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Northern India Iron and Steel Co. Ltd. Vs. the State of Haryana and anr. - Court Judgment

LegalCrystal Citation
SubjectElectricity
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ Nos. 6603 of 1974 and 192, 229, 733, 838, 867 and 892 etc. of 1975
Judge
Reported inAIR1976P& H59
ActsPunjab Electricity (Duty) Act, 1958 - Sections 3, 3(1) and 13; Electricity Supply Act, 1948 - Sections 49 and 59; Electricity Act, 1910 - Sections 22B; Sale of Goods Act, 1930 - Sections 37; Contract Act, 1872 - Sections 31; Haryana Electricity (Duty) Act, 1974; Punjab Electricity (Duty) Rules - Rule 3
AppellantNorthern India Iron and Steel Co. Ltd.
RespondentThe State of Haryana and anr.
Appellant Advocate Siri Chand Goyal, Sr. Adv. and; O.P. Goyal, Adv.
Respondent Advocate J.N. Kaushal, Adv. General, Haryana,; C.D. Dewan, Addl. Adv. General,;
DispositionPetition dismissed
Cases ReferredMadangani Kishengarh v. Rajasthan State Electricity Board. Jaipur
Excerpt:
- sections 100-a [as inserted by act 22 of 2002], 110 & 104 & letters patent, 1865, clause 10: [dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] letters patent appeal order of single judge of high court passed while deciding matters filed under order 43, rule1 of c.p.c., - held, after introduction of section 110a in the c.p.c., by 2002 amendment act, no letters patent appeal is maintainable against judgment/order/decree passed by a single judge of a high court. a right of appeal, even though a vested one, can be taken away by law. it is pertinent to note that section 100-a introduced by 2002 amendment of the code starts with a non obstante clause. the purpose of such clause is to give the enacting part of an overriding effect in the case of a conflict with laws mentioned with the.....rajendra nath mitttal, j.1. this judgment of mine will dispose of a bunch of writ petitions, as detailed below, which involve common questions of law and facts. the petitioners can be mainly divided into two categories, namely:--(i) large supply consumers. (ii) medium supply consumers. civil writs nos. 6603 of 1974, 192, 229, 589, 591, 593, 594, 626, 645, 678, 679, 680, 682, 683, 722, 723, 725, 726, 727, 728, 729, 730, 731, 742, 747, 777, 778, 779, 780, 833, 843, 863, 868, 869, 881, 883, 884, 885, 886, 887, 907, 964, 965, 975, 979 and 980 of 1975: and 25, 595, 681, 733 and 838 of 1975 (arc furnaces' category) belong to former category of petitioners: and 422, 584, 676, 720, 721, 724, 732, 743, 781, 841, 848, 867 and 892 of 1975 to latter category of petitioners.(some of the large supply.....
Judgment:

Rajendra Nath Mitttal, J.

1. This judgment of mine will dispose of a bunch of writ petitions, as detailed below, which involve common questions of law and facts. The petitioners can be mainly divided into two categories, namely:--

(i) Large Supply Consumers.

(ii) Medium Supply Consumers.

Civil Writs Nos. 6603 of 1974, 192, 229, 589, 591, 593, 594, 626, 645, 678, 679, 680, 682, 683, 722, 723, 725, 726, 727, 728, 729, 730, 731, 742, 747, 777, 778, 779, 780, 833, 843, 863, 868, 869, 881, 883, 884, 885, 886, 887, 907, 964, 965, 975, 979 and 980 of 1975: and 25, 595, 681, 733 and 838 of 1975 (Arc Furnaces' Category) belong to former category of petitioners: and 422, 584, 676, 720, 721, 724, 732, 743, 781, 841, 848, 867 and 892 of 1975 to latter category of petitioners.

(Some of the large supply consumers are running Furnaces. Such consumers constitute subdivision amongst the large supply consumers. A specific mention has been made about these consumers in the aforesaid list).

2. The facts have been given here from civil writ petition No. 733 of 1975. The petitioner owns a factory and is manufacturing alloy steel and steel castings. It is a large supply consumer of electricity which is supplied by the Har-yana State Electricitv Board, respondent No. 2 (hereinafter referred to as 'the Board'). The connected load of the petitioner is 8687.649 K. Ws. and its contract demand is also the same. It has been allotted 1.06.590 units on daily basis as its power quota by the Board. There was shortage of electric energy in the State of Haryana and the State Government issued orders and directions for maintaining the supply and securing the equitable distribution of the energy. The petitioner was subiected to power cut on account of the orders and directions of the State Government. The Board in spite of power cut, has been billing the petitioner on the basis of demand charges as was done earlier. According to the petitioner, the Board is not entitled to charge the demand charges and it has challenged its rights to do so. The State of Haryana, the petitioner says, is entitled to charge duty on the energy consumed under the Punjab Electricitv (Duty) Act 1958 (hereinafter referred to as 'the Duty Act'). It is, however, charging duty not only on the consumption of energy but also on the demand charges. On April 15, 1974, the electricity duty was revised whereby it was increased from 20% to 50% on the category pf industrial consumers in which the petitioner falls. The above notification was amended by notification, dated April 24, 1974, with retrospective effect from April 15, 1974, and certain changes were made in the slabs. The Board, according to the petitioner, instead of collecting the duty according to the above notifications from April 15, 1974, is doing so, from April 1, 1974. The Board has been chanting surcharge of 20% on the amount of bills. It is alleged by the petitioner that it is entitled to the duty only on the bill relating to energy consumed by it and not on demand charges. The Board revised the tariff with effect from August 1. 1974. By virtue of the new tariff, the energy charges and demand charges have been increased. The petitioner has also challenged the tariff regarding the demand charges and the surcharge and the electric duty on the demand charges. All the writ petitions have been contested by the Board.

2-A. The first question that arises for determination is as to whether the Board is entitled to demand charges in spite of the fact that it imposed cut in the supply of electric energy. In order to decide this question, it is necessary to know as to how the tariffs are framed, Section 49 of the Electricity Supply Act, 1948 (hereinafter referred to as 'the Supply Act') authorizes the Board to frame uniform tariffs. The aforesaid section is as follows:--

'49(1) Subject to the provisions of this Act and of regulation, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs.

(2) In fixing the uniform tariffs, the Board shall have regard to all or any of the following factors, namely:--

'(a) the nature of the supply and the purpose for which it is required:

(b) the co-ordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with Particular reference to such development in areas not for the time being served or adeauatelv served by the licensee:

(c) the simplification and standardisation of methods and rates of charges for such supplies;

(d) the extension and cheapening of supplies of electricity to sparsely develop-ed area.

(3) Nothing in the foregoing provisions of this section shall derogate from the power of the Board, if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee, having regard to the geographical position of any area, the nature of the supply and purpose for which supply is required and any other relevant factors.

(4) In fixing the tariff and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person.'

3. A reading of the section shows in fixing the tariffs, the Board shall take into consideration various factors, such as, the nature of the supply and the purposes for which the electricity is required, the simplification and standardisation of methods and rates of charges for such supplies and the co-ordinated development of the supply and distribution of electricity within the State in the most economical and efficient manner. The section also authorizes the Board to fix different tariffs for the supply of electricity to any person not being a licensee in different circumstances. In doing so, it has to take into consideration the nature of supply and the purposes for which the supply is required and any other relevant factors. The section clearly authorizes the Board to simplify and standardise the methods and rates of charges.

4. There are two well-known systems of framing tariffs-- one is the flat rate system and the other is two-part tariff system. Under the former system, a flat rate per unit is fixed. The latter comprises of (a) demand charges to cover investment and also the standing charges to some extent; and (b) energy charges to provide for balance of the standing charges not covered in the demand charges and the running charges. The Board has framed its tariff on the latter system, that is, two-part tariff system. In order to see what is two-part tariff system, it is necessary to know what is demand charges. The Board has framed conditions for supply of electric energy to consumers other than distributing licen-cees under Section 49 of the Supply Act (hereinafter called as 'the Terms and Conditions'). Clause 1 therein defines various terms. 'Demand Charge' has been defined in Sub-clause (h) of Clause (1) as follows:--

' 'Demand Charge' shall mean the amount chargeable per month in respect of Board's readiness to serve the consumer irrespective of whether he consumes any energy or not, and is based upon theconnected load, the maximum demand or the contract demand, as the case mav be and as prescribed in the relevant schedule of tariff.'

4-A. It is clear from the definition that the demand charge is based on the connected load, the maximum demand and the contract demand. The definitions of 'Connected Load' and 'Contract Demand' are as follows:--

'Connected Load' means the sum of the rated capacities of all the energy consuming apparatus in the consumer's installation, which can be operated simultaneously.

'Contract Demand' means the maximum demand agreed to between the consumer and the Board.'

'Maximum Demand' has been defined in the Supply Act which savs that 'Maximum Demand' in relation to any period shall, unless otherwise provided in any general or special order of the State Government, mean twice the largest number of killowatt-hours or kilo-volt-ampere-hours supplied and taken during any consecutive thirty minutes in that period. In Haryana, as already stated, for supplvits electricity to the large consumers, and medium size consumers, two-part tariff is applicable. The Board changed the tariff with effect from the meter reading in September, 1974, that is, the reading on the basis of which bills were prepared in October, 1974. According to the old Schedule of tariff, the tariff was fixed as follows :--

'Tariff: Demand charges:

First 1000 KVA.....Rs. 6.50 per KVAper month

All above 1000 KVA.....Rs. 5.50 perKVA Der month Plus

energy charges

5.00 paise per Kwh for the First 1.00.000 Kwh per month

4.5 paise per Kwh for the next 2.00.000 Kwh per month

4.0 paise per Kwh for all in excess of 3,00,000 -do-

Subiect to (1) A rebate of half paisa Der Kwh for all units in excess of 360 Kwh per KVA per month or in excess of 420 Kwh per KW per month if the demand charge is based on KW.

(2) A maximum overall rate of 10 paise per Kwh without prejudice to the monthly minimum charges under Item (7) below.

Note: The above tariff covers supply at 11 KW or 6.6 KV and 3.3 KV for supply at 400 volts surcharge of ten per cent is leviable.

(i) Add surcharge of 20% on 50 P/monthly minimum charges (industrial, factory lighting and colony supply).

(ii) Add further surcharge of 20% on above.

(4) Demand Assessment:

(a) The demand for any month shall be defined as the highest average Load measured in kilovolt amperes during any 30 consecutive minutes period of the month.

(b) The monthly demand charges shall be based on the actual maximum demand during the month or (ii) 65 % of the contract demand or (iii) 75 % of the highest maximum demand during the preceding eleven months or (iv) 100 KVA whichever is the highest. For the first 11 months from the commencement of supply alternative (iii) shall not be ap-plicable.

(c) The contract demand means the maximum KW/KVA for the supply of which the Board undertakes to provide facilities from time to time.

Note: In case the consumer exceeds his contract demand in any month by more than 7 1/2% a surcharge of 25% will be levied on the 50 P/monthly minimum charges (industrial, factory lighting and colony supply).

(d) If in any case file maximum, demand is being measured in KW the same shall be converted, into KVA by the use of actual power factor and KVA tariff ap-plied for working out the demand charges.

(e) In case the supply has been given on restricted hours basis then a reduction of 30% in demand charges will be given if supply is for 12 hours or less. Occasio-nal break downs or shut downs if any, on the part of the supplier shall, however, not entitle a consumer to any reduction.

(f) Force Majeure : in the event of lock out, fire or any other circumstances considered by the supplier to be beyond the actual control of the consumer the consumer shall be entitled to a proportionate reduction in demand charges/minimum charges provided he serves at least 3 days notice on the supplier for shut down of not less than 15 days' duration.

(g) The power factor of the consumer shall not be less than 85% at any time within 100% and 75% of the highest maximum demand as recorded in the 3 months preceding the date of checking of power factor. In case the power factor falls below 85%, the consumer shall have to pay a surcharge of 1/2% of 5.0 P. charges for each 1 % decrease in the power factor.

Note:-- The Board shall give a week's notice to the consumer to facilitate measurement of power factor on the above basis. If the consumer fails to provide the load requirement as above in spite of the notice the power factor as measured under the load conditions actually provided by the consumer shall be taken into account for purposes of billing.

(5) xx xx x

XX XX X

(6) XX XX X

XX XX X

(7) Monthly minimum payment: The demand charges under Items (4) and (5) above shall be reckoned as the monthly minimum charges.

(8) Payment: The above rates are net. In the event of the monthly bill not being paid in full within the time specified in the bill a surcharge of two per cent. shall be levied on the unpaid amount of the bill for each 30 days' successive period or part thereof until the amount is paid in full.

(9) Single point Delivery : The above tariff is based on the supply being given through a single delivery and metering point and at a single voltage. Supply at other points or at other voltages shall be separately metered and billed.'

5. In the new schedule of tariff, the system of charges remained the same. The rates were, however, varied. Another material change which was made in the new schedule of tariff was that the maximum overall rate of 10 paise per Kwh which had been provided in the old tariff was deleted. The schedule provides certain safeguards to the consumers. Clause 4 (e) says that in case of supply for restricted hours, certain concessions will be given in demand charges. In Clause 4 (f), it is stated that in the event of lock-out, fire or any other circumstances, considered by the supplier to be beyond the control of the consumer, the consumer shall be entitled to certain, reductions in demand charges. In some clauses, safeguards have also been provided for the Board. The payment of demand charges, according to the schedule, is based on (i) the actual maximum demand during the month: or (ii) 65% of the contract demand or (iii) 75% of the highest maximum demand during the preceding 11 months: or (iv) 100 KWA, whichever is the highest. It shows that the demand charges are based not on the energy consumed but on the power factor. The criteria as given in the schedule for fixing the demand charges is in consonance with the definition of the demand charges. Therefore, no fault can be found with it according to the latter part of the definition, The argument which has been vehemently canvassed is that the Board had no electric energy to supply to the petitioner and, therefore, it cannot be said that it was readv to serve the consumer. It is submitted that in the circumstances, the Board is not entitled to charge demand charges. No doubt, the argument is ingenious, but when examined closely, it was found to be without merit. Theaforesaid definition is to be read subject to the provisions of the Indian Electricity Act 1910 (hereinafter referred to as 'the 1910 Act') applicable to the Board. Section 22B provides that if the State Government is of opinion that it is recess the or expedient so to do, for maintaining the supply and securing the eauitable distribution of energy, it may by order provide for regulating the supply, distribution, consumption or use thereof. Clause 6 of the schedule to the said Act says that if the licences is not prevented from supplying energy by cyclones, floods, storms or other occurrences beyond its control, it shall continue to supply energy in accordance with the requisition. It is clear from the aforesaid provisions that the obligation of the Board to supply electric energy is not absolute but is subject to the restrictions placed by the aforesaid provisions. If the Board has been ordered by the Government to impose a cut in the supply of electric energy to the consumer or it is unable to supply the same on account of any happening as provided in Clause 6 of the Schedule of 1910 Act, the Board cannot be blamed for not supplying the energy. In such a situation, it cannot be held that it was not ready to serve the consumer as there is no lapse on its part on account of which the energy was not being supplied. Readiness to serve would mean that the Board has adeauate arrangements to supply energy, and it can supply it, if not forbidden by any lawful order or prevented from any cause beyond its control. In the present case, it has not been shown that the energy was not being supplied on account of any lapse on the part of the Board. On the other hand, it is apparent on the record, that it was not doing so on account of lawful orders and acute shortage of electric energy because of power crisis. Thus the provisions of the 1910 Act give full protection to the Board. In this situation, in my view, the Board was always ready to supply electric energy to the petitioner.

6. A contention has been raised by the learned counsel for the petitioner that electricity is 'goods' within the definition of Section 2(7) of the Sale of Goods Act, 1930, and, in case, the goods are not supplied in accordance with the terms of the agreement the consumer is liable to pay only for delivery of such quantity as has been supplied to the consumer. No doubt, it is true that electricity falls within the definition of the expression 'goods' (see Commr. of Sales Tax Madhya Pradesh, Indore v. Madhya Pradesh Electricity Board, Jabalpur, (1969) 2 SCR 939 = (AIR 1970 SC 732)) but the learned counsel in advancing this argument loses sight of the schedule of tariff. As already stated, there are two systems of charging tariff, one known as two-part tariff system and the other single-part tariff system. In two-part tariff system, the consumer is liable to pay for the energy consumed and also the demand charges. Demand charges are to cover the investment and the standing charges to some extent. It is the power factor which is the basis for determining demand charges. In the single-part tariff, both the charges are consolidated and rate is fixed on that basis. In that case, the rate of energy is higher than that fixed under the other system. The Board in that system takes demand charges along with energy charges. In two-part tariff system if the Board does not charge demand charges, it shall be selling the energy at loss. This is not possible for the Board. Generally, two-part tariff system is applied throughout the country for large supply consumers and medium size consumers. No fault can be found with the said system. All the consumers including the petitioner, have signed agreement. The peti-tioner as well as other consumers did not raise any objection regarding tariff while signing such agreements. It is, therefore, bound by it. Similar view has been taken by a learned Division Bench of the Bombay High Court in Maharashtra State Electricity Board v. Madhusudandass and Brothers, Tumsar, AIR 1966 Bom 160. It has held that the minimum billing demand charge is a part of the tariff and by agreement between the parties, the consumer is bound to pay this charge as well as the charge for the actual energy consumed in the present case, the schedule of tariff has, however, provided some relief in case the supply is made for 12 hours or less. It may also be mentioned that the Board on account of energy crisis has also given additional reliefs to the consumer of which full discussion will he made later. Section 37 of the Sale of Goods Act which relates to delivery of wrong quantity has no applicability. In view of the aforesaid reasons. I do not find any substance in this contention.

7. Another contention has been raised by the learned counsel for the petitioner that the contract between the petitioner and the Board was a contingent contract as defined in Section 31 of the Contract Act and that the petitioner was not liable to pay any demand charges in case the Board failed to supply the energy. I have given a thoughtful consideration to this argument but regret my inability to accept the same. Section 31 of the Contract Act defines the contingent contract as a contract to do or not to do something, if some event collateral to such contract does or does not happen. In the case of agreement to pay Minimum Demand Charges', there is no collateral event which is to happen. The consumer is liable to pay the minimum demand charges. These charges, in certain circumstances, as already mentioned, can be reduced. Section 31, in my view, has no applicability as the contract between the parties is not contingent.

8. The learned counsel for the petitioner then advanced the contention that the Legislature can give power to any subordinate authority to make reasonable rules/bye-laws. He argues that the demand charge on the face of it is unreasonable and no intention can be assigned to the Legislature to delegate such a power to the Board. He, therefore, submits that it is liable to be struck down on this ground. The learned counsel in support of his contention has referred to a Full Bench judgment of the Allahabad High Court in Bhushan Lal v. State, AIR 1952 All 866, wherein it has been observed that it is a fundamental principle of law that rules or regulations or orders made under a Dower conferred by the Legislature upon a subordinate authority must be reasonable. It is further observed that this furnishes a justiciable standard for the Courts to apply to all subordinate legislation and by this wholesome rule, no subordinate legislation may make rules and regulations which may be considered unreasonable. I have given a thoughtful consideration to the argument but do not find any force in it. The principle laid down by the learned Full Bench is unexceptionable. The question is whether the above principle is applicable to the instant case or not. In my view, it is not. It has already been discussed above as to how the tariff is framed and why the consumer is liable to pay demand charges. There is no unreasonableness in these charges. There are, therefore, no reasons to strike them down.

9. After taking into consideration all the aforesaid arguments, the irresistible conclusion is that the Board is en-titled to recover the demand charges in accordance with the clauses of the schedule of tariff.

10. Another contention which was sought to be raised by the counsel for the petitioner is that the Board had no authority to change the tariff. A reference has been made by him to the following para. of agreement between the parties:--

'And I/we hereby declare that the said conditions of supply including Schedule of Tariff Service charge and General charges have been perused by/read to me/us and I/we agree to be bound by them.'

11. I have also given a deep thought to this contention of the learned counsel for the Petitioner but do not findanv substance in it. The Board has got the power to change the tariff from time to time under Section 49 of the Supply Act. Section 59 of the Supply Act relates to general principles for Board's finances and it says that the Board shall not, as far as practicable, carry on its operations under the Act at a loss, and shall adjust its charges accordingly from time to time. This section further confirms the above view. It is also provided in the agreement that the petitioner had perused the conditions of supply of electric energy and it was bound by these conditions. Clauses 23 and 31 of the Terms and Conditions specifically Drovide that the tariff can be amended by the Board from time to time. In addition to the aforesaid clauses, there is also a clause in the agreement to the effect that the petitioner shall pav in accordance with relevant tariff. The words 'relevant tariff' are very significant and mean the tariff in force. The aforesaid clauses clearly indicate that the Board was entitled to amend the tariff and the petitioner would be bound by the amended schedule. In this view. I get support from the decision of a Division Bench of this Court in Civil Writ No. 2988 of 1968 (Kartar Singh v. Punjab State Electricity Board) decided on 7-5-1969.*

12. It is then argued by the learned counsel for the petitioner that the Punjab Electricity Board has given some relief to its consumers in similar circumstances and that relief be given to the petitioner on the same pattern. In order to adjudicate on this contention, it is necessary to refer to certain facts. The State of Harvana vide its orders, dated January 4, 1974, and November 21, 1974, imposed cuts in the supply of electricity. The orders of the Harvana Government are Annexures R-2/3 and R-2/4. In the former, it is stated that a cut be imposed in the supply of electric power upto 60% of the normal supply, with effect from November 3, 1973, till further orders in respect of electric arc furnaces, large supply, medium supply and small industrial consumers. By the latter order, a cut has been imposed on the supply of electric power in respect of all industrial consumers, domestic, commercial and other consumers and agricultural consumers. The cut prescribed in the case of all industrial consumers during certain period is upto 100% on energy consumption. On supply of electric energy, 100% cut was imposed to 'all industrial consumers' from the midnight of November 21 and 22, 1974, upto the midnight of November 28 and 29, 1974. Consequently, the Board gave some relief to the consumers vide sale circular No. 5/75, dated April 23, 1975.on demand charges. The formula is as follows:--

'(i) IN CASE OF RUNNING INDUSTRIES

%age relief in demand: (A B) X 60

A charges/M. M. C.

A: Is base/normal consumption of the consumer.

B: Is actual consumption during any Dower cut month of a consumer.

No relief will however be admissible where the relief accruable is 10% or less in demand charges/minimum charges. Charges assessed shall also not be less than the unit charges.

Note: The base/normal consumption, i.e., 'A' shall be the same as has been advised earlier through various circulars and has been adopted for fixing the unit quota of various consumers.'

13. In nutshell, by this formula. 60% of the loss was borne by the Board and 40% was left to be borne by the consumer. It is also provided in the formula that in case any industrial consumers including the Furnace category consumers suspended their industrial production due to inadequacy of power, they were not liable to pay the minimum charges during such non-production period in case they served seven days' notice on the Board. This formula was made applicable to the old as well as the new tariff with respect to both the medium and the large supply consumers. The Haryana Board in its affidavit, dated May 14. 1975, agreed to give relief to its consumers on the basis of Punjab formula during the period in which old schedule of tariff was applicable on the ground that that schedule was similar to that of the Punjab. The Board, however, put a condition that it will give relief on that pattern, if all the consumers agreed to accept it. The offer of the Board was thus subject to acceptance by all the consumers. The question was put to the learned counsel for the parties. They stated that some of the petitioners showed preference for the Punjab formula whereas the others for the Haryana formula. There was no unanimity between the petitioners on any one pattern. In the circumstances, there is no alternative but to accept the formula on which the Board has agreed to give relief to all the consumers, namely, the Haryana formula. The contention of the learned counsel of the petitioner is, therefore, rejected.

14. The learned counsel for the petitioner has next argued that the new tariff was applied retrospectively. He further submits that the tariff could come into operation prospectively. This contention of the learned counsel for the petitioner has also no merit. The Boardhas submitted the copies of the resolutions dated June 29, 1974, and September 2, 1974. In the former resolution, it is stated in Item No. 48 that the reconstruction of tariff for steel furnaces would take effect from the first meter reading falling due after August 1, 1974. In the other resolution, it is provided that the revised rate shall be applicable on the energy consumed after the meter reading falling in September, 1974, that is, for the bills prepared on the basis of readings taken in October. 1974. The language of both the resolutions indicates that both of them are prospective. In view of the aforesaid circumstances, the contention of the learned counsel for the petitioner is rejected as having no merit.

15. It is then argued on behalf of the petitioner that the Board gave new connections in spite of the fact that it had no energy to supply. He submits that if there was shortage of electricity, connections should not have been given to the new consumers. He also says that the petitioners are entitled to the relief claimed as the Board is responsible for creating shortage of electric energy to some extent. The reply of the Board is that it was fulfilling its previous commitments in giving the new connections. It also says that it had to take into consideration the overall development of the State, vis a vis, future power development. The Board was bound to give connections to such persons with whom it had entered into agreements. In case, it had committed breach of the agreement, it would have ibecome liable to legal consequences. The State of Haryana is a developing State. The shortage cannot be ascribed to be permanent feature. It is a temporary phase. In case, the Board stops giving of new connections, it may affect the future economy of the State, In these circumstances, there is no merit in the contention of the learned counsel for the petitioner.

16. The next contention of the learned counsel for the petitioner is that the electricity duty under the Punjab Electricity (Duty) Act, 1958, could be charged by the Board on the energy consumed by the petitioner and not on the demand charges. He says that the act of the Board in collecting duty on the demand charges was illegal and against the provisions of the Duty Act. In order to determine the question, some of the provisions of the Duty Act as amended by Haryana Act 16 of 1974; and those of the Puniab Electricity (Duty) Rules 1958 (hereinafter referred to as 'the Rules') may be noticed. Section 3 of the Duty Act is the charging section Sub-section (1) of Section 3 says that there shall be levied and paid to the State Government on the energy supplied by the Board toa consumer or a licensee a duty, to be called the 'electricity duty' computed at the rates given therein. Clause (i) of Sub-section (1) relates to consumption of energy by a domestic consumer, Clause (ii) by a commercial consumer and Clause (iii) by other category of consumers. Clause (iii) prescribes a rate of duty not exceeding 50% of the price of energy supplied in a month as the State Government may from time to time by notification specify in that behalf. It is an admitted case of the parties that the petitioner is liable to pay duty under Section 3 (1) (iii). It has already been discussed above that the patterns of tariffs are either single part-tariff or two-part tariff. In the former, all the charges are included in the energy charges whereas in the latter, it is not so. In the two-part tariff, the demand charges cover investment and also the standing charges to some extent. In order to supply electricity, it is necessary that some capital investment is made in order to fix installations and provide lines. Unless it is done, the electric energy cannot be supplied. The two-part tariff is a recognised method of dividing the charges into two heads. That shows that the minimum demand has got connection with the supply of electric energy. It has already been stated that if single part tariff system is adopted, then the charges of electric energy are much higher than those in the two-part tariff. The two-part tariff is a system evolved for charging the consumers of certain categories who have large consumption. It cannot be held that the demand charges are not part of energy charges. In this view. I get support from the observations of a learned Division Bench judgment of Rajasthan High Court in M/s. Aditya Mills Ltd., Madangani Kishengarh v. Rajasthan State Electricity Board. Jaipur, AIR 1969 Raj 254, wherein it was observed as follows:--

'In case of 'Large Industrial Loads' charges are made for consumption of electricity under two heads, viz.. Demand Charges and Energy Charges. The two-part rate' is only a system of charging. There are two methods of charging prescribed in the 'tariffs', one is what may be termed one part rates, i.e., a single charge Is made on the basis of quantity of energy consumed or which is supposed to cover both the demand costs and the output costs. The other is two-part rates which provides specifically for the demand costs. The two parts rate is in two component parts a separate demand charge. Consequently the surcharge is leviable on the Demand charges as well as Energy char-ges. It cannot be said that Demand Charges are not part of consumption charges and that the surcharge can be made applicable to energy charges and not to demand charges.'

17. The supply of energy has, therefore, a direct connection with the demand charges and the consumer is liableto pay the duty on it along with the duty on energy charges. This conclusion further gets support from Rule 3 of the Rules wherein it is mentioned that the duty under Clause (iii) of Sub-section (1) of Section 3 of the Duty Act shall be calculated on the price of the energy recoverable at the net rate of the Board which will include the demand charge when the supply is governed by a two-part tariff. The State Government had been given powers to make rules inter alia for the manner of calculating the duty (including marginal adjustments) under Section 13. The State Government, therefore, could prescribe as to how the duty could be calculated in case there was two-part tariff. After taking into consideration all the aforesaid circumstances. I am of the view that the State is entitled to recover duty on the demand charges.

18. The next contention of the learned counsel for the petitioner is that Rule 3 of the Rules is ultra vires Section 3 of the Duty Act. He submits that the State Government could not say that the consumer was liable to pay duty on the demand charges when Section 3 authorizes the State Government to charge duty on the consumption of electric energy. This contention of the learned counsel for the petitioner has also no merit. I have already held that the two-part tariff is only a system of charging for consumption of electric energy. The State Government, therefore, in two-part tariff could prescribe that the duty was payable on the demand charges. In these circumstances, the rule cannot be held to be ultra vires Section 3 of the Duty Act.

19. It is then contended by the learned counsel for the petitioner that the Board according to the schedule of tariff was entitled to add surcharge on the bill for consumption of energy and not on that of the demand charges. This contention is similar to that as has been dealt with above, wherein it was argued that the duty was not payable on the demand charges. In view of the reasons detailed above, the Board is entitled to charge surcharge on the demand charges in addition to energy charges. I am fortified in my conclusions by the decision of the Rajasthan High Court in M/s. Aditya Mills' case (supra).

20. The learned counsel for the petitioner has then argued that the Board had given an undertaking that no surcharge would be charged from the consumer for a period of five years from the date of giving the connection. He states that in spite of the undertaking, the Board had started charging it within that period. Mr. Jain, the learned counsel forthe Board, has stated that no surcharge was charged during a period of five years. He has further stated that in case the Board by mistake had charged any amount on account of surcharge within the aforesaid period, the consumer can make an application to that effect and the Board will refund the amount. In view of the undertaking given by Mr. Jain, I need not go into this matter.

21. The learned counsel for the petitioner has also argued that in case a factory had been closed by consumer on account of non-supply of energy in that case the Board should not charge demand charges, even though no notice had been served on it in terms of Circular No. 5/75, dated April 23, 1975. Mr. Pitam Singh Jain, the learned counsel for the Board, has given an undertaking that in such cases, the consumer would not be charged demand charges. He has also stated that in case any consumer has paid such charges, the same would be refunded on making an application. In view of the undertaking of Mr. Jain, it is not necessary to deal with this matter.

22. In the cases of Arc Furnaces, an additional argument has been raised that the consumer having an arc furnace has to pay Rs. 12/- per K. V. A. whereas a large supply consumer has to pay Rs. 10/- per K. V. A. as demand charges. It is contended that there are no reasons for charging Rs. 12/- per K. V. A. from a consumer having arc furnace. It is also contended that there is no rational basis for discriminating between a large supply consumer and an arc furnace consumer and, therefore, the clause regarding rates being discriminatory, is liable to be struck down. The Board in its affidavit has stated that the steel furnace is jerk type industry and it has to instal a much higher capacity of equipment for that industry as compared to other large supply industrial consumers. It further says that the steel furnaces constitute a separate category and the charges are based on rational differentia. The averments in the affidavit filed on behalf of the respondents have not been controverted by the petitioners. It is an admitted fact that consumption in electric furnaces is very high. In order to meet that demand the Board has to fix very heavy installations at great cost. The owners of the steel furnaces thus create a class in themselves. It has not been alleged that the Board fixed different tariffs for the steel furnaces owners inter se. The learned counsel for the petitioner has failed to show that the classification is unreasonable. In the abovesaid circumstances, the classification of furnace owners is reasonable and is not hit by Article 14 of the Constitution of India.

23. The contentions raised by the learned counsel for the petitioner in thecase of medium supply consumer are the same. No fresh arguments have been raised therein. The above conclusions will, therefore, govern the said category of writs.

24. For the aforesaid reasons, the writ petitions fail and the same are dismissed. In view of the complicated questions involved in the cases. I make no order as to costs.

Bhopinder Singh Dhillon, J.

25. I agree.


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