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Wadhvan City Municipality at Wadhavan City, Surendrangar Vs. the Zalawad Electric Supply Co. - Court Judgment

LegalCrystal Citation
SubjectElectricity
CourtGujarat High Court
Decided On
Case NumberLetter Patent Appeal No. 30 of 1970
Judge
Reported inAIR1972Guj50
ActsElectricity (Supply) Act, 1948 - Sections 57 and 70; Electricity Act, 1910; Electricity (Supply) (Amendment) Act, 1956; Electricity Act, 1910
AppellantWadhvan City Municipality at Wadhavan City, Surendrangar
RespondentThe Zalawad Electric Supply Co.
Appellant Advocate S.B. Vakil and; M.M. Dave, Advs.
Respondent Advocate C.T. Daru, Adv.
Cases ReferredSanta Singh v. Rajinder
Excerpt:
.....for complaints in the event of the licensee deriving more than a reasonable return as contemplated by the 6th schedule we consider that the failure consciously to adjust the rates by working out the details so as to reach at the same rate as was charged previously does not constitute a failure 'to adjust the rates' as required by paragraph 1.'and the supreme court concluded- provisions of paras i and ii of schedule vi show that there can be a unilateral adjustment of the rates by a licensee but that such an adjustment must not leave him with more than the reasonable return plus another 30 per cent, this being an absolute limitation on the power to adjust. [1969]3scr836 ,the provisions of the supply act as well as of the electricity act were considered and relying on its earlier..........the purposes of this judgment.3. clause viii of the schedule to the electricity act provides for supply of electricity of public lamps and a requisition can be made by the state government or by a local authority requiring the licensee to supply for a period of not less than seven years energy for any public lamps within the area of supply and the licensee is under an obligation to supply such electrical energy for public lamps. clause x of the schedule provides for different methods of charging and it refers to section 23 of the electricity act. section 23 mentions that the licensee may charge the consumers for the actual amount of energy supplied or for the electrical quantity contained in the supply or by any other method as may be approved by the state government. no consumer can,.....
Judgment:

Divan, J.

1. This appeal has come before us under a certificate granted by A.D. Desai, J. under C1. 15 of the Letters Patent in respect of a decision given by his in Second Appeal No.184 of 1962. This appeal raises an interesting question about the interpretation of S. 57 of the Electricity (Supply) Act. 1948 (hereinafter referred to as the Supply Act). The short facts leading to this appeal are that on September 2, 1943, an agreement was arrived at between Wadhwan City Municipality, the appellant herein, and the predecessor of the respondent-Company. The agreement was in respect of electricity supply at certain rates for the purpose of street-lighting and for the supply of electrical energy for running water works. In 1950, the present respondent-Company purchased the assets and liabilities of its predecessor. In 1952, the respondent-Company revised the rates which were being charged to the appellant-Municipality and the revision was by way of an increase in the existing rates. In respect of that revision there was an arbitration proceeding and on September 3, 1952, an award in those arbitration proceedings was given. With effect from August 1952, the rates as revised by the award were in force and the date of enforcement of these award rates. If we may so call them, was October 8,. 1952 but with retrospective effect. On August 30, 1956, the respondent-Company wrote to the appellant informing the appellant-Municipality that it proposed to charge rates for street lights at a higher rate than before viz., at five annas per unit. From November 1, 1956 onwards, the respondent-Company prepared bills and submitted the same to the appellant-Municipality on the basis of the new rates and the appellant-Municipality was asked to pay the bills in accordance with these revised rates. On April 9, 1957, the respondent-Company was served with a notice under Section 54 of the Indian Electricity Act, 1910 and thereafter on April 24, 1957, the appellant Municipality filed the suit out of which the present appeal arises. The trial Court decreed the suit on July 14, 1959 and for arriving at its decision the trial Court relied upon the decision of a Single Judge of the Bombay High Court of Babulal Chhaganlal v. Chopda Electricity Supply co. : AIR1955Bom182 . Against this decision of the trial Court, the respondent-Company went in appeal to the District Court of Surendranagar. The appeal was disposed of by the learned Assistant Judge by his judgment and decree, dated August 11, 1961. The decree of the lower Court was confirmed subject to certain modifications but those modifications are not material for the purposes of this judgment. Thereafter the respondent-Company filed Second Appeal No.184 of 1962 in this High Court. The Second Appeal was decided by A.D. Desai, J. on March 21, 1968 reported in : AIR1969Guj40 . Our learned brother relied upon the decision of the Supreme Court in Amalgamated Electricity Co. v. N.S.Bathena. : [1964]7SCR503 ; and thereafter he also granted the certificate under C1.15 of the Letters Patent and on such certificate the present appeal has now come before us.

2. The Indian Electricity Act, 1910 (hereinafter referred to as the Electricity Act) was enacted to amend the law relating to the supply and use of electrical energy; and under Section 3 the Electricity Act provides for the grant of licences. Section 3(2)(f) provides:-

'3. (2) (f): In respect of every such license and the grant thereof the following provisions shall have effect, namely: ................. the provisions contained in the Schedule shall be deemed to be incorporated with, and to form part of, every licence granted under this Part, save in so far as they are expressly added to, varied or expected by the license, and shall subject to any such additions, variations or exceptions which the State Government is hereby empowered to make, apply to the undertaking authorised by the license.'

The proviso to Section 3(2)(f) is not material for the purposes of this judgment.

3. Clause VIII of the Schedule to the Electricity Act provides for supply of electricity of public lamps and a requisition can be made by the State Government or by a local authority requiring the licensee to supply for a period of not less than seven years energy for any public lamps within the area of supply and the licensee is under an obligation to supply such electrical energy for public lamps. Clause X of the Schedule provides for different methods of charging and it refers to Section 23 of the Electricity Act. Section 23 mentions that the licensee may charge the consumers for the actual amount of energy supplied or for the electrical quantity contained in the supply or by any other method as may be approved by the State Government. No consumer can, except with the consent in writing of the licensee, use energy supplied to him under one method of charging in a manner for which a higher method of charging is in force. This material clause on which the appellant has relied is Clause XII of the Schedule and it is in these terms:-

'XII. The price to be charged by the licensee and to be paid to him for energy supplied for the public lamps, and other charges to be paid to him in connection therewith and the mode in which those charges are to be ascertained, shall be settled by agreement between the licensee and the State Government or the local authority, as the case may be, and where any difference or dispute arises, the matter shall be determined by arbitration.'

Under the Electricity (Supply) Act, 1948 (hereinafter referred to as the Supply Act) the material provision is set out in Section 57 and the Sixth Schedule to the Act. Under Section 57, the provisions of the Sixth and the Seventh Schedules shall be deemed to be incorporated in the licence of every licensee not being a Local Authority, and different dates depending upon the date of the commencement of the license are set out in Section 57 as the date from which Section 57 is to be made applicable and as from the said date the licensee shall comply with the provisions of the said Schedule accordingly, and any provisions of the Indian Electricity Act, 1910, and the licence granted to him thereunder and of any other law, agreement or instrument applicable to the licensee shall, in relation to the licensee be void and of no effect in so far as they are inconsistent with the provisions of Section 57-A and the said Schedules. We may also point out that under Section 70, it has been further laid down that no provision of the Indian Electricity Act. 1910, or of any rules made thereunder or of any instrument having effect by virtue of such law or rule shall, so far as it is inconsistent with any of the provisions of the Supply Act, have any effect. The rest of the provisions of Section 70 are not material for the purposes of this judgment. Clause I of the Sixth Schedule provides:--

'I. Notwithstanding anything contained in the Indian Electricity Act, 1910 (9 of 1910), and the provisions in the license of a licensee, the licensee shall so adjust his charges for the sale of electricity whether by enhancing or reducing them that his clear profit in any year of account shall not, as far as possible, exceed, the amount of reasonable return.' And the rest of the provisions of the Six Schedules are for the purposes of determining as to what is a reasonable return and on what basis and in what manner the reasonable return is to be ascertained.

4. The decision of the Single Judge of the Bombay High Court on which the learned Judge in the trial Court relied viz, in : AIR1955Bom182 (supra) has in terms been overruled by the decision of the Supreme Court in Amalgamated Electricity Co.'s case. : [1964]7SCR503 (supra). In that case the decision of the majority of the learned Judges of the Supreme Court was delivered by N. Rajagopala Ayyangar, J. and in para 44 at p.1612, Rajagopala Ayyangar, J. pointed out that the learned Judges who constituted the majority were unable to agree with the conclusion of the learned Judge of the Bombay High Court, who decided Babulal's case (supra). Under these circumstances, it is not necessary for us to refer to that decision of the Bombay High Court.

5. The principal point which arose for determination before the Supreme Court in Amalgamated Electricity Co.'s case : [1964]7SCR503 (supra) was whether the maxima prescribed by the State Government under the provisions of the Electricity Act could be exceeded by the licensee and as pointed out by Rajagopala Ayyangar, J. in para 41 of his judgment at p.1611 of the report, three points arose for consideration before the Supreme Court.

'The questions raised before us are principally three: (1) The effect of the Supply Act, 1948, on the maxima of rates fixed by Government under S. 3(2) of the Electricity Act, 1910, which could be charged by a licensee. The submission of the appellant which was accepted by the High Court but which was contended by the respondents before us was that any changes that might be effected by a licensee acting under the provisions under Section 57 of the Supply Act read with Paragraph 1 of Sch. VI in revising his rates so far as to derive the reasonable return permitted by these provisions had still to be within the maxima prescribed by Government under the electricity Act of 1910.'

The other two points which were considered by the Supreme Court are not material for the purposes of our present judgment.

6. Dealing with the first point Rajagopala Ayyangar, J. has pointed out in para 42 at page 1612:-

'Read in the light of Section 70 of the Supply Act it would follow that if any restriction incorporated in the licence granted under the Electricity Act, 1910 is inconsistent with the rate which a licensee might charge under para I of Sch. VI of the Supply Act. 1948, the former would, to that extent, be superseded and the latter would prevail.'

In para 43 of the judgment, the Supreme Court observed:-

'Para I of Sch., VI, both as it originally stood and as amended, as seen already empowered the licensee 'to adjust his rates, so that his clear profit in any year shall not, as far as possible exceeded the amount of reasonable return.' We shall reserve for later consideration the meaning of the expression 'so adjust his rates.' But one thing is clear and that is that the adjustment is unilateral and that the licensee has a statutory right to adjust his rates provided he conforms to the requirements of that paragraph viz., the rate charged does not yield a profit exceeding the amount of reasonable return. The conclusion is therefore irresistible that the maxima prescribed by the State Government which bound the licensee under the Electricity Act of 1910 no longer limited the amount which a licensee could charge after Supply Act, 1948 came into force, since the 'clear profit' and 'reasonable return' which determined the rate to be charged was to be computed on the basis of very different criteria and Electricity Act.'

Then at the end of para 44, Rajagopala Ayyangar, J, observed:--

'We, therefore, consider that the first submission of learned Counsel of the Appellant that the limit imposed by the maxima prescribed by the limit imposed by the maxima prescribed by the State government ceased to be in force after the Supply Act of 1948 came into force is well founded.'

The Supreme Court pointed out in para 46:--

'In view of the machinery that it provided for complaints in the event of the licensee deriving more than a reasonable return as contemplated by the 6th Schedule we consider that the failure consciously to adjust the rates by working out the details so as to reach at the same rate as was charged previously does not constitute a failure 'to adjust the rates' as required by Paragraph 1.'

And the Supreme Court concluded-

'Provisions of Paras I and II of Schedule VI show that there can be a unilateral adjustment of the rates by a licensee but that such an adjustment must not leave him with more than the reasonable return plus another 30 per cent, this being an absolute limitation on the power to adjust. Where the amount of reasonable return is exceeded, paragraph II comes into play and the excess over the reasonable return is distributed in the manner laid down in that paragraph.

.......................

The position would therefore be that the licensee must be deemed to have adjusted his rates under paragraph I of the VIth Schedule when after the lapse of the Bombay Act of 1946 it continued to levy the same charges, and that, after the amendment of the Act in 1956, unless it is established that the rate charged by the licensee for lights and fans and for the standing monthly charge for supply of power resulted in a profit to it more than 15 per cent, over the reasonable return, the licensee would be held to have properly adjusted these rates in conformity with the requirements of the relevant provisions of the Supply act, 1948, as amended by Act 101 of 1956.'

7. We may also mention that in Jindas Oil Mill v. Godhra Electricity Co. : [1969]3SCR836 , the provisions of the Supply Act as well as of the Electricity Act were considered and relying on its earlier decision in Amalgamated Electricity Co.'s case. : [1964]7SCR503 (supra) the Supreme Court held that the charges fixed by the Government for supply of power to consumers under Section 57 of the Act before its amendment in 1956 can be enhanced unilaterally by the Licensee by virtue of the amendment in accordance with the provisions contained in Schedule VI of the Act; and the Supreme Court pointed out:--

'Section 57 of the Electricity (Supply Act as it stands now lays down that the provisions of Sch. VI shall be deemed to be incorporated in the license of every licensee not being a local authority, in the case of licence granted before the commencement of the Act from the date of the commencement of the licensee's next succeeding year of account. Where the license if governed by Section 57 the provisions of Sch, VI have to be read into that license. If any of the earlier provisions in the licence either as they stood when the licence was originally granted or as they stood modified as per the provisions of the Electricity (Supply) Act prior to its amendment in 1956 are inconsistent with the provisions of Sch. VI of Section 57-A as they are now, they must be held to be avoid and of no effect.'

8. Mr. Vakil, for the appellant, contended that even though under Section 57 of the Supply Act, there is a right and a corresponding obligation on the licensee to adjust the rates so as not to exceed nor fall below the reasonable return, the power to adjust the rates has to be exercised reasonably and legally and no absolute power is conferred on the licensee to impose whatever rates it likes in total disregard to the Electricity Act, 1910, or the Supply Act of 1948 , Now, as pointed out by the Supreme Court in Amalgamated Electricity Co.'s case. : [1964]7SCR503 (supra) if in any particular case because of the upward revision of rates the reasonable return is exceeded, then machinery for invoking the drastic provisions of Schedule VI can be brought into play and the excess profit derived by the licensee by such upward revision, the profit being considered excess over the reasonable return, is taken away from the licensee in the manner laid down in Sch. VI.

9. The other contention on which Mr. Vakil relied was that there was inconsistency between C1. 12 of the Scheduled to the Electricity Act and S. 57 and Sch. VI of the Supply Act. He contended that even though power was given to the licensee to raise its rates in respect of electric energy supplied to a particular class of consumers, so far as the supply of electrical energy for street lamps was concerned, without departing from its right to raise the rates, it was bound to raise the rates either by agreement with the Municipality or in accordance with the award given by the arbitrator under C1. 12 of the Schedule to the Electricity Act. We are unable to accept this contention because if that contention were to be accepted, it would mean putting fetters on the unilateral power of the licensee to revise the rates in accordance with Section 57, Para 1, of the Sch, VI of the Supply Act. The Supreme Court in Amalgamated Electricity Co.'s case. AIR 1964 SC 1598 (supra), has clearly held that this unilateral power of the licensee of unfettered by any of the provisions of the Electricity Act or any of the provisions of the licence granted under the Electricity Act, C1. 12 of the Schedule to the Electricity Act incorporates a term in the licence granted to the licensee in respect of rates to be charged for the supply of electricity for public lamps but it is clear that if that C1. 12 is to apply, a fetter would be put upon the unilateral power of the licensee to adjust its rates upward or downward as contemplated by a para 1 to the VIth Schedule to the Supply Act. In the case before the supreme Court, the question was of a fetter which was sought to be put upon the power of the licensee to adjust his rates unilaterally, in view of the maxima of the rates fixed by the State Government under S. 3(2) of the Electricity Act; and the Supreme Court held that there was no such fetter. In the case before us, a fetter on the unilateral power of the licensee to adjust its rates in accordance with the VIth Schedule to the Act is sought to be placed by virtue of C1. 12 of the Schedule of the Act and we must hold, following the principle laid down by the Supreme Court, that there is no such fetter on the unilateral power and there is a clear consistency between C1. 12 of the schedule of the Electricity Act and the unilateral power of the licensee to adjust its rates in accordance with para 1 to the VIth Schedule to the supply Act.

10. MR. Vakil relied upon the well-known passage from the speech of Lord Halsbury in Quinn v. Leathem, 1901 AC 495, at p.506, the passage being:--

'That every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. The other is that a case is only an authority for what is actually decides. I entirely deny that it can be quoted for a proposition that may seem to follow logically from it. Such a mode of reasoning assumes that the law is necessarily a logical code, whereas every lawyer must acknowledge that the law is not always logical at all.'

This passage from the speech of Lord Halsbury was cited with approval by the Privy Council in Punjab Co-operative Bank Ltd. v. Commr. of Income-tax. of the report, Lord Maugham stating the opinion of the Privy Council has quoted the above mentioned passage from the speech of Lord Halsbury. In our opinion this passage from the speech of Lord Halsbury does not apply to the point which arises before us for the simple reason that we are not concerned with the general proposition laid down by the Supreme Court in Amalgamated electricity Co.'s case : [1964]7SCR503 (supra). What we are concerned with is the interpretation placed by the Supreme Court on the provisions of Section 57 and the scope of the power of adjustment of rates conferred upon the licensee by Section 57 and para 1 of the VIth Schedule to the Supply Act. The law laid down by the Supreme Court is binding on all Courts in India and once the Supreme Court has stated in Amalgamated Electricity Co.'s case (supra) as to what is the scope of power of adjustment of rates conferred upon the licensee, every Court in India is bound by that interpretation. Here we are not doing anything to extend the principle laid down by the Supreme Court in Amalgamated Electricity Co.'s case (supra); and, therefore, the observations of Lord Halsbury quoted above or of the Full Bench of the Punjab High Court in Santa Singh v. Rajinder singh (FB), regarding the value of precedent and dicta in judicial pronouncements have no application to the case before us.

11. Under these circumstances, we hold that the conclusion reached by our learned brother A.D. Desai, J. was correct and he rightly allowed the appeal of respondent-Company and dismissed the suit with costs all throughout. The result, therefore, is that this appeal fails and is dismissed with costs.

12. Appeal dismissed.


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