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Maharana Bhupal Electric Supply Co. Ltd. Vs. the State of Rajasthan - Court Judgment

LegalCrystal Citation
SubjectElectricity;Limitation
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 18 of 1960
Judge
Reported inAIR1973Raj132; 1972()WLN803
ActsLimitation Act, 1908 - Schedule - Articles 52 and 120; Electricity Supply Act, 1948 - Sections 57; Contract Act - Sections 23; Sale of Goods Act, 1930 - Sections 2(7) and 61
AppellantMaharana Bhupal Electric Supply Co. Ltd.
RespondentThe State of Rajasthan
Appellant Advocate H.N. Parakh, Adv.
Respondent Advocate M.D Purohit, Deputy Govt. Adv.
DispositionAppeal allowed
Cases ReferredAvtarsingh v. State of Punjab
Excerpt:
limitation act - article 120-suit for recovery of price of electricity consumed--right to sue rose on approval of report of the rating committee--period of limitation is 6 years.;the present suit partook of the nature of the suit for recovering money by way of price arising out of an award made by the rating committee.;the right to sue arose when the report of the rating committee was approved by the government on 31-10-1983 vide ex. 10 and the report of limitation being 6 years under the said article and the suit having been instituted on 11-7-1956 it was clearly within time.;(b) electricity (supply) act, 1948 - section 57 and contract act--section 23--company raising rate retrospectively--held, not hit by section 57.;if the company could increase the rate without reference to the rating.....beri, ag. c.j. 1. this is a plaintiffs appeal whose suit for the recovery of unpaid electricity charges was dismissed by the learned senior civil judge, udaipur by his judgment dated october 14. 1959. 2. the circumstances which it is necessary to notice for the disposal of this appeal succinctly stated are these maharana bhupal electric supply co. ltd., udaipur (hereinafter called 'the company') was a licensee under the indian electricity act. 1910. it was to provide electrical energy in the town of udaipur. the company was charging annas six per unit of electricity for domestic purposes from its consumers. it is said that it was running in losses and therefore with effect from february 1. 1951 it increased the rate to annas eight per unit of electricity for domestic use. it justified.....
Judgment:

Beri, Ag. C.J.

1. This is a plaintiffs appeal whose suit for the recovery of unpaid electricity charges was dismissed by the learned Senior Civil Judge, Udaipur by his judgment dated October 14. 1959.

2. The circumstances which it is necessary to notice for the disposal of this appeal succinctly stated are these Maharana Bhupal Electric Supply Co. Ltd., Udaipur (hereinafter called 'the Company') was a licensee under the Indian Electricity Act. 1910. It was to provide electrical energy in the town of Udaipur. The Company was charging annas six per unit of electricity for domestic purposes from its consumers. It is said that it was running in losses and therefore with effect from February 1. 1951 it increased the rate to annas eight per unit of electricity for domestic use. It justified this increase on the ground that the licence dated 31st December. 1948. Clause (8) entitled it to make this increase. The increase in the rate was resented to by consumers and they desired to get its justification examined. The plaintiff continued charging this rate upto July 1951. By that date the Indian Electricity Supply Act, 1948 (Act 54 of 1948) (hereinafter called the 'Supply Act') had come into force in the State of Rajasthan with effect from April 1, 1951 by virtue of the provisions contained in the Part B States Adaptation of Laws Act. In view of the provisions of the Supply Act the consumers and the Minister of the Government and the Company entered into an agreement which is contained in Schedule 'A' annexed to the plaint whereby it was agreed that the plaintiff shall provisionally charge at the rate of annas six per unit and a Rating Committee shall be constituted for determining the reasonableness of the charge claimed by the Company and the rate determined shall be charged from 1-2-1951. This agreement was signed on September 14, 1952. It is Exhibit 13.

The Company pursuant to the agreement provisionally collected electricity charges for domestic use at the rate of annas six per unit. The Rating Committee reported that the 'reasonable return' worked out according to the Sixth Schedule of the Supply Act justified Company's charging annas eight per unit for domestic use. The report was published in the gazette and the Government gave its approval on October 24, 1953 but the rate was permitted to be charged with effect from July 1, 1953. According to the Company, the Government as a consumer paid a sum of Rs. 1,00,006/-less than what it should have pursuant to the tripartite agreement dated September 8. 1952 and after necessary notice it instituted a suit for the recovery of the said amount. The State of Rajasthan as a defendant halfheartedly denied even the existence of the tripartite agreement Ex. 13 to which a Minister was a party and urged that even if such an agreement existed it was contrary to the provisions of Section 57 of the Supply Act and therefore not binding on the State and besides the suit was barred by time. It was also urged that a dispute such as this should have been decided by arbitration and that the Company had a statutory obligation to treat all consumers alike and it was erroneous for it to claim enhanced rates only from the Government as a consumer.

3. The learned Civil Judge framed nine Issues arising out of the rival contentions of the parties and held that the tripartite agreement amounted to a contract; but it was not proved that a sum of Rs. 1,00,006/- was payable by the defendant; that the suit was barred by limitation under Article 52 of the Indian Limitation Act, 1908 excepting for a period of two months; that the suit was barred under Section 57; that issues Nos. 6, 8 and 9 were not pressed and he held that Section 57 barred the contract. Aggrieved by this judgment the plaintiff has come up in appeal.

4. Mr. Hastimal. learned counsel for the appellant, urged that under the licence which was granted to the Company's predecessor-in-title in 1948 the licensee was entitled to charge upto a maximum of eight annas per unit for the domestic supply and that being the ceiling he could have gone upto it under the Indian Electricity Act, 1910. In point of fact the plaintiff had raised the rate with effect from February 1. 1951 from six annas to eight annas per unit before the Supply Act came into force. This was resented to by the public and the Congress, as a political organisation, took cudgels on behalf of the consumers and the Government intervened and eventually, according to the tripartite agreement entered into on September 8, 1952 it was agreed that the plaintiff as a licensee should provisionally charge six annas per unit from the consumers and a Rating Committee be appointed to adjudge on the basis of the Sixth Schedule of the Supply Act whether the demand of the plaintiff as a licensee was reasonable or not and it was further stipulated in that agreement that if the Rating Committee came to the conclusion that eight annas per unit represented the reasonable return, the same shall be chargeable with effect from February 1, 1951. Section 56 of the Supply Act had not come into operation when the rate was increased to eight annas per unit.

All that was sought to be done by the Rating Committee was to scrutinize whether the demand of the plaintiff was reasonable or not. The Rating Committee having come to the conclusion that eight annas per unit for the domestic supply was reasonable according to the principles laid down in the Sixth Schedule of the Supply Act the Government as a consumer as well as a Government were bound by the Report and that the plaintiff's claim should have succeeded. His further submission was that the agreement contained a deferred demand and the price of the electricity was not governed by Article 52 of the Limitation Act, 1908 but by the residuary Article 120 of the Indian Limitation Act. 1908. His further submission was that in view of the provisions of Section 61, of the Sale of Goods Act he was entitled to interest on unpaid price of the commodities supplied. He placed reliance on Amalgamated Electricity Co. Ltd. v. Bathena, AIR 1964 SC 1598. He also urged that the learned Civil Judge was in error in holding that the plaintiff had failed to prove the exact amount due to it for the balance of the price of electricity supplied by it. The plaintiff had given notices for the production of the original bills sent to the defendant for calculating the same and on its failure it was entitled to lead secondary evidence. The State at no point of time had asserted that this was not the quantity consumed by it and it was simple arithmetic to calculate the unpaid balance when there was no controversy about the units of electricity consumed as per copies of the bills Exhibits 9 (1) to 9 (95).

5. Mr. M.D. Purohit learned Deputy Government Advocate, argued that the primary evidence regarding the electricity consumed was the reading recorded by meter readers in the register of the Company on the basis of which the bills were made and that evidence haying not been produced the learned Civil Judge was right in treating the evidence adduced as inadmissible or not adequate to prove the claim. His further contention was that the Government entered into the tripartite agreement as a consumer only and therefore the Government as such was not bound by the terms thereof. The tripartite agreement was clearly hit by the provisions of Section 57 of the Supply Act because all agreements whatsoever if they were not consistent with Section 57 were void. The agreement in question was apparently inconsistent with Section 57(2)(c) and he placed reliance on Jorhat Electric Supply Ltd. v. State of Assam, AIR 1955 NUC (Assam) 2835. He also submitted that the learned Civil Judge was right in applying Article 52 of the Indian Limitation Act, 1908 and that the suit was barred by time.

6. The rival contentions of the learned counsel for the parties call for the determination of the following issues as framed by the trial Court:--

1. Whether what the plaintiffs call a tripartite agreement dated 8-9-1952 is a contract between the parties on the basis of which the plaintiffs can maintain their suit

2. If so, whether the Government was no party to it as a consumer and

(contd. on Col. 2)

'For the price of the goods sold and delivered where the fixed period of credit is agreed upon.

8. Having regard to the documents to this dispute it was no case of delivery of any goods, the price for which had already been settled. The [price was under dispute and the bills were sent provisionally according to the evidence of P. W. 1 Shanker Kishore Joshi who has said that each of the bills was rubber stamped as provisional. The determination of the price was dependent on the report of the Rating Committee constituted pursuant to the agreement in Ex. 13. It would be equally erroneous to say that the goods were sold on credit. If the Rating Committee had decided against the increase of the electricity there would have been probably the end of the matter. As a matter of fact the goods were sold and the price remained to be determined by an appointed party. Even Article 53, therefore, would not apply because that speaks of the period of credit. Articles 54, 55 and 56 are equally inapplicable. In fact the present suit partook of the nature of the suit for recovering money by way of price arising out of an award made by the Rating Committee. We have not been shown any specific Article governing such a suit and therefore it will be regulated by Article 120 of the Limitation Act. The right to sue arose when the report of the Rating Committee was approved by the Government on 31-10-1953 vide Ex. 10 and the period of limitation being 6 years under the said Article and the suit having been instituted on 11-7-1956 it was clearly within time, only stepped in as a mediator in the interests of peace and order and therefore is not bound by it

4. Are Rs. 1,16,056/- due from the defendant on account of the differences of rates for energy supplied between . 7-2-1951 and 30-6-1963 P.

4 (a). Is the suit barred by Limitation? D.

5. Is the plaintiff entitled to interest If so, at what rates P.

7. Is the suit barred by Section 57 of the Electric Supply Act. 1948 D.

7. Perhaps it will be proper to deal with issue No. 4 (a) first. The learned Civil Judge has held that the electric energy was goods; that the suit was for the recovery of the goods sold and therefore it was governed by Article 52 of the Indian Limitation Act. 1908 (hereinafter called 'the Limitation Act'). In this view of the matter he found that the bills of period between 11-5-1953 and 30-6-1953 alone were within limitation and the rest of the claim was barred by time. Article 52 of the Limitation Act reads:--

Three years The date of the delivery of the goods.'

9. Issues Nos. I. 2 and 7 can be conveniently dealt with together. Acting under their licence the company enhanced their rate from six annas per unit to eight annas with effect from 1-2-1951. This was resented to by the consumers and an agitation followed. The Government induced the plaintiffs to keep their increased rate in abeyance. Several meetings were convened in which two Ministers of the Government participated. The Company was represented by S.T. Shah and B.C. Parakh and Hanumanprasad represented the Consumers Action Committee. Ultimately an agreement was reached on 3-9-1952, the terms whereof have been recorded in the shape of minutes. It was agreed, according to the minutes, that the Power House (meaning thereby the Company should collect provisional payments against their bills on the basis of old rates for the interim period and after the report was received readjust the bills with effect from February 1951 onward in accordance with the recommendations of the Rating Committee.

On receipt of the report of the Rating Committee the Government undertook to expeditiously complete all the formalities so that the recommended rates with effect from 1st February. 1951 could be enforced by the licensee by the beginning of January 1953. The Government was to offer to the licensee co-operation and help in implementing this agreement and the recommendations of the Rating Committee both in letter andspirit. The Minister stated that the Government did not wish to change the personnel of the Committee in any case unless so directed by the High Court and eventually the agreement was signed for the Government by Shri Bhola Nath. P. W. D. Minister. Consequent to this agreement the Company charged old rates on the condition that the rates recommended by the Rating Committee shall be given retrospective effect from 1-2-1951 and further that the Government shall implement this agreement and the recommendations of the Committee faithfully. The learned Civil Judge has held that the minutes contained in Ex. 13 amounted to an agreement to which the Government was a party and it was bound by it. I have specifically noticed that the minutes were signed 'on behalf of the Government' by the Minister. It is futile for the learned Deputy Government Advocate to contend that the Government was not bound as such by the agreement. The Government was also the largest consumer of the electric energy and accordingly it was also bound as a consumer.

10. The undertaking given by the Government that it shall implement the Eating Committee's recommendations in fact and in spirit and that too expeditiously and the signatures by the Government in this behalf take away all the force from the argument that the Government was merely mediating.

11. The important issue is No. 7 on which emphasis was laid by the learned Deputy Government Advocate. It may be recalled that with effect from 1-4-1951 the Electricity (Supply) Act came into force. The preamble of the Act provides that whereas it was expedient to provide for the rationalisation of the production and supply of electricity, for taking measures conducive to electrical development the Act was promulgated. The twin purpose of the Act evidently was that firstly the licensee should charge from the consumers such rate as may be a reasonable return calculated according to the principles contained in the Sixth Schedule so that it may be an economically sound undertaking and the second was that the electricity should be supplied to the consumer without unduly exploiting the consumer's needs for electricity. The relevant provisions of Section 57 read,--

'57. Licensees' charges to consumers.-

(1) The provisions of the Sixth Schedule and the Table appended to the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee, not being a local authority, from the date of the commencement of the licensee's next succeeding year of account, and from such date the licensee shall comply therewith accordingly and any provisions of such licence or of the Indian Electricity Act, 1910 (IX of 1910) or 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 this section and the said Schedule and Table.

(2) Where the provisions of the Sixth Schedule and the Table appended to the Seventh Schedule are under Sub-section (1) deemed to be incorporated in the licence of any licensee, the following provisions shall have effect in relation to the said licensee, namely:--

(a) The Board, or where no Board is constituted under this Act the State Government, may. if it is satisfied that the licensee has failed to comply with any provision of the Sixth Schedule, and shall when requested so to do by the licensee, constitute a rating committee to examine the licensee's charges for the supply of electricity and to recommend thereon to the State Government 3

Provided that no rating committee Shall be constituted in respect of a licensee within three years from the date on which such a committee has re-ported in respect of that licensee, unless the State Government declares that in its opinion circumstances have arisen rendering the orders passed on the recommendations of the previous rating committee unfair to the licensee or any of his consumers.

(c) Within one month after the receipt of the report under Clause (b) the State Government shall cause the report to be published in the Official Gazette, and may at the same time make an order in accordance therewith fixing the licensee's charges for the supply of electricity with effect from such date, not earlier than two months or later than three months after the date of publication of the report, as may be specified in the order; and the licensee shall forthwith give effect to such order:

Provided that nothing in this clause shall be deemed to prevent a licensee from reducing at any time any charges so fixed. ... ... ... ...'

12. The argument of the learned counsel for the State is that the agreement Ex. 13 may have authorised tine charging of the rates with retrospective effect from 1st of February. 1951 but Section 57(2)(c) provides that the rate fixed by the Rating Committee was to be charged from a date not earlier than two months or later than three months after the date of publication of the re-port and the licensee was to forthwith give effect to such order. The retrospective clause of Ex. 13, urged thelearned counsel, was inconsistent with the provisions of Section 57 and such inconsistency made it void under Section 57(1). Section 57 and the Schedule Sixth came to be considered by their Lordships of the Supreme Court in Amalgamated Electricity Co.'s case, AIR 1964 SC 1598. We have examined this case and in our opinion the head-note (a) correctly sums up the conclusions. We may reproduce it:--

'It is clear from Para 1 of Schedule VI of the Electricity (Supply) Act, 1948, asoriginally stood and as amended, that the adjustment rates may be unilateraland 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 maximum prescribed by the State Governmentwhich bound the licensee under the Electricity Act of 1910 no longer limited the amount which a licensee could charge after the 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 factors than what obtained under the Electricity Act. 1910. Further, on reading Para. I of Schedule VI in the light of Section 70 of the Act of 1948 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 Schedule VI of the Supply Act, 1948, the former would, to that extent, be superseded and thelatter would prevail. The submission of the licensee that the limit imposed by the maxima prescribed by the State Government under the Electricity Act, 1910. ceased to be in force after the Supply Act of 1948 came into force is thus well founded.'

In the case before us the Company was entitled to raise even under its own licence and it did in point of fact raise prior to the coming into force of the Supplies Act in Rajasthan its rate on the domestic supply of electricity from annas six to annas eight but it agreed to suspend the recovery with a view to assuage the consumers' resentment by accepting the Rating Committee's recommendation subject to this condition that the rates shall be chargeable with effect from 1-2-1951 provided the Ratine Committee approved the same to be the reasonable return. In our opinion prior to the coming into force of the Supplies Act the Company had a right under the licence clause granted under the Indian Electricity Act, 1910 to raise the rate upto eight annas a unit. After the coming into force of the Supplies Act it was unilaterally entitled to raise its rates upto the limit of the reasonable return as envisaged by the Sixth Schedule of the Supplies Act without reference to the Rating Committee. The Rating Committee was constituted merely to ascertain whether the claim made by the Company fell within the ambit of reasonable return. It was agreed that if it did the Company would be entitled to charge such a rate with effect from 1-2-1951. Such an agreement is certainly not hit by Section 57(2)(c) for the simple reason that the rate recommended was identical with the rate claimed.

13. The learned Civil Judge has expressed the opinion that Ex. 13 ran contrary to Section 57(2)(c) and was therefore void under Section 23 of the Contract Act. He was clearly in error. If the Company could increase the rate without reference to the Rating Committee and the Rating Committee was only appointed with a view to make a post-facto examination of reasonableness then such a term that the Company could charge rates retrospectively in our opinion is not hit by Section 57 and therefore, the contract was not void under Section 23 of the Indian Contract Act.

14. Now comes the issue No. 4 whether the amount claimed by the plaintiff-company was duly proved by it. The learned Civil Judge has found that the Company failed to prove as to the exact amount due to it from the Government. The reasons which appealed to the trial court were that the bills were prepared after the decision of the Rating Committee and the original books of account showing how much energy was consumed by the Government during the period covered by the suit were not produced; and lastly prima facie certain bills did not relate to the Government at all and they had been included in the claim.

15. The allegations in para. 11 of the plaint are that the amount stated in the list marked 'A' with the plaint contained the difference consumer-wise between the amount paid and which was payable according to the rates determined by the Rating Committee and it amounted to Rs. 1,00,006/-. The list contained the consumer number, the name of the consumer, the amount of the electricity consumed, the amount collected and the difference payable. In the written statement the Government did not admit the claim and merely put the plaintiff to proof. It did not clarify which part of the list was disputed and issue No. 4 came to be framed. The burden obviously was on the plaintiff. The plaintiff moved an application on 17-4-1957 that the defendant had evasively replied the fact of the receipt of the bills by it and the balance claimed and for a fair disposal of the suit it was necessary to have discovery of certain documents. The defendant sought time to collect the documents and eventually on 19-9-1957 said that the bills mentioned in Schedule 'A' to the plaint and received by the several Government Departments were not traceable. On 12-9-1959 the plaintiff moved another application under Order 11, Rule 1. Civil P. C. seeking permission to serve an interrogatory on the State to answer if the various Departments and Officers mentioned in Schedule 'A' to the plaint received the revised bills mentioned in Schedule 'A' to the plaint.

The defendant opposed that application and the learned Civil Judge disallowed it on the ground that allowing of an interrogatory would entail loss of time. In this background the question 5s whether the proof tendered by the plaintiff regarding the difference in rates is (a) admissible and (b) sufficient to fasten the liability on to the defendant. We have examined the statement of P. W. 1 Shanker Kishore Joshi, who has stated that the accounts of the company were regularly maintained. Regarding Government, as a consumer. 3 copies of the bill used to be prepared, one remained in the Company's office and two used to be sent to the Government Office. There was a separate account for each consumer. The Government was given a notice indicating the claim which was received by it but was not answered. After the publication of the recommendations of the Rating Committee the revised bills from February 1951 to June 1953 were sent and in token of the receipt of these bills, the signatures of the receivers were obtained in the peon book. The bills showed the amount received in column 4 and column 2 indicated the units that were Consumed and the amount which ought to have been paid was contained in column 3 and the difference was contained in column 5 and the net difference in column 6 and that all the bills from Exs. 9 (11 to 9 (95) were prepared under his supervision and after tallying them from the register and the cash book. The bills were sent to the Heads of Departments. No objection was taken about the admissibility of these copies nor was any demand made for the registers and (the only cross-examination directed against this witness was whether consumer Nos. 430 and 551 which related to the city corporation and that bill No. 9 (61) which related to the temples were Government bills. No other bills or amounts mentioned therein were contested in the cross-examination. The original bills were sent to the Government, which was the defendant in the case, and the application for discovery was made and the Government's answer was that the bills were not traceable.

In a situation, such as this, in our opinion, the secondary evidence could be given and was admitted without objection. The only question, which survives, is whether it proves the correctness of the case. At no point of time during the trial did the Government specifically question any specific item. contained in the list 'A' to the plaint. Neither in answer to the notice nor in the written statement nor in answer to the application for discovery of document did the defendant contest the correctness of the list. The only items that have been contested are regarding two consumer numbers viz. 430 and 551 relating to City Corporation and Municipal Board. The numbers given in the statement of the witness appear to be erroneous. I have scrutinized the record and their correct numbers are 430 and 551 and they are Exs. 9 (21) and Ex. 9 (45) respectively. The total amount of these is Rs. 342/2/-. In such state of evidence, when the accounts of the Company have been maintained in the regular course of business and audited as per evidence of P. W. 1 Shanker Kishore Joshi there is no other conclusion than this that the plaintiff had ade-quately proved its claim subject to the exception of the two bills relating to aforesaid consumers because they prima facie relate to City Corporation and Municipal Board which are ordinarily independent of the Government. Reducing the amount of these two bills the balance of the claim amounts to Rupees 99,663/14/-.

16. The last point that remains to be determined is whether the plaintiff Company is entitled to any interest. Section 61 of the Sale of Goods Act reads:--

'61. (1) Nothing in this Act shall affect the right of the seller or the buyer to recover interest or special damages in any case where by law interest or special damages may be recoverable, or to recover the money paid where the consideration for the payment of it has faile'd.

(2) In the absence of contract to the contrary, the court may award interest at such rate as it thinks fit on the amount of price-

(a) to the seller in a suit by him for the amount of the price -- from the date of the tender of the goods or from the date on which the price was payable;

(b) to the buyer in a suit by him for the refund of the price in a case of a breach of the contract on the part ofthe seller -- from the date on which payment was made.'

17. Electricity is not goods covered by the Sale of Goods Act. The reason is that the Sale of Goods Act applies to goods as defined in Section 2(7) of the said Act. The principal ingredient is that it is movable property. The Supreme Court in Avtarsingh v. State of Punjab, AIR 1965 SC 666 has observed that 'Electricity is not movable property'. The claim of interest under the Sale of Goods Act is therefore not tenable. Accordingly we are not inclined to award interest in the circumstances of the case.

18. The result is that the judgment and decree of the learned Senior Civil Judge are set aside, the appeal is accepted and a decree in the sum of Rs. 99,663/14/-, is passed in favour of the appellant and against the respondent State. The plaintiff appellant will get his costs of both the courts on the decretal amount aforesaid.


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