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Gopisetti Venkataratnam and ors. Vs. the Vijayawada Municipality and ors. - Court Judgment

LegalCrystal Citation
SubjectElectricity
CourtSupreme Court of India
Decided On
Judge
Reported inAIR1966SC353; [1965]3SCR276
ActsIndian Electricity Act, 1910 - Sections 3(1), 21, 21(1), 21(2), 22 and 23; Bezwada Municipal Electric Licence, 1927; Indian Electricity (Amendment) Act, 1940
AppellantGopisetti Venkataratnam and ors.
RespondentThe Vijayawada Municipality and ors.
Excerpt:
.....conditions as to invoke section 21 - consumer agreed to pay rates to be fixed by municipality from time to time under agreement as per section 21 - apex court observed that resolution in question has not altered any condition of agreement within section 21 (2) - no sanction of state government required - appeal dismissed on grounds that levy of enhanced rates valid. - - on appeal, the learned subordinate judge held that the levyfrom the date of the said resolution was good, but it could not be givenretrospective operation. the term goes well with the present, futureand recurrent. that apart, a public body like the municipality in supplying energy todifferent consumers cannot run the risk of incurring loss by agreeing to fixedrates, for the government may increase the licence fee, as it..........the question whether the words 'current official scaleof rates' in para. iv relate to the scale of rates current on the datewhen the agreement was entered into or refer to the scale of rates current fromtime to time in accordance with the resolution passed by the municipality. theexpression 'current' means 'vogue or prevalent'; and'current rate' may mean the rate obtaining at a particular time or ata future time or from time to time. the term goes well with the present, futureand recurrent. it is capable of different meanings depending upon the contextor setting in which it appears. as the meaning of the word is ambiguous, it islegitimate, in order to ascertain its true meaning, not only to study thedocument as a whole but also to ascertain its meaning from the circumstanceswhereunder.....
Judgment:

Subba Rao, J.

1. On November 22, 1927, the Government of Madras, in exercise of its powersunder s. 3(1) of the Indian Electricity Act, 1910 (IX of 1910), hereinaftercalled the Act, issued a licence to the Bezwada (now Vijayawada) MunicipalCouncil for the supply of electric energy within the municipal limits ofBezwada at rates not exceeding the maximum charges given in the third annexureto the said licence. The appellants, who are some of the consumers of electricenergy for domestic and industrial purposes, entered into agreements with thelicensee for the supply of electric energy to them for domestic, industrial andother purposes, agreeing to pay the current official scale of rates. OnDecember 13, 1940, the Municipality passed a resolution bringing into force newrates for the supply of electric energy from April 1, 1940. The consumers paidthe rates so fixed till the year 1956. On April 30, 1956, the Municipal Councilpassed another resolution enhancing the rates from 1-4-1956. The appellants fileda representative suit against the Vijayawada Municipality in the Court of theDistrict Munsif, Vijayawada, for a declaration that the said resolution datedApril 30, 1956, passed by the Municipal Council was illegal, invalid andunenforceable and for an injunction restraining the said Municipality fromcollecting charges from the consumers of electric energy in the licensee's areaat the new revised rates in pursuance of the impugned resolution. The learnedDistrict Munsif held that the demand of enhanced rate was legal and valid anddismissed the suit. On appeal, the learned Subordinate Judge held that the levyfrom the date of the said resolution was good, but it could not be givenretrospective operation. He further held that the claim for duty at half ananna per unit was invalid. In the result he modified the decree of the DistrictMunsif. On a further appeal, a Division Bench of the Andhra Pradesh High Courtconfirmed the decree of the Subordinate Judge. By special leave the presentappeal has been filed in this Court.

2. Mr. A. V. Viswanatha Sastri, learned counsel for the appellants raisedbefore us the following two contentions : (1) The rates agreed upon between theconsumers and the Municipality cannot be unilaterally altered and increased by theMunicipality to the prejudice of the consumers and, therefore, the saidresolution dated April 30, 1956, was invalid and unenforceable; and (2) as thesaid resolution was passed without obtaining the previous sanction of the StateGovernment under s. 21(2) of the Act, it was void for that reason also.

3. The first contention turns upon the relevant clauses of the agreemententered into between the Municipal Council and the consumers. Ex. B-4 is onesuch agreement date May 27, 1932, between the Municipality and one of theappellants herein. The material clauses of the agreement read :

Para, IV. The consumer shall payto the licensee for all electrical energy so supplied at the rates and inaccordance with the terms, given in the licensee's Current Official Scale ofrates and the signing of this Agreement is held to imply concurrence in theterms of the said Scales of rates.

Provided that the minimum ratesas specified therein shall be paid irrespective of whether energy to the extenthas been consumed or not.

Para, V. A consumer under thisAgreement is required to state (see Schedule) under which of the rates set outin the licensee's Official Scale of energy Rates, he desires to be charged.

Para, X. This Agreement shall beread and construed as subject in all respects to the provisions of the BezwadaMunicipal Electric Licence, 1927, and to the provisions of the IndianElectricity Act 1910, and of any modification or re-enactment thereof for thetime being in force thereunder so far as the same respectively may beapplicable. The supply of electrical energy under this agreement is subject tofollowing among other provisions of law, namely :-

* * * *

The schedule above referred to.

(2) Purposes to which the supplyis to be given, and in the case of domestic supply under which rate to becharged, as referred to in paragraph V :

(a) (Supply) Domestic Purposes.

(b) (Rate) Rs. 0 - 6 - 0 perunit.

(3) Maximum electrical powerrequired by the consumer : 0 - 54 K.W.

(4) Minimum monthly charge : Rs.2 - 8 - 0 in accordance with (a) class rate in the Schedule of Rates.

4. The Schedule of Rates mentioned in this agreement presumably refers toscale of rates fixed by the resolution of the Municipality. The conflictingarguments center on the question whether the words 'current official scaleof rates' in para. IV relate to the scale of rates current on the datewhen the agreement was entered into or refer to the scale of rates current fromtime to time in accordance with the resolution passed by the Municipality. Theexpression 'current' means 'vogue or prevalent'; and'current rate' may mean the rate obtaining at a particular time or ata future time or from time to time. The term goes well with the present, futureand recurrent. It is capable of different meanings depending upon the contextor setting in which it appears. As the meaning of the word is ambiguous, it islegitimate, in order to ascertain its true meaning, not only to study thedocument as a whole but also to ascertain its meaning from the circumstanceswhereunder the said agreement came into existence. Under para. X of theagreement the said agreement shall be subject to the provisions of the licenceand the provision of the Indian Electricity Act, 1940, that is to say the saidprovisions are incorporated by reference into this agreement. Under the licencethe licensee is precluded from charging rates higher than those prescribedthereunder. On April 1, 1940, the Electricity Department of the VijayawadaMunicipality prepared a document styled as 'Conditions and Rates ofSupply'. It does not contain any statutory rules, but only administrativedirections in regard to providing, inter alia for the method of entering intoagreements and for charging rates for the energy supplied. This embodies theadministrative practice of the Municipality in the matter of charging rates forthe energy supplied. Paragraph 15 thereof, under the heading 'Method ofcharging for current', reads :

'The price and method of charging for currentsupplied shall be such as may from time to time be fixed by the licensee inaccordance with the provisions of the Act and of his licence, or such as may bemade subject of special agreement between the consumers and the licensee.'

5. This makes a distinction between the official rate and the contractualrate. The official rate is that fixed by the licensee from time to time and thecontractual rate is that fixed by special agreement between the parties. It maybe assumed that this dual method is followed by the Municipality in the matterof entering into agreements. The form of application prescribed for the supplyof electric energy contains the following clause :

'I agree to pay for the said energy, serviceconnection and other dues including the deposit of such security as may bedemanded in accordance with the scale of rates and the rules of thelicence.'

6. The scale of rates in the context means the official scale of rates thatmay be fixed by the Municipality. When an application is filed an obligation isimposed under s. 22 of the Act on the licensee to supply energy, except in sofar as is otherwise provided by the terms and conditions of the licence, on thesame terms as those on which any other person in the same area is entitled insimilar circumstances to corresponding supply. Section 23 of the Act says thata licensee shall not, in making any agreement for the supply of energy, showundue preference to any person. The combined operation of these provisions isthat the licensee cannot discriminate between the applicants in the matter,among others, of rates chargeable for the energy supplied. Unless theMunicipality enters into an agreement with a consumer enabling it to charge himat a rate fixed by it from time to time, it would be very difficult for theMunicipality to maintain equality of treatment between the consumers in thematter of rates. The illustrate, if under certain agreement a rate obtaining ata particular date is agreed upon and the rate is binding on the Municipalityeven if it is raised later on, the Municipality may be guilty of discriminationwhich it is asked to avoid by statute if it charges other consumers at a higherrate. This difficulty can be avoided if there is a term in the agreementexecuted by every consumer that he will pay the official rate fixed by theMunicipality from time to time subject to the maximum fixed by the licence.That apart, a public body like the Municipality in supplying energy todifferent consumers cannot run the risk of incurring loss by agreeing to fixedrates, for the Government may increase the licence fee, as it has done in thepresent case, or there may be a rise in the cost of distribution. On the otherhand, if the term in the agreement is flexible to meet the said eventualities,the maintenance of continuous supply of electric energy may be assured withoutany loss to the public body. The circumstances obtaining at the time when theagreements between the consumers and the Municipality were entered into werethese : The licensee had power to fix the rates subject to the maximumprescribed by the Government. The administrative directions provided forcharging for the current supplied at rates that may be fixed from time to time.The Municipality was in practice fixing the rates from time to time havingregard to the relevant circumstances. The said rates fixed by the Municipalityfrom time to time were the 'Official Scale of Rates'. The consumersapplied to the Municipality for supply of energy, agreeing to pay for theenergy supplied at the scale of rates fixed by the Municipality.

7. With this background if we look at paragraphs IV and V of Ex. B-4 themeaning of the expression 'current official scale of rates' will beclear. Paragraph IV speaks of 'current official scale of rates'whereas para. V mentions 'official scale of energy rates'. These twoparagraphs bring out the distinction between the official scale of rates andthe official scale of energy rates : the former refers to the scale of ratesmaintained by the Municipality as modified from time to time by appropriateresolutions, and the latter refers to the different rates payable in respect ofenergy supplied for different purposes. Under para. IV the consumerspecifically agreed to abide by the official scale of rates. If the intentionof the parties is that the consumer shall pay only the scale of energy ratesobtaining at the time the agreement is entered into, there is no necessity forthis specific agreement, for para. V serves that purpose. On the other hand,the said express condition and the use of the word 'current' make itclear that the consumer agrees to pay at the official scale of rates currentfrom time to time. The adjective 'current' will become a surplusage,if the intention is to pay the rates obtaining at the time the agreement isentered into, for the agreement itself gives the existing rates. The use of theadjective 'current' emphasizes the fact that the official scale ofrates is not the existing rates, but the scale of rates current from time totime. We have, therefore, on a reasonable construction of the ambiguousexpression 'current' having regard to the entire document and thesurrounding circumstances, come to the conclusion that the words 'currentofficial scale of rates' in para. IV of the agreement mean the officialscale of rates current or prevalent from time to time during the currency ofthe agreement. If so, it follows that the appellants were under a contractualliability to pay the enhanced rates covered by the impugned resolution.

8. The next question turns upon s. 21(2) of the Act, which, as it then stoodread :

'Subject to the provisions of sub-section (1), alicensee may, with the previous sanction of the State Government given afterconsulting the local authority, make conditions not inconsistent with this Actor with his licence or with any rules made under this Act, to regulate his relationswith persons who are or intend to become consumers, and may with the likesanction given after the like consultation add to or alter or amend any suchconditions; and any conditions made by a licensee without such sanction shallbe null void.'

9. Under this sub-section the licensee cannot make conditions to regulatehis relations with the consumers or amend any such conditions without thesanction of the State Government. Mr. Viswanatha Sastri argued that to enhancethe rates was to alter a condition within the meaning of sub-s. (2) of s. 21 ofthe Act and as admittedly the sanction of the State Government was not obtainedbefore such alteration, the said resolution was void. The learned SolicitorGeneral contended that s. 21(2) of the Act was a general provision relating toconditions, whereas s. 23 thereof was a specific provision in regard to fixingof rates and that s. 23 would, therefore, prevail over s. 21 and that s. 23 didnot prescribe the sanction of the Government as a condition precedent forfixing the rates, Mr. Tatachari, while supporting this argument, added that onthe interpretation of para. IV of the agreement suggested by the respondentsthere was no alteration in the conditions at all and, therefore, there was noscope for invoking s. 21 of the Act. It is not necessary to express our opinionin this case on the question whether s. 23 excludes the operation of s. 21(2)of the Act in the matter of fixation of rates, for we are satisfied that thereis no alteration of any condition of the agreement within the meaning of s.21(2) thereof. We have held that under para. IV of the agreement that wasentered into between the consumers and the licensee, the consumers agreed topay the rates that were fixed by the Municipality from time to time. If thesaid term was a condition within the meaning of s. 21(2) of the Act, there wasno change at all in that condition, for the change in the rates was not inderogation of the condition but in terms of it. To state it differently, thesame condition embodied in para. IV of the agreement continued to operatebetween the parties even after the rates were enhanced under the impugnedresolution. Therefore, no sanction of the State Government was necessary forenhancing the rates.

10. No other point was raised before us. In the result, the appeal fails andis dismissed with one set of costs.

11. Appeal dismissed.


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