Jharkhand State Electricity Board vs M/S Ramkrishna Forging Limited

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6145 OF 2010

JHARKHAND STATE ELECTRICITY BOARD AND OTHERS …..APPELLANTS

VERSUS

M/S RAMKRISHNA FORGING LIMITED .….RESPONDENT

JUDGMENT

Vineet Saran, J.

The respondent is a small scale industry. For

running its industry, it had a contract

demand/sanctioned load of electricity of 4000 KVA from

the appellants­Jharkhand State Electricity Board (for

short ‘the Board’). The request of the respondent for Signature Not Verified Digitally signed by GEETA AHUJA Date: 2021.04.30 16:16:53 IST Reason: reduction of such sanctioned load to 1325 KVA having

been refused, the respondent filed a writ petition before 2

the High Court of Jharkhand, which has been allowed.

Aggrieved by the said judgment of the High Court, this

appeal has been preferred by the Board.

2. The brief facts, relevant for the present case,

are that the respondent, which is a small scale

industry, had entered into an agreement with the Board

on 14.04.2004 for High Tension (H.T.) connection of 325

KVA load. The respondent thereafter applied for

enhancement of load from 325 KVA to 1325 KVA, which

was allowed by the General Manager­cum­Chief

Engineer of the Board on 14.03.2006. The respondent

again applied for enhancement of load from 1325 KVA

to 3500 KVA, which was sanctioned by the Board on

26.12.2006. On a further request of the respondent,

the load was again enhanced by 500 KVA to 4000 KVA.

For each enhancement of load, fresh agreements to that

effect were entered into between the respondent and the

Board, the last one being on 07.07.2007 for supply of

4000 KVA load. The respondent alleges that after the 3

enhancement of load, it was facing major trippings as

well as continuous load shedding which was affecting

the costly machineries and, therefore, the respondent

decided to reduce the load from 4000 KVA to 1325 KVA.

Accordingly, the respondent filed an application, on

20.09.2007, before the authority of the appellants­

Board for such reduction. Vide its order dated

08.11.2007, the Electrical Superintending Engineer

rejected the said application of the respondent for

reduction of load from 4000 KVA to 1325 KVA informing

the respondent that from the date of enhancement of

supply of load, an agreement (dated 07.07.2007) would

be enforced for a period of three years and treating it to

be a case of determination of agreement, and quoting

the Clause 9B of the agreement, it was provided that

the agreement could not be permitted to be determined

prior to the completion of initial period of three years

from 07.07.2007 and that the respondent will have to

pay the minimum guarantee charges and other charges, 4

even if the respondent decides to terminate the

agreement.

3. Challenging the said order of the Board dated

08.11.2007, the respondent filed Writ Petition No.6651

of 2007, which has been allowed by the High Court vide

its judgment dated 23.07.2008, primarily on the ground

that the proviso contained in Regulation 9.2.1 of the

Jharkhand State Electricity Regulatory Commission

(Electricity Supply Code) Regulations, 2005 (for short,

‘the Regulations of 2005’), providing for no reduction of

load to be allowed by the Distribution Licensee before

expiry of the initial period of agreement was

discriminatory, arbitrary and against the public policy.

Challenging the aforesaid judgment, this appeal has

been filed.

4. We have heard Shri Anup Kumar, learned

counsel appearing for the appellants and Shri N.P.

Singh, learned Senior Counsel appearing for the 5

respondent, assisted by Shri Devashish Bharuka,

Advocate­on­Record for the respondent.

5. It is noteworthy that after the initial

agreement dated 14.04.2004, which came into effect

from 16.04.2004 whereby the contract demand of 325

KVA was allowed in favour of the respondent, the

Jharkhand State Electricity Regulatory Commission (for

short, ‘the Commission’) in exercise of power conferred

by Section 181(2)(x) read with Section 50 of the

Electricity Act, 2003, framed the Jharkhand State

Electricity Regulatory Commission (Electricity Supply

Code) Regulations, 2005, which came into effect from

28.07.2005.

6. The submission of the learned counsel for the

appellants­Board, is that in terms of Regulation 9.2.1 of

the Regulations of 2005, which relates to the reduction

of contract demand/sanctioned load, no reduction of

load could be allowed before the expiry of the period of

agreement which, according to the appellants, would be 6

07.07.2007 when a fresh agreement was executed for

enhanced load of 4000 KVA. Learned counsel for the

appellants has thus submitted that the application for

reduction of load filed by the respondent on 20.09.2007,

which was well within the period of three years from

07.07.2007, was rightly rejected by the Board vide its

order dated 08.11.2007, as it was in conformity with

the provisions of the Regulations of 2005.

7. Per contra, learned Senior Counsel appearing

for the respondent has submitted that the agreement

was initially entered into on 14.04.2004 and thereafter

even though technically fresh agreements may have

been executed for enhancement of load of the

respondent, but the same were only

extension/amendment of the initial agreement dated

14.04.2004, and the terms of each of these agreements

were identical, with the only change being that of the

increased contracted load. It has been contended by

the learned Senior Counsel for the respondent that the 7

Regulations do not permit execution of a fresh

agreement in case of enhancement of load, and the

enhancement agreements would merely be

supplementary agreements in continuation of the initial

agreement dated 14.04.2004 and cannot be treated as

fresh agreement because it is the same electricity

connection, which was granted by the agreement dated

14.04.2004, in which there have been amendments

from time to time for increase of load, and merely

executing a fresh agreement for enhancement of load

cannot be termed as fresh agreement for the purpose of

Regulations of 2005. It has, thus, been submitted that

the application of the respondent for reduction of load

dated 20.09.2007 has to be treated as after a period of

three years from the date of initial agreement dated

14.04.2004 and thus, the application of the respondent

ought to have been allowed and/or should be deemed to

be allowed in terms of the provisions of Regulations of 8

2005. In this regard, reliance has been placed on

Regulations 2(l), 9.1 and 9.2 of the Regulations of 2005.

8. For the ready reference, the relevant

provisions of the Regulations of 2005 are reproduced

below:­

“2. Definitions. 2.1 In these regulations, unless the context otherwise requires:

(a)…..

(b)…..

(c)…..

……...

(l) “Contract Demand” means demand in Kilowatt (KW) or Kilo Volt amperes (KVA) or H.P (Horse Power) mutually agreed between the Distribution Licensee and the consumer as entered into agreement or agreed through other written communication.

(m)…..

(n)…..

9. Enhancement and Reduction of Contract Demand/Sanctioned Load. – 9.1 Enhancement of Contract Demand /Sanctioned Load 9.1.1 The application for enhancement of Contract Demand/Sanctioned Load shall be made in the prescribed form and in the 9

manner as specified in new service connection in Clause 5 of these Regulations.

9.1.2 The application for enhancement of load shall be disposed of in the manner and within the time frame as prescribed for new service connection in Clause 6.2.11 of these Regulations.

Provided that the application for enhancement of Contract Demand/Sanctioned Load may be

outright rejected by the distribution licensee if the consumer is in arrears of licensee’s dues and the same have not been stayed by a court of law or the Commission.

9.2 Reduction of Contract Demand/Sanctioned Load. ­ 9.2.1 The application for reduction of Contract Demand/Sanctioned Load shall made in the prescribed form specified for the new service connection.

Provided that no reduction of load shall be allowed by the Distribution Licensee before expiry of the initial period of agreement.

9.2.2 The application for reduction of load shall be accompanied by­

(i) Details of modification, alteration and removal of electrical installation with completion certificate and test report of the Licensed Electrical contractor.

(ii) Any other reason for reduction of load 10

(iii) Details of generator if any installed by the consumer with safety clearance certificate from competent authority as applicable.

9.2.3 The Distribution Licensee shall consider the application verify the same and communicate in writing its decision on reduction of Contract Demand/Sanctioned Load in writing within 30 days of the application.

Provided that if the distribution licensee rejects or refuses the reduction of Contract Demand/Sanctioned Load it shall do so after affording the consumer reasonable opportunity of being heard in the matter and after communicating in writing the reasons for such refusal.

9.2.4 If the decision of the application for reduction of Contract Demand/Sanctioned Load is not communicated by the licensee within 30 days of the application, the consumer shall send a notice to the licensee requesting for disposal in the matter and if the decision is still not communicated within 15 days of the notice. The reductions of Contract Demand/ Sanctioned Load shall be deemed to have been sanctioned, from the 16th day after the issue of notice to the licensee by the consumer.

9.2.5 The reduction of Contract Demand/Sanctioned Load shall come into effect from the first day of the month following the month in which the reduction of load has been sanctioned or have been deemed to be sanctioned.

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9.2.6 After the sanction of the reduction of Contract Demand/Sanctioned Load the consumer shall execute a supplementary agreement and the licensee shall recalculate the Security Deposit excess Security Deposit if any shall be refunded by way of adjustment in the minimum number of succeeding bills of the consumer.” (emphasis supplied)

9. The communication dated 08.11.2007 of the

Electrical Superintending Engineer of the Board,

refusing the prayer of the respondent for reduction of

load, is reproduced below:­

“Sub: Regarding the reduction of load from 4000 KVA to 1325 KVA in respect of M/s R.K. Forging Ltd. Conn. No. HJAP­ 185

Ref: Your letter No. R.K.F.L/III and IV 182/07­08 dated 05.10.2007.

With respect to the above, you have applied for reduction of C.D from 4000KVA to 1325KVA. It is to inform you that C/9B of agreement may kindly be seen.

‘C/9B­ The consumer shall not be at liberty to determine this agreement before the expiration of three years from the 12

date of commencement of the supply of energy (4000KVA w.e.f. 12.07.2007). The consumer may determine this agreement with effect from any date after the said period on giving to the Board not less than twelve calendar months’ previous notice (this has charged not less than 6 Month Notice vide Secretary, Jharkhand State Electricity Board Notification No.5058 dated 20.08.2002) in writing in that behalf and upon the expiration of the period of such notice.

This agreement shall cease and determine without prejudice to any right which then have accrued to the Board herewith provided always that the consumers may at any time with the previous consent of the Board transfer and assign this agreement to any other person and upon subscription of such transfer, this agreement shall be binding on the transferee and Board and take effect in all respects as if transferee had originally been party in place of the consumer who shall henceforth be discharged from all liabilities under or in respect thereof.’ Hence your request for reduction cannot be done as per agreement.”

10. Heard learned Counsel for the parties and

have carefully gone through the record. 13

11. From perusal of the communication dated

08.11.2007, it is clear that the application of the

respondent for reduction of load has been rejected in

terms of Clause 9(B) of the agreement, treating the date

of commencement of the agreement to be 7/12.07.2007

and only by considering the provision of determination

of the agreement, which could not have been without

giving notice of less than 12 calendar months. It is

clear that the said communication/order does not

consider the provisions of the Regulations of 2005 with

regard to reduction of load, but only treats the

application for reduction of load to be an application for

determination of the agreement.

12. Chapter 9 of the Regulations of 2005 deals

with the enhancement and reduction of contract

demand/sanctioned load. Regulation 9.1 deals with

enhancement of contract demand/sanctioned load,

whereas Regulation 9.2 deals with the reduction of

contract demand/sanctioned load.

14

13. Just as the consumer has the liberty of

getting its load enhanced under Regulation 9.1, the

reduction of contract demand/sanctioned load can also

be prayed for and decided in terms of Regulation 9.2.

The proviso to Regulation 9.2.1, no doubt, provides that

no reduction of load shall be allowed before expiry of the

initial period of agreement, which is three years in the

present case. The question would be whether the initial

agreement is to be considered for such purpose, or the

subsequent agreements.

14. Regulation 9.2.6 of the Regulations of 2005

provides for execution of a supplementary agreement for

reduction of contract demand/sanctioned load of the

consumer. Similarly, for enhancement of load also, even

if a fresh agreement may have been executed between

the parties, the same could be treated as nothing but a

supplementary agreement of the initial agreement by

which the electricity connection was granted for a

particular load. Clause 2(l) of the Regulations also 15

defines “contract demand” to be demand mutually

agreed in the agreement or agreed through other written

communication, meaning thereby that for variation of

the contract demand execution of a fresh agreement is

not essential and the same can be done otherwise also

by mere written communication.

15. It is noteworthy that the Jharkhand State

Electricity Board (‘the Board’) is a monopoly supplier of

electricity which has laid down its own terms and

conditions, regarding which the consumer has no say or

choice but to sign on the dotted lines, if it wants of get

electricity load varied for running its industry. The

Board is an instrumentality of the State. It has to be fair

and reasonable. If the Regulations provide for contract

load to be varied even through a written

communication, then in our considered view, in all

fairness, though fresh agreements may have been

executed at the stage of enhancement of load of the

same electricity connection, the same cannot be treated 16

as anything but an extension/amendment or

modification of the initial agreement granting the

electricity connection, which in the present case would

be the agreement dated 14.04.2004. On the dictates of

the Board, the consumer may have been required to

sign fresh agreements for each enhancement of load,

but the enhancement being for the same electricity

connection which still continues, it would merely be

amendment of the initial agreement. This would also be

in consonance with the provisions of the Regulations of

2005, which have to be liberally interpreted in favour of

the consumer.

16. Reverting to the order dated 08.11.2007,

which was impugned in the writ petition, we are of the

opinion that the Board has gone wrong in treating the

application dated 20.09.2007 of the respondent for

reduction of load to be that for determination of the

agreement under Clause 9B of the agreement, which

application, in fact, ought to have been considered 17

under Regulation 9.2 of the Regulations of 2005.

Further, we are unable to accept the submission of the

learned Counsel for the appellant that the application of

the respondent for reduction of load was within the

period of three years, because as we have discussed

hereinabove, the agreement to be considered in the

present case is the initial agreement dated 14.04.2004

and not the subsequent agreement dated 07.07.2007.

17. The judgments of this Court rendered in

Bihar State Electricity Board, Patna and Others v.

M/s. Green Rubber Industries and Others, (1990) 1

SCC 731, Orissa State Electricity Board v. Orissa

Tiles Limited, (1993) Supp. 3 SCC 481, Andhra Steel

Corporation Ltd. and Others v. Andhra Pradesh State

Electricity Board and Others, (1991) 3 SCC 263 and

Jharkhand State Electricity Board & Others v Laxmi

Business and Cement Company Private Limited and

Another, (2014) 5 SCC 236 as have been relied upon by 18

learned counsel for the parties, are distinguishable on

facts, in as much as they all relate to minimum

guarantee charge, and that too under the old Electricity

Act of 1910, as is so in the first three cases.

18. In view of the aforesaid, we are of the opinion

that the application of the respondent dated 08.11.2007

ought to have been allowed by the Board in terms of

Regulation 9.2 of the Regulations of 2005, treating the

application to be beyond the period of three years from

the date of the execution of the initial agreement dated

14.04.2004, by which the electricity connection of the

respondent had been initially granted.

19. While dismissing the appeal, we are not going

into the question as to whether the provisions of

Regulation 9.2.1 are discriminatory, arbitrary and

against the public policy, as has been held by the

Jharkhand High Court vide its judgment dated

23.07.2008.

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20. The appeal is, accordingly, dismissed. No

order as to costs.

21. The application of the respondent dated

20.09.2007 for reduction of contract load/sanctioned

load from 4000 KVA to 1325 KVA would be deemed to

have been allowed under the provisions of Regulation

9.2 of the Regulations of 2005, and the respondent shall

be entitled to all consequential benefits.

………..………………………………..J (L. NAGESWARA RAO)

………..……………………………....J (VINEET SARAN)

New Delhi April 30, 2021.