agreement, because Condition No. 10 (1) of the Agreement stipulates that the consumer shall

'abide by the Electricity Board conditions of supply now in force and by any subsequent modification or alteration thereto, as if the same had been incorporated in this Agreement.'

2. The consumer has an agricultural farm on the Lucknow-Barabanki Road, she has a tube well on the farm; she requisitioned the supply of electric energy to enable her to run the tube-well and upon her entering into the agreement on 30-8-1968 her premises were connected with the main. The electric motor of the tube-well stopped working in the first week of October and upon enquiry she was told that the transformer situate at a distance from her tube-well had been stolen. When she presented an application to replace the stolen transformer, the Board insisted her to bear the replacement cost and hence the writ petition. The Board contended that the consumer having agreed to abide by the subsequent modifications or alterations made by the Board in the Conditions of Supply and Condition No. 23 (a) added by the Board making it obligatory upon the consumer to bear the cost of the stolen transformer, the latter cannot -turn round and ask the Board to resume the supply of energy without her performing her part of the contract. Finally, It was maintained that the rights of the parties flow from a contract, they cannot be enforced by invoking the extraordinary jurisdiction of the Court under Art, 226 of the Constitution.

3. The learned single Judge held that the petitioner was under no legal liability to bear the replacement cost of the transformer, it being not the [part of service line as defined by Section 2(1) of the Indian Electricity Act, 1910. A transformer, in the opinion of the learned single Judge, is a part and parcel of the main transmission line as defined by Section 2(7) of the Electricity (Supply) Act, 1948. As regards the plea that contractual rights and liabilities cannot be enforced, the learned single Judge held that the obligation which the Board sought to fasten upon the consumer was in contravention of Clause (vi) of the Schedule 7 to Indian Electricity Act, 1910, the remedy for statutory breach could be availed of by the consumer and the Court can grant writ to her. Accordingly, the writ petition succeeded and the rule was made absolute,

4. Being aggrieved from that order, the Board has come up in appeal.

5. The Board is a body corporate which has been endowed with power to acquire and hold property, both movable and immovable, by Section 12 of the Electricity Supply Act, 1948. The Board is constituted by a notification made under Section 5 of that Act It being thus a statutory corporation, it would be necessary at the outset to consider its nature and character and the extent of the powers which it may in its relationship with the consumer lawfully exercise. The right to conduct its business in the form of a corporation and as such to enter into contracts with consumers, is not its natural or fundamental right. It 5s a creature of the law and the statute in authorising its own corporations to carry on business, may qualify that privilege fey imposing such conditions and duties as reasonably may be deemed expedient in order that its activities may not operate to the injury of the rights of the public with whom it may come in contact. We would do no better than quote the following from the opinion of Chief Justice Taney in the well-known case of The Bank of Augusta v. Earle (U. S. Supreme Court reports (1842) 10 Law Ed (Peters) (519)) at p. 586:--

'In the case of Head and Amory v. The Providence Insurance Co. ((1808) 2 Cranch 127), Chief Justice Marshall, in delivering the opinion of the Court, said, without ascribing to this body which in its corporate capacity is the mere creature of the Act to which it owes its existence, all the qualities and disabilities annexed by the common law to ancient institution of this sort, it may correctly be said to be precisely what the incorporating Act has made it -- to derive all its powers from that Act, and to be capable of exerting its faculties only in the manner which that Act authorises.

To this source of its being, then, we must recur to ascertain its powers, and to determine whether it can complete a contract by such communications as are in this record.'

In the case of Dartmouth College v. Woodward ((1810) 4 Wheat 629 (636)), the same principle was again decided by the Court.

'A corporation, said the court, is an artificial being, invisible, intangible and existing only in contemplation of law. Being a mere creature of the law, it possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence.'

And in the case of the Bank of the United States v. Dandridge ((1827) 12 Wheat 64), where the questions in relation to the powers of corporations and their mode of action were very carefully considered, the court said:

'But whatever may be the implied powers of aggregate corporations by the common law, and the modes by which those powers are to be carried into operation, corporations created by statute must depend both for their powers and the mode of exercising them, upon the true construction of the statute itself.'

The Supply Act charges the Board with the general duty of supply and distribution of electricity in the most efficient and economical manner. It confers the power upon the Board to frame tariffs, and to supply electricity to any person not being a licensee upon such terms and conditions as it thinks fit. (See Section 49). The Board by Section 26 has been given all the powers and obligations of a licensee under the Indian Electricity Act, 1910. The section declares that the Act shall be deemed to be the licence of the Board for the purposes of that Act. The Second Proviso states further

'that the provisions of Clause VI of the Schedule to that Act shall apply to the Board in respect of that area where distribution mains have been laid by the Board and the supply of energy through any of them has commenced.'

Thus the Electricity Supply Act not only brought into existence a corporate body designated as the Board but also conferred upon it the licence for the purposes of Indian Electricity Act, 1910. It made Clause VI of the Schedule of the latter Act applicable to the Board, without laying down in the Act, fresh Conditions of Supply to which the Board would adhere, in its relationship with the consumers serving upon it the requisition for supply of electricity in the area where the distribution mains have been laid by it and the supply of energy through any of them has commenced.

6. That brings us to CL Vl of the Schedule to the Indian Electricity Act, 1916. It is as follows:--

'(1) Where (after distributing mains have been laid down under the provisions of Clause IV or Clause V and the supply of energy through those mains or any of them has commenced) a requisition is made by the owner or occupier of any premises situate within (the area of supply) requiring the licensee to supply energy for such premises, the licensee shall, within one month from the making of the requisition (or within such longer period as the Electrical Inspector may allow) supply, and save in so far as he is prevented from doing so by cyclones, floods, storms or other occurrences beyond his control, continue to supply energy in accordance with the requisition:

Provided, first, that the licensee shall not be bound to comply with any such requisition unless and until the person making it-

(a) within fourteen days after the ser-vice on him fey the licensee of a notice in writing in this behalf, tenders to the licensee a written contract in a form approved by the (State Govt) duly executed and with sufficient security, binding himself to take a supply of energy for not less than two years to such amount as will (assure to the licensee at the current rates charged by him, on annual revenue not exceeding fifteen per centum of the cost of the service line required to comply with the requisition) and

(b) if required by the licensee so to do pays to the licensee the cost of so much of any service line as may be laid down or placed for the purposes of the supply upon the property in respect of which the requisition is made, and of so much of any service line as it may be necessary for the said purposes to lay down or place beyond one hundred feet from the licensee's distributing main, although not on that property.''

Sub-clause (2) of Clause VI provides that any service line laid for the purpose of supply in pursuance of a requisition under Sub-clause (1) shall, notwithstanding that a portion of it may have been paid for by the person making the requisition, be (maintained by the licensee who shall also have the right to use it for the supply of energy to any other person).

7. Clause VI lays down the conditions on the performance of which by the consumer, the Board undertakes to supply energy to a consumer.

8. In computing the cost of any 'Service Line' as may be laid or placed for the purposes of supply of energy beyond 100 feet of its distributing main, the Board, in terms of Clause VI cannot demand the cost of the transformer from the consumer.

9. 'Service Line' as defined by Section 2(1) of Indian Electricity Act, 1910 means any electric supply line through which energy is, or is intended to be supplied-

(i) to a single consumer either from a distributing main or immediately from the supplier's premiess or

(ii) from a distributing main, to a group of consumers on the same premises or an adjoining premises supplied from the same point of the distributing main.'

S. 2(e) of that Act says that 'distributing main' means the portion of any main with which a service line is, or is intended to be, immediately connected. From the definition assigned to 'Service Line' and the 'Distribution Main', it cannot be said the transformer is a part and parcel of the 'Service Line'. Further, the first Proviso to Sub-clause (1) of the clause entitles the Board to discontinue supply in the events specified thereunder. It does not give power to the Board to discontinue supply if the consumer failed after the supply had commenced, to deposit the cost of the stolen transformer. Even if it were assumed that the transformer is a part and parcel of the 'Service Line', which in our opinion it is not, the claim of the Board that the consumer should bear its replacement cost is, in our opinion, negatived by Sub-clause (2) which provides that the 'Service Line' laid for the purposes of supply in pursuance of a requisition under Sub-clause (1), shall be maintained by the licensee. The transformer is the part of the main 'transmission line' as defined by Section 2(7) of the Act. The Electricity Supply Act, 1948 draws a distinction between 'Main transmission line' and 'Service Line', It is only the cost of the 'Service Line' which the prospective consumer has to bear, before the Board complied with his requisition for supply of electricity. Analysed in that manner, we should hold that the transformer is not the part of 'Service Line' and that the Board having once commenced the supply it has to maintain the 'Service Line'. Neither does 1910 Act nor the Electricity (Supply) Act, 1948 authorise the Board in our opinion to demand the replacement cost of the transformer. This being so, if a condition as that were added by the Board to the Conditions of Supply, comprising the agreement between it and the Board, such a condition would be void as against the public policy. It is well recognised that public corporations have no implied powers to enter into contracts whereby the performance of their duties to the public is prevented or unduly restricted. It amounts to a condition 'so obviously inimical to the interest of the community that it offends almost any concept of the public policy'. The Act lays down the conditions to regulate the relationship between the Board and the consumer. No contract would be enforced which would be contrary to the general policy of the law, The consumer may have agreed to abide by the conditions subsequently altered or modified by the agreement, nevertheless, what is injurious to and against the public policy, must be forbidden. Contractual freedom must be fostered but no contract, that tends to circumvent the law creating the corporation, would be countenanced in law. Judged in that manner, the newly added condition No. 23 (a) which the Board seeks to invoke to its aid, is unlawful, in the sense that the law will not enforce it. This disposes of the main submission canvassed by the learned counsel appearing on behalf of the Board.

10. It has been next urged that the rights and obligations arising from under the contract cannot be enforced in the extraordinary proceeding under Article 226 of the Constitution. In general, one cannot quarrel with the correctness of the proposition. But, here we are dealing with, a statutory corporation, the powers and obligations of which have been well defined by the statute creating it, It being a statutory licensee, its duties towards the consumer to supply electricity arise not only by virtue of the agreement but also by the provisions of Clause VI of the Schedule to 1910 Act. If it transgresses the limits of its powers and seeks to impose conditions of supply, not warranted by the Act, an aggrieved person can seek to enforce its corresponding obligations in pursuance of statutory provisions. This reciprocity of the obligations, apart from its basis in agreement, has in the present case acquired an operative force resting on statutory sanction and equity. This disposes of the second submission.

11. Learned counsel for the Board has vehemently argued that there being no express prohibition by law to agree to the condition of the nature as is contained in Condition No. 23 (a), and the consumer having agreed to its incorporation in the agreement by Condition No. 10 (1) of the Agreement, even if it were something beyond the conditions prescribed by Clause VI of the Schedule, the Court should refuse to nullify the bargain at the instance of the consumer. In support of this contention our attention has been invited to Lachoo Mal v. Radhey Shyam (AIR 1971 SC 2213) and in particular to Paragraph 248 in Halsbury's Laws of England. Volume 8, Third Edition, where at page 143 it is stated:

'As a general rule, any person can enter into a binding contract to waive the benefits conferred upon him by an Act of Parliament, or, as it is said can contract himself out of the Act, unless it can be shown that such an agreement is in the circumstances of the particular case contrary to public policy. Statutory conditions may, however, be imposed in such terms that they cannot be waived by agreement, and, in certain circumstances, the legislature has expressly provided that any such agreement shall be void.'

12. The case at hand falls, in our opinion, within the category of cases where the enforcement of such a condition would amount to disobedience of law. As already discussed in the foregoing, the insertion of Condition No. 23 (a), having regard to the scheme of 1916 and 1948 Acts, would be contrary to public policy. It is well known that no contract would be enforced which is contrary to the general policy of the law or is detrimental to the interest of the consumer, which the State has to protect in the interest of the public good. Thej case of Lachoo Mal v. Radhey Shyam (AIR 1971 SC 2213) (supra) was one arising under the U. P. (Temporary) Control of Rent and Eviction Act, 1947 wherein the landlord had waived the exemption benefit available to him for constructions made after 1-1-1951. The agreement was neither illegal nor did it defeat the provisions of any law within the meaning of Section 23, Contract Act and, therefore, their Lordships of the Supreme Court held that the landlord could give up the benefit which otherwise could be available to him under Section 1-A of the Act. Manifestly and for reasons which we need not repeat, that principle does not govern the point in controversy here.

13. Finally, learned counsel for the Board has urged that since the disputes arising under the Agreement require, by virtue of Clause 13 of the Agreement, to be referred to the Electrical Inspector to Govt. whose decision is final and binding on both the parties, the petitioner should be directed to the remedy provided under the Agreement. We are unable to agree with the submission. The existence of such alternative remedy is not a sufficient reason for refusing a party relief by a writ or order prohibiting an authority, acting without jurisdiction, from continuing such action. In the well known case of Calcutta Discount Co. Ltd. v. Income-tax Officer Companies, Calcutta (AIR 1961 SC 362) the Supreme Court has taken the view that where an action of the executive authority, acting without jurisdiction, subjects or is likely to subject a person to lengthy proceeding and unnecessary harassment the High Court will issue appropriate orders or directions to prevent such consequences. In the present case, we find no reason, for which the relief to the petitioner should be refused, specially when the Board was asking for something which it had no power to demand under the law creating it or under the 1910 Act, Clause VI of which was made applicable to it by Section 26 of the Electricity (Supply) Act, 1948.

14. We may note that the Board, by its letter dated February 18, 1972, has directed the units under its control not to charge cost of the transformer from a consumer if the transformer was stolen in 1971 or preceding year but it was not physically replaced by Executive Engineer in 1971 or preceding years. In view of these modified instructions it is all the more necessary that the Board be directed in the present case to continue to perform its obligations by replacement of the stolen transformer.

15. For the discussion in the foregoing we see, therefore, no force in this appeal which is hereby dismissed with costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //