Karnataka Power Transmission Corporation And Another vs Ashok Iron Works Pvt. Ltd.

2

2. As the principal arguments have been advanced in Civil

Appeal No. 1879/2003, we take up the facts of that appeal which

are thus, briefly put. M/s Ashok Iron Works Private Limited (for

short, `the company') is a Private Limited Company and engaged in

the activity of manufacture of iron products. The company applied

for the supply of electrical energy (2500 KVA) to the Karnataka

Electricity Board (now Karnataka Power Transmission Corporation

and hereinafter referred to as `KPTC'). The application made by the

Company was cleared by the Single Window agency and supply

of electric energy 1500 KVA was sanctioned. The company is said

to have deposited an amount of Rs. 8,40,000/- on 1st February,

1991 as per demand. KPTC did not commence supply of

electricity as agreed upon and that necessitated the company to

approach Karnataka High Court for a direction to KPTC to supply

the sanctioned energy. On 16th April, 1992, the High Court

directed KPTC to supply electrical energy as per sanction forthwith

and subsequently, time for supply of electricity was extended by

the High Court upto 21st July, 1992. KPTC raised an additional

demand of Rs. 8,38,000/- from the company and further demand in

the sum of Rs, 1,34,000/-. The company is said to have deposited

the said amount. However, the actual supply of the power 3

commenced in the month of November, 1992. The company

accordingly filed a complaint under the Consumer Protection Act,

1986 (for short, `the Act, 1986') before the Consumer Disputes

Redressal Forum, Belgaum claiming damages in the sum of Rs.

99,900/- for delay in supply of electricity. The complaint was

contested by KPTC, and, inter alia, preliminary objection was

raised that complaint was not maintainable as the complainant was

engaged in commercial activity and electricity being goods; sale of

goods to a commercial consumer for a commercial purpose was

outside the scope of the Act, 1986.

3. As there were several complaints wherein identical objection

pertaining to the maintainability of such complaints was involved, all

these complaints were taken up and disposed of together by the

District Forum by a common order dated 10th September, 1993.

The District Forum was persuaded by the objection raised by the

KPTC and it held that the complaints were not maintainable.

4. The company challenged the order of the District Forum in

appeal before Karnataka State Consumer Disputes Redressal

Commission (for short, `State Commission'). Few other appeals

from the common judgment dated 10th September, 1993 also

came to be filed before the State Commission. The State 4

Commission vide its order dated June 15, 1995 set aside the order

of the District Forum and held that complaints were maintainable

being covered by the definition of "Consumer" under the provisions

of the Act, 1986.

5. KPTC challenged the order of the State Commission by filing

a revision petition before the National Consumer Disputes

Redressal Commission (for short, "`National Commission"). It

appears that initially revision petition was dismissed in default but

later on, on the application of restoration made by KPTC, the

revision petition was restored but it was dismissed in view of its

decision dated 23rd November, 2001, in the case of M/s Welmelt

Steel Cast Pvt. Ltd. v. Karnataka State Electricity Board. It is

from this order that appeal 1879/2003 by special leave arises.

6. Mr. S.K. Kulkarni, learned counsel for KPTC made the

following submissions before us:

(i) The complaint by the company before the Consumer Forum against KPTC was incompetent and not maintainable because the complainant is not a `person' under Section 2(1)(m) of the Act, 1986 and as such the complainant is not the `consumer' within the opening limb of the definition of that expression in Section 2(1)

(d).

(ii) The complainant is not a `consumer' within the definition of Section 2(1)(d)(i) of the Act, 1986 since 5

it purchased electrical energy from the KPTC for commercial production.

(iii) The complainant's case does not fall within the scope of Section 2(1)(d)(ii) of the Act, 1986. The expression "service" in Section 2(1)(o) cannot be read in a wider sense as it is circumscribed by the word "facilities", thereby limiting the service only to the consumers of facilities in connection with supply of electrical energy.

In other words, the dispute relating to sale and supply of electricity does not come within the ambit of "service" under Section 2(1)(o) of the Act, 1986. If for the arguments' sake, it is treated "service", since it is for commercial purpose, it is excluded from the purview of sub-clause (1)(d)(ii).

7. At this stage, it would be appropriate to refer to some of the

provisions of the Act, 1986 as were existing at the relevant time in

the year 1992 which are relevant for the consideration of the

submissions of the learned counsel for KPTC.

8. Section 2(1)(d) defines "consumer" as follows:-

"Consumer" means any person who, -

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtain such goods for resale or for any commercial purpose; or 6

(ii) hires any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person."

9. According to Section2(1)(m), "person" includes :-

"(i) a firm whether registered or not; (ii) a Hindu undivided family; (iii) a co-operative society; (iv) every other association of persons whether registered

under the societies Registration Act, 1860 (21 of 1860) or not."

10. Section 2(1)(o) defines "service" thus:

"Service' means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, entertainment, amusement or the purveying a news or other information, but does not include the rendering of any service free of charge or under a contract of personal service."

re : contention -(i)

11. The question that falls for our determination is: is a private

limited company a `person' as contemplated under Section 2(1)(d). 7

The contention of the learned counsel for the KPTC is that persons

specified and enumerated in Section 2(1)(m) are the only

categories of persons covered by that clause and a company

incorporated under the Companies Act is not covered thereunder.

The learned counsel would submit that a company is excluded from

the definition of `person' since the object of the Act, 1986 is to

provide an affordable remedy to individuals or four categories of

collectivities or associations of individuals which may constitute

legal entities for suing or being sued. According to learned

counsel, the companies incorporated were never intended to be

covered by Act, 1986 as they could always pursue the ordinary

remedy provided in law. The learned counsel also submitted that

the word "includes" must be read as "means". In this regard, the

learned counsel placed reliance upon two decisions of this Court

namely; (1) The South Gujarat Roofing Tiles Manufacturers

Association and Anr. v. The State of Gujarat and Anr. [(1976) 4

SCC 601] (2) Reserve Bank of India v. Peerless General

Finance and Investment Co. Ltd. and Ors. [(1987) 1 SCC 424)]

12. Lord Watson in Dilworth v. Commissioner of Stamps

(1899) AC 99 made the following classic statement: 8

"The word "include" is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word "include" is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to "mean and include", and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions."

13. Dilworth (supra) and few other decisions came up for

consideration in Peerless General Finance and Investment Co.Ltd.

and this Court summarized the legal position that inclusive

definition by the Legislature is used; (one) to enlarge the meaning

of words or phrases so as to take in the ordinary, popular and

natural sense of the words and also the sense which the statute

wishes to attribute to it; (two) to include meaning about which there

might be some dispute; (three) to bring under one nomenclature all

transactions possessing certain similar features but going under

different names.

14. It goes without saying that interpretation of a word or

expression must depend on the text and the context. The resort of 9

the word `includes' by the Legislature often shows the intention of

the Legislature that it wanted to give extensive and enlarged

meaning to such expression. Sometimes, however, the context

may suggest that word `includes' may have been designed to mean

"means". The setting, context and object of an enactment may

provide sufficient guidance for interpretation of word `includes' for

the purposes of such enactment.

15. Section 2(1)(m) which enumerates four categories namely,

(i) a firm whether registered or not; (ii) a Hindu undivided family; (iii)

a co-operative society; and (iv) every other association of persons

whether registered under the Societies Registration Act, 1860 (21

of 1860) or not while defining `person' cannot be held to be

restrictive and confined to these four categories as it is not said in

terms that `person' shall mean one or other of the things which are

enumerated, but that it shall `include' them.

16. The General Clauses Act, 1897 in Section 3(42) defines

`person':

"Person shall include any company or association or body of individuals whether incorporated or not."

10 17. Section 3 of the Act, 1986 upon which reliance is placed by

learned counsel for KPTC provides that the provisions of the Act

are in addition to and not in derogation of any other law for the

time being in force. This provision instead of helping the

contention of KPTC would rather suggest that the access to the

remedy provided to the Act of 1986 is an addition to the provisions

of any other law for the time being in force. It does not in any way

give any clue to restrict the definition of the `person'.

18. Section 2(1)(m), is beyond all questions, an interpretation

clause, and must have been intended by the Legislature to be taken

into account in construing the expression `person' as it occurs in

Section 2(1)(d). While defining `person' in Section 2(1)(m), the

Legislature never intended to exclude a juristic person like

company. As a matter of fact, the four categories by way of

enumeration mentioned therein is indicative, categories (i), (ii) & (iv)

being unincorporate and category (iii) corporate, of its intention to

include body corporate as well as body un-incorporate. The

definition of `person' in Section 2(1)(m) is inclusive and not

exhaustive. It does not appear to us to admit of any doubt that 11

company is a person within the meaning of Section 2(1)(d) read

with Section 2(1)(m) and we hold accordingly.

re: contention - (ii) and (iii)

19. In CST v. M.P. Electricity Board, Jabalpur; case 1969 (2)

SCR 939, this Court held that electricity is `goods'. In the case of

State of Andhra Pradesh v. National Thermal Power

Corporation; (2002) 5 SCC 203, the Constitution Bench approved

the observations made in M.P. Electricity Board to the extent that

electrical energy can be transmitted, transferred, delivered,

possessed, etc., but did not agree with the observation that

electrical energy can be stored. The Constitution Bench held that

significant characteristic of electrical energy is that its generation or

production coincides almost instantaneously with its consumption. In the case of Indian Aluminium Co. v. State of Kerala; (1996) 7

SCC 637, the characteristics of electrical energy were noticed by

this Court thus, ".....continuity of supply and consumption starts

from the moment the electrical energy passes through the meters

and sale simultaneously takes place as soon as meter reading is

recorded. All the three steps or phases (i.e. sale, supply and

consumption) take place without any hiatus. It is true that from the 12

place of generating electricity, the electricity is supplied to the sub-

station installed at the units of the consumers through electrical

high-tension transformers and from there electricity is supplied to

the meter...."

20. Recently, this Court in the case of Southern Petrochemical

Industries Co. Ltd. v. Electricity Inspector & ETIO and Others ;

(2007) 5 SCC 447, made following pertinent observations:

"149. It may be that electricity has been considered to be "goods" but the same has to be considered having regard to the definition of "goods" contained in clause (12) of the Article 366 of the Constitution of India. When this Court held electricity to be "goods" for the purpose of application of sales tax laws and other tax laws, in our opinion, the same would have nothing to do with the construction of Entry 53 of List II of the Seventh Schedule of the Constitution of India."

21. Section 49 of The Electricity (Supply) Act, 1948 makes the

following provision:

[49. Provision for the sale of electricity by the Board to persons other than licensees. - (1) Subject to the provisions of this Act and of regulations, 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 purposes for which it is required;

13 (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 adequately served by the licensee;

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

(d) the extension and cheapening of supplies of electricity to sparsely developed areas.

(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.]

22. Whether the supply of electricity by KPTC to a consumer

is sale and purchase of goods within the meaning of Section 2(1)(d)

(i) of the Act, 1986? We do not think so. Although title of Section

or marginal note speaks of "the sale of electricity by the Board to

persons other than licensees" but the marginal note or title of the

Section cannot afford any legitimate aid to the construction of

Section. Section 49 speaks of supply of electricity to any person

not being a licensee upon said terms and conditions as a Board 14

thinks fit and for the purpose of such supply free uniform tariffs.

This Court has already held in Southern Petrochemical

Industries (supra) that supply does not mean sale. As a matter

of fact, the company has brought its case to be covered by Section

2(1)(d)(ii) and not 2(1)(d)(i) as the dispute raised by the company

is with regard to non-performance of the services for consideration

within time frame. For the purposes of the maintainability of the

complaint, therefore, what is important to be seen is whether there

is deficiency in service within the meaning of Section 2(1)(d)(ii).

Under Section 2(1)(o) of the Act, 1986, `service' means service of

any description which is made available to potential users and

includes the provision of facilities in connection with supply of

electrical or other energy. "Deficiency" under Section 2(1)(g)

means any fault, imperfection, shortcoming or inadequacy in the

quality, nature and manner of performance which is required to be

maintained by or under any law for the time being in force or has

been undertaken to be performed by a person in pursuance of a

contract or otherwise in relation to any service. As indicated in the

definition of `service', the provision of facilities in connection with

supply of electrical energy is a service. Supply of electricity by the

Board or for that matter KPTC to a consumer would be covered 15

under Section 2(1)(o) being `service' and if the supply of electrical

energy to a consumer is not provided in time as is agreed upon,

then under Section (2)(1)(g), there may be a case for deficiency in

service.

23. Learned counsel for KPTC relied upon an order of this Court

in the case of SDO, Electricity and Anr. v. B.S. Lobana; (2005) 6

SCC 280 in support of his contention that in the matter such as

present one, the Consumer Forum is not an appropriate forum. We

are afraid no such absolute proposition as canvassed by the

learned counsel is discernible from the said order. The said order

is confined to its own facts which is clear from paragraph 3 that

reads thus:

" The respondent has filed written submissions. We have perused the same. In the facts and circumstances of the case, we are of the view that instead of moving the District Forum, the respondent should have moved an application under section 26(6) of the Electricity Act, 1910 (for short " the Act") for referring the matter to the Electrical Inspector."

24. Learned counsel urged that the definition `service' is of

limited nature and is limited to the providing facilities in connection

with electricity. According to him, the facility is an expression which

facilitates the supply of electricity to an installation and the definition 16

of service does not cover supply of electricity. This contention of

the learned counsel is founded on erroneous assumption that

supply of electricity is a sale of electricity and the use of expression

`supply' is synonym for `sale'. We have already noticed above,

which we need not repreat, that supply of electricity to a consumer

by KPTC is not sale of electricity. The expression `supply' is not

synonym for `sale'. We reiterate what has been stated by this

Court in Southern Petrochemical Industries Co. Ltd. (supra) that

supply does not mean sale. The expression `but does not include

a person who avails of such services for any commercial purpose'

inserted in Section 2(1)(d)(ii) by the Act 62 of 2002 is not

applicable in the facts and circumstances of the present case since

the controversy relates to the period prior to amendment.

25. In what we have discussed above, the complaint made by

the company before the District Forum cannot be said to be not

maintainable and we hold, as we must, that complaint is

maintainable.

26. In so far as Civil Appeal No. 7784/2002 is concerned, the

complainant (appellant herein) is a sole proprietor of Techno

Batteries which is a battery charging unit. According to the

complainant, for the power supplied by Karnataka Electricity Board 17

(now `KPTC' ) charges payable are under "Power-Tariff, L.T.-5"

but in the Bill dated 6th March, 1990, a sum of Rs. 22,628.40 was

demanded as "Audit Short Claim" on the ground that the charges

payable for the consumption of electricity by the complainant are

under Tariff-Schedule L.T.-3 and not L.T. -5. The complainant

moved the District Forum at Bangalore challenging the demand.

The District Forum allowed the complaint vide its order dated 22nd

February, 1994. KPTC preferred an appeal before the State

Commission. The State Commission by its Order dated 19th June,

1997 allowed the appeal on the ground that the complainant was

not a consumer within the meaning of Section 2(1)(d) of the Act,

1986 and consequently, it set aside the order of the District Forum.

Aggrieved by the order of the State Commission, the complainant

preferred Revision before the National Commission. The Revision

Application came to be dismissed as the complainant was not

present and also because the National Commission was satisfied

with the order passed by the State Commission. This appeal

arises from the Order dated 1st December, 2000, passed by the

National Commission.

27. In view of the discussion already made by us above while

dealing with contentions (ii) and (iii) in Civil Appeal No. 1879/2003, 18

it has to be held that the complaint by H.V. Balchandra Rao is

covered under Section 2(1)(d)(i)(ii) of the Act, 1986.

28. For the foregoing reasons:

(1) Civil Appeal No. 1879/2003 is dismissed; the

order dated 7th October, 2002 passed by National

Consumer Disputes Redressal Commission and

the Order of Karnataka State Consumer

Redressal Commission passed on 15th June, 1995

are affirmed and, accordingly, the complaint

stands remitted to District Forum for its disposal in

accordance with law.

(2) Civil Appeal No. 7748/2002 is allowed and the

Order dated 1st December, 2000 passed by

National Consumer Disputes Redressal

Commission and the Order dated 19th June, 1997

passed by Karnataka State Consumer Disputes

Redressal Commission are set aside. Appeal No.

168/1994 is restored to the file of Karnataka State

Consumer Disputes Redressal Commission for its

disposal in accordance with law.

(3) The parties shall bear their own costs. 19

................................J. (MARKANDEY KATJU)

.................................J. (R.M. LODHA)

New Delhi February 9, 2009