Skip to content


Raj NaraIn Pratap NaraIn Vs. U.P. State Electricity Board - Court Judgment

LegalCrystal Citation
SubjectCivil;Arbitration
CourtAllahabad High Court
Decided On
Case NumberCivil Revision No. 294 of 1980
Judge
Reported inAIR1982All14
ActsArbitration Act, 1940 - Sections 20 and 41; Code of Civil Procedure (CPC) , 1908 - Order 39, Rule 1
AppellantRaj NaraIn Pratap Narain
RespondentU.P. State Electricity Board
Appellant AdvocateS.P. Gupta and ;Vishnu Sahai, Advs.
Respondent AdvocateA.P. Singh, Adv.
DispositionRevision allowed
Excerpt:
.....settle disputes through arbitration - bill was served even for a period when there was no meter - revisionist moved for arbitration - applied for interim injunction during arbitration proceedings - lower court refused - prima facie evidence to prove that the bill may not be correct - held, interim injunction granted on the basis of furnishing adequate security within three months. - - 6. it may be stated here that at this stage i am not concerned with the ultimate decision on merits of the rival claims, but i have to confine myself to the question whether there existed good prima facie ground for granting temporary injunction to the revisionist or not. it is also well settled that in order to find out whether there exists any prima facie case in favour of party or not, it would be..........to move the court under section 20, its right to file the suit for refund, after depositing the dues demanded, cannot be adversely affected. these two remedies operate in different and distinct fields. there is thus no question of permitting the revisionist to circumvent any provision of the dues recovery act. if legally the remedy of moving the court under section 20 of the arbitration act can be availed by the revisionist, the court cannot refuse it, particularly when there is no provision in the dues recovery act prohibiting recourse to otheralternative remedy.9. besides this, where the provisions of the act are restrictive in nature and curtail the rights of an ordinary party to get redress from the civil courts, then such a restriction has to be strictly interpreted in favour of.....
Judgment:
ORDER

N.N. Mithal, J.

1. The present revision is directed against the order passed by the court below rejecting the plaintiffs application for issue of temporary injunction in the proceedings under Section 20 of the Arbitration Act.

2. The relevant facts of the case are that the plaintiff entered into a special agreement with the U. P. State Electricity Board (hereinafter referred to as the Board) on 26-9-1979 for supply of electricity to its Roller Flour Mill. A sum of Rs. 55,100/- was deposited as security and the Board in pursuance of the agreement installed a meter for indicating units of electric power consumed, Noother meter for indicating the maximum demand was, however, installed in the premises at that time. In the agreement one of the terms thereof related to settlement of disputes of certain nature through arbitration. The revisionist continued to pay all the charges in respect of the units consumed by it up to Apr. 1979 in accordance with the readings recorded by the meter. However, on 17-4-1979 the applicant received a bill for Rs. 7429-13P pertaining to the period from January, 76 to August, 77. Although the correctness and legality of this demand was disputed by the revisionist the money claimed in the bill was paid under protest on 1-5-79. In the month of April, with the permission of the authorities concerned, the flour mill in question was shifted from Dehradun to Agra. On 30th May, 1979 therefore a written request was made to the Board to disconnect the supply. It was so actually disconnected on 24-6-79. In the mean time, another bill for Rs. 4684/-for the period from September, 77 to December, 78 was received and this too was paid by the revisionist under protest, Since the rolling flour mill units had been discontinued at Dehradun and all the bills sent to the revisionist already stood paid up, a request was made to get refund of Rs. 55,100/- deposited with the Board by way of security.

3. It appears that simultaneously the revisionist had also approached the higher authorities seeking direction for getting refund of its security deposit (See Annexure 16, letter of Chief Secretary of the Electricity Board) due to which the local staff got annoyed This immediately resulted in two bills one for Rs. 92891/-for the period from 1-1-76 to April, 78 and the other for Rs. 28243-20 P for the period from 31st May, 79 to 12-7-79 being served on the revisionist on 1-9-79. It is alleged that this action of the Board was mala fide as the second bill was obviously wrong in as much as the roller flour mill unit of the revisionist itself had been closed down and shifted in April, 79 and the electricity supply had also been actually disconnected on 24-6-79 (Annexure 15 dated 2-7-79) yet the second bill covered a period even subsequent to the date of such disconnection. These bills were followed by a notice of demand under Section 3 of U. P. Government Electrical Undertakings (Dues Recovery) Act 1958 (herein-after referred to as Dues Recovery Act)demanding payment of Rs. 73,004.33 P. after making an adjustment of the security amount of Rs. 55,100/-.

4. Since correctness of this demand was disputed the revisionist moved .an application under Section 20 of the Arbitration Act alleging that dispute had arisen between the parties to the agreement which are covered by the arbitration clause and prayed that the matter may be referred to arbitration. Simultaneously, he moved an application for issue of a temporary injunction also under Section 41 of the Arbitration Act against the board restraining it from realising the amount in question as arrears of land revenue. This application was contested on behalf of the Board mainly on the ground that after a notice under Section 3 of the Dues Recovery Act had been served, the only way for revisionist to get any relief was to deposit the claimed amount first and then to file a suit for its refund from the Board. Since in this case, the money mentioned in the notice had not been deposited, it was contended that the application was not maintainable. It was further stated that Revenue/Recovery Act, 1890 and U. P. Public Money (Recovery of Dues) Act, 1972 also barred the suit.

5. The lower court after hearing the parties came to the conclusion that since the notice under Section 3 of the Dues Recovery Act had admittedly been served demanding payment of Rs. 73,004.33P. the same was required to be paid by the revisionist as a pre-condition to any proceedings challenging its liability in view of Section 4 of the said Act, The court has further held that the amount was being recovered as arrears of land revenue under the Revenue Recovery Act of 1890. According to Section 5 thereof, the amount mentioned in the notice must be treated as conclusive proof of the fad that such an amount was due. In view of the aforesaid provisions, the court below came to the conclusion that the revisionist could not be permitted to say that the sum of Rupees 73,004-33 P. was, in fact, either not correct or was not due from it. The Court, therefore, refused to grant an interim injunction prayed for as the applicant had not shown a prima facie case, It also held that there was no balance of convenience or likelihood of irreparable in-Jury to the revisionist. Aggrieved by this order, the revisionist has come up before this Court.

6. It may be stated here that at this stage I am not concerned with the ultimate decision on merits of the rival claims, but I have to confine myself to the question whether there existed good prima facie ground for granting temporary injunction to the revisionist or not. It is to that extent alone that I propose to examine the legality of the impugned order. It is a settled principle that to entitle any party to an ad interim injunction, it must not only satisfy the court about its prima facie right but also that refusal to grant injunction would result in irreparable injury and that balance of convenience lay in favour of granting the injunction rather than in refusing it. It is also well settled that in order to find out whether there exists any prima facie case in favour of party or not, it would be enough if it could be established that there was really a seriously arguable question and it is not necessary that the point be proved to the hilt at that stage, Showing a fair chance of success is good enough.

7. In order to prove his prima facie case, the learned counsel for the revisionist assailed the order of the court below on several grounds, It is first contended that the provisions of U. P. Government Electricity Undertaking (Dues Recovery) Act, 1958 (U. P. Act No. XVI of 1958) were not at all attracted in the present case and the reference to the said Act in the order was unjust and un-warranted. In this connection he referred to the language of Section 4 of that Act which runs as under;--

'4. (1) Where a notice of demand has been served on the consumer, or his authorised agent under Section 3, he may, if he denies his liability to pay the dues or any part thereof, and upon deposit thereof with the prescribed authority under protest in writing, institute a suit for the refund of the dues or part thereof so deposited.

(2) The suit referred to in Sub-section (1) may be instituted at any time within six months from the date of deposit with the prescribed authority in the Court having jurisdiction, but subject to the result of the suit the notice of demand shall be conclusive proof of the dues mentioned therein.'

A reading of the section shows that the course open to a party against whom a demand had been made by issue of notice under Section 4 of the Dues Recovery Act is to first deposit the amount demanded with the prescribed authority under protest and within six months of doing so to file a suit for the refund of the said money, It is urged that this section, does not prohibit initiation of any other proceedings which was not in the nature of a suit. If under the terms of the special agreement, the parties had agreed to refer their disputes for decision through arbitration, the same cannot be prevented and the party would be entitled to move the court by making an application under Section 20 of the Arbitration Act to refer the dispute for arbitration. If such an application is moved, it would not be a suit envisaged under Section 4 of the Act For his above sub-missions, the learned counsel relies upon the case of Indian Oil Corporation v. Kishore Bandhu (1978 All LJ 176). The rerspondents met this argument by submitting that by filing an application under Section 20 of the Arbitration Act, the revisionist cannot be allowed to circumvent the provisions of Dues Recovery Act and, therefore, such an interpretation should not be placed on the provisions of the Act. I do not agree.

8. The right to file suit under Section 4 of the U. P. Act No, XVI of 1958 and to move the court under Section 20 of the Arbitration Act. 1940 for making a reference when disputes have arisen are two distinct, independent and separate rights and one can be exercised independently of the other, Filing of a suit under Section 4 of the Act cannot curtail limit Or otherwise circumscribe the rights of the revisionist of making an application under Section 20 of the Arbitration Act, Any of the two alternative remedies can be chosen by him and recourse to one would not bar the other remedy, In spite of the fact that the revisionist has chosen to move the court under Section 20, its right to file the suit for refund, after depositing the dues demanded, cannot be adversely affected. These two remedies operate in different and distinct fields. There is thus no question of permitting the revisionist to circumvent any provision of the Dues Recovery Act. If legally the remedy of moving the court under Section 20 of the Arbitration Act can be availed by the revisionist, the court cannot refuse it, particularly when there is no provision in the Dues Recovery Act prohibiting recourse to otheralternative remedy.

9. Besides this, where the provisions of the Act are restrictive in nature and curtail the rights of an ordinary party to get redress from the civil courts, then such a restriction has to be strictly interpreted in favour of the party whose rights are sought to be restricted and against the authority in whose favour the restriction works. In this case, therefore, the consumer must get the benefit. Even if no strict interpretation be put on the provisions of Section 4 of the Act. it would be found that filing of the suit is not the only remedy open to the consumers.

10. Apart from the above, on a plain reading of Section 4, it is apparent that the restrictions contained therein applies only to filing of the suit challenging the liability to pay the amount. In proceedings under Section 20 of the Arbitration Act, however, all that the revisionist has prayed for in his application was that a certain dispute regarding the liability to pay the amount under the special agreement had arisen between the parties and the same should be referred to arbitration as required by the terms of the said agreement There cannot be any adjudication of the liability to pay or not to pay in these proceedings which have to wait until the matter goes before the Arbitrator and the only relief which the court can ultimately grant would be to make an order referring the dispute for decision by the arbitrator. I have already observed earlier that there is no prohibition in the U. P. Act No. XVI of 1958 against such a course being adopted. Also when parties choose to have their disputes resolved by an arbitrator of their own choice it is entitled to get precedence over their usual right to file the suit. Where an Arbitration clause exists, a suit even if it be filed by any party to the agreement can be stated at the request of the opposite party. The predominance and pre-eminence of the arbitration agreement over the ordinary right of a party to get relief in a suit is undisputed and, therefore, there is no question of circumventing the provisions of U. P. Act No. XVI of 1958 if a person chose to file a petition under Section 20 of the Arbitration Act. There appears to be considerable force in the revisionist's contention that an application under Section 20 of the Arbitration Act which is not a suit may be legallymaintainable in spite of Section 4 of the Dues Recovery Act.

11. It was next contended that U. P. Act No. XVI of 1958 does not apply in respect of the U. P. State Electricity Board. It is urged that according to the preamble the Act applies only in respect of recovery of government dues for the supply of electrical energy by government Undertakings. The words 'government Undertakings' have not been defined in the Act, instead 'government electrical undertakings' have been defined in Section 2 (c) of the said Act in 'he following terms:--

'2 (c). 'Government Electrical Undertaking' includes Kanpur Electric Supply Administration and such other electrical undertakings run or controlled by the State Government or the Board as may be notified in this behalf.'

The definition is very wide being an inclusive definition but what it includes within the definition of 'Government Electrical Undertakings' has been confined to Kanpur Electric Supply Administration and 'such other' electrical undertakings run or controlled by the State Government or the Board as may have been notified in this behalf. Thus,apart from Kanpur Electric Supply Administration any such electrical undertakings must (i) be run or controlled either by the State Government or by the Board (Board here means U. P. State Electricity Board) (ii) such undertaking must have been notified to be a government electrical undertaking. Unless there be a notification showing any particular electrical undertaking of the kind as Kanpur Electrical Supply Administration had been designated government electrical undertaking the same cannot be regarded to be one.

12. Sri. A. P. Singh, learned counsel appearing for the Board drew my attention to notification no. 1687-H/ XXIII-P-A-562 H-58 dated 6th August, 1960, published in part I of U. P. Gazette dated August 13. 1960. It is a notification issued under Section 2 of U. P. Electrical Undertakings (Due's Recovery) Act, 1958 and enumerates six undertaking which were being run and controlled by the U. P. State Electricity Board as Government Electrical Undertakings for the purposes of the said Act, However, from this notification it does not appear that the U. P. State ElectricityBoard was ever empowered or designated as government electrical undertaking within the meaning of Section 2 (c) of thesaid Act.

13. At this stage, it is not necessary to enter into this controversy because the matter has yet to be decided at the trial of the suit itself, yet it can safely be stated here that the point raised by the learned counsel is certainly worth consideration and must attract serious attention of the court below. It certainly provides a prima facie ground to the revisionist to say that the notice of demand itself was without jurisdiction. This question at least needs to be considered in greater depth by the court below.

14. The learned counsel for the revisionist further contended that before any demand under Section 3 of the Act can be made there must be in existence some dues payable by the consumer to a government electrical undertaking and only in respect of such dues any notice under Section 3 can be issued. His further submission was that the words 'any dues payable' in Section 3 of the Act do not mean any fanciful amount which the Board as an electrical undertaking may demand from a consumer but must be such as has been properly determined by some method unless the same is admitted to be correct by the consumer. So long as there is a dispute about the amount due either as regards the method of calculating, it or for violation of any rules, if any, framed in that behalf, the same cannot be said to be 'dues payable.'

15. The learned counsel also urged that in the instant case, the Board had not installed the MDI (Maximum Demand Indicator) meter in the premises of the Flour Mill until Sept., 1977, and therefore, from Jan., 1976 to Sept., 1977 there would be no valid method of determining whether the revisionist ever exceeded the maximum demand. He, therefore urged that in such a situation when the liability was seriously under dispute, the Board could not unilaterally determine the amount liable to be paid by the revisionist without affording opportunity to them. He has in support of his submission, relied upon the following cases:--

(1971) 3 SCC 883, 1979 All LJ 574, AIR 1975 All 29, AIR 1981 SC 136 to show that principle of natural justice would be violated if no opportunity is given tothe revisionist before the Board determined the 'amount due' from them.

16. In General Manager NEF Railway v. Dina Bandhu Chakraborty (1971).3 SCC 883 the respondent was Station Master serving under the appellant Railway, A shortage of a certain sum was found in remittances made by him. The respondent retired soon thereafter and while paying the provident fund amount due to him the amount of shortage was deducted. In a suit filed by him, the Supreme Court held that the government, could not be a Judge in its own cause in the absence of any statutory provision empowering it to act in this manner. Again in R. K. Industries v. State of U. p. (1979 All LJ 574) a Division Bench of this Court relying on Sri Bandhu's case (1978 All LJ 176) held that the government could not make an arbitrary deduction from the statutory price which it was bound to pay for the stock of rice purchased. In this case also the court held that the right to deduct be got adjudicated in a court of law.

17. In Mirzapur Electric Supply Company Ltd. v. State of U. p., AIR 1975 All 29. the Board issued a notice to the company to pay additional security to the tune of Rs. 20 lacs under Section 47A of Electricity (Supply) Act, 1948 as amended in U. P. A Division Bench of this court held that before demanding security from the Company it was necessary for the Board to take into consideration various factors before determining the amount that should be demanded. For doing this, the Board could not act arbitrarily and must give an opportunity of being heard to the other party.

18. Sri A. P. Singh, learned counsel for the Electricity Board, however, contended that in the first two cases relied on by the petitioner the liability did not arise out of a contract. Similarly in the third case, the liability arose from statutory provision and therefore, according to him these cases were distinguishable. He has on the other hand relied upon State of Punjab v. Ajudhia Nath, (AIR 1981 SC 1374) where it was held that though an opportunity of being heard has to be given to a liquor vendor when his licence is sought to be cancelled, the same principle of natural justice does not come into play when the demand is merely for payment of a sum becoming due under the conditions of subject to which the licence was granted.

19. From the above discussion of the case, it follows that where the liability is fixed under a contract of (sic) the demand is made in accordance with a statutory provision and a demand for that amount is made without giving an opportunity to the other side there can be no violation of principles of natural justice, Where, however, such is not the case the amount needs determination, may be in terms of certain rules, the party affected thereby must have notice before the final amount can be said to have become due or payable by him. This lends us to examine as to what is meant by the words 'due' or 'payable.'

20. The word 'due' has been defined in Blacks Law Dictionary as owning, payable justly owned that which law or justice requires to be paid or done. The word 'due' therefore, always imports a fixed and settle obligation or liability.

21. Similarly the word 'payable' has been defined in Corpus Juris Secundum as it is an adjective of ambiguous import, standing above the word is not confined to one single definite meaning, nor is there such single meaning when it is used in a legal sense. It is a descriptive word and its meaning can be determined only in the light of situation and the circumstances of its use. It is also defined as that should be paid, due, matured, legally enforceable. It is sometimes taken as syonymous with the word 'due'. Therefore due may mean that the debt or claim is now (presently) matured and enforceable, or that it matured at sometimes in the past and yet remains unsatisfied or that it is fixed or certain but the day appointed for its payment has not yet arrived. But commonly the word 'due' is restricted to the first of the above three meanings the second being expressed by the word 'over due' and the last by the word 'payable.'

22. It, therefore, follows that no amount can be said to be due unless it is fixed or settled and becomes legally payable, But what would be legally payable in a given case may be based on the terms of contract between the parties. It can also be on the basis of the statutory provisions in the Act or it may be fixed or ascertained between the parties by mutual agreement, if there be some kind of method provided for calculating the amount due in the agreement, the same shall be binding and there would be no need to give opportunity to the other side to determine the amount payable.For example there may be a provision such as is to be found in Clause 10 of the agreement between the parties that any reading recorded at the point of supply will be entered and that reading will be binding on the party and any amount calculated on the basis of the readings mentioned in the card can be taken as the amount due. Similarly under the Electricity Supply Act certain restrictions were placed by the government on the consumers restraining the consumption of electricity by them and if any contravention thereof was made a penalty could be imposed as per rules on them. If there is a prima facie proof that a party has exceeded the limits placed by the government in consuming the electricity, penalty as provided for the violation thereof, can be fixed in accordance with the rules. A demand for such an amount can be made and such amount can be said to be the amount due and payable. However, in the present case, the learned counsel for the revisionist has drawn my attention to annexures II and III which are copies of the two bills in dispute. In Annexure II dated 1-9-79 a demand for Rs. 28,243.30 P. has been raised. The bill shows that it is for the period 31st May, 79 to 12th July, 79. The learned counsel pointed out that on the face of it, the period for which demand has been made is incorrect. He has drawn my attention to Annexure XVI written by the Assistant Engineer to the Executive Engineer Commercial on 2-7-79 wherein it has been admitted that the connection in question had been actually disconnected on 24-6-79. The bill also mentions that the line was dismantled on 12-7-79 which again would be contrary to what is contained in the letter Annexure XVI. According to the revisionist, the bills submitted for this period had already been paid. It appears to be the admitted case of the parties that all the bills of the Board stand paid including bills for Rs. 7429.14 P. and for Rupees 4668/- both of the which have been deposited under protest, except the last two bills for Rs. 28,243-30 P. and Rupees 92,861.03 P. It appears that no amount of penalty was ever charged from the revisionist. Annexure III is the statement of account. This assessment appears to have been made on the basis of government notification of 7th Apr., 77 and 19th Sept., 77. It is urged in the application that no meter had been installed in the premises of the revisionist till Sept., 77for recording maximum demand and, therefore, in the absence of that, it is prima facie difficult to believe that the revisionist had indeed exceeded the maximum demand while consuming the electricity. It again will be a matter requiring determination by the arbitrator when the matter is referred to him for arbitration. It, however, does appear that prima facie the stand taken by the revisionist cannot be rejected out of hand. If that be so, the position prima facie is that the revisionist has been able to establish a case which certainly needs determination and his contention though may fail ultimately yet it cannot be rejected off hand without giving him a proper hearing.

23. On the question whether there would be irreparable injury by the grantof injunction or by its refusal we have to consider whether any money was, in fact, due or not. This cannot be decided at this stage but prima facie there is enough material to show that the amount may not be due. The balance of convenience lies in favour of the revisionist, and, consequently, there will be irreparable injury to the revisionist. It is true that the Board will suffer but the revisionist cannot also be bound to pay the money merely on the basis of some supposed amount raised by the Board. The interest of the Board can be secured if the revisionist gives sufficient security for the amount in question.

24. I, therefore, allow the revisionwith costs and order of the court below is set aside. The application for issuance of injunction restraining the Board from realising the amount in question as arrears of land revenue shall stand allowed. The Board shall not realise the disputed amount from the revisionist either itself or through any other agency during the pendency of the petition under Section 20 of the Arbitration Act, provided the revisionist gives adequate security for the amount in question to the satisfaction of the court below within three months of the date of this Order. The revisionist will be entitled if it so likes to provide Bank guarantee also as security.


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