Appeal No 3908 NT 1983
From the Judgment and Order dated 20111979 of the Madras High Court in Tax Case No 330 of 1976
A Raghuvir and Ms A Subhashini for the Appellant
TA Ramachandran and Mrs Janaki Ramachandran for the Respondent
The Judgment of the Court was delivered by BP JEEVAN REDDY J
This appeal is preferred against the Judgment of the Madras High Court answering the question referred to it in the affirmative ie in favour of the assessee and against the Revenue
The question referred under section 256 1 of the Income tax Act reads as follows Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in holding that the total sum of Rs 22000 received by the assessee from the Indian Oil Corporation and All India Highway Motor Rally should not be brought to tax The assessment year concerned is 1974 75
The assessee GR Karthikeyan assessed as an individual was having income from various sources including salary and business income
During the accounting year relevant to the said assessment year he participated in the All India Highway Motor Rally
He was awarded the first prize of Rs 20000 by the Indian Oil Corporation and another Sum of Rs 2000 by the All India Highway Motor Rally
The Rally was organised jointly by the Automobile Association of Eastern India and the Indian Oil Corporation and was supported by several Regional Automobile Associations as well as Federation of Indian Motor Sports Clubs and the Federation of Indian Automobile Associations
The rally was restricted to private motorcars the length of the rally route was approximately 6956 kms
One could start either from Delhi Calcutta Madras or Bombay proceed anti clock wise and arrive at the starting point
The rally was designed to test endurance driving and the reliability of the 331 automobiles
One had to drive his vehicle observing the traffic regulations at different places as also the regulations prescribed by the Rally Committee
Prizes were awarded on the basis of overall classification
The method of ascertaining the first prize was based on a system of penalty points for various violations
The competitor with the least penalty points was adjudged the first prize winner
On the above basis the assessee won the first prize and received a total sum of Rs 22000
The Income Tax Officer included the same in the income of the respon dent assessee relying upon the definition of income  in clause 24 of section 2
On appeal the Appellate Assistant Commissioner held that inasmuch as the rally was not a race the amount received cannot be treated as income within the meaning of section 2 24 ix
An appeal preferred by the Revenue was dismissed by the Tribunal
The Tribunal recorded the following findings aThat the said rally was not a race
It was predominantly a test of skill and endurance as well as of reliability of the vehicle
b That the rally was also not a game  within the meaning of section 224 ix
c That the receipt in question was casual in nature
It was nevertheless not an income receipt and hence fell outside the provisions of section 10 3 of the Act
At the instance of the Revenue the question aforementioned was stated for the opinion of the Madras High Court
The High Court held in favour of the assessee on the following reasoning a The expression winnings  occuring at the inception of sub clause ix in section 224 is distinct and different from the expression winning 
The expression winnings  has acquired a connotation of its own
It means money won by gambling or betting
The expression winnings  controls the meaning of several expressions occurring in the sub clause
In this view of the matter the sub clause cannot take in the receipt concerned herein which was received by the assessee by participating in a race which involved skill in driving the vehicle
The rally was not a race
In other words the said receipt does not represent winnings 
b A perusal of the memorandum explaining the provisions of the Finance Bill
1 972 which inserted the said sub clause in section 224 also shows that the idea behind the sub clause was to rope in windfalls from lotteries races and card games etc
332 c Section 74 A which too was introduced by the Finance Act 1972 supports the said view
Section 74 A provides that any loss resulting from any of the sources mentioned therein can be set off against the income received from that source alone
The sources referred to in the said section are the very same sources mentioned in sub clause ix of section 224 namely lotteries crossword puzzles races including horse races card games etc
The correctness of the view taken by the High Court is questioned herein
The definition of income  in section 224 is an inclusive definition
The Parliament has been adding to the definition by adding sub clause s from time to time
Sub clause ix which was inserted by the Finance Act 1972 reads as follows ix any winnings from lotteries crossword puzzles races including horse races card games and other games of any sort or from gambling or betting of any form or nature whatsoever We may notice at this stage a provision in section IO
Section 10 occurs in chapter HI which carries the heading Incomes which do not form part of total income
Section 10 in so far as is relevant reads thus  10 Incomes not included in total income In computing the total income of a previous year of any person any income failing within any of the following clauses shall not be included d any receipts which are of a casual and non recurring nature not being winnings from lotteries to the extent such receipts do not exceed one thousand rupees in the aggregate
The clause has been amended by Finance Act 1986 but we are not concerned with it
Similarly it is not necessary to notice the proviso to the said clause It is not easy to define income
The definition in the Act is an inclusive one
As said by Lord Wright in Kamakshya Narayan Singh vs CIT P C income   is a word difficult and perhaps impossible to define in any precise general formula
It is a word of the broadest connotation
In Gopal Saran Narain Singh vs Commissioner of Income Tax 3ITR 237 PC the Privy Council pointed out that anything than can properly be described as income is taxable under the Act unless expressly exempted This Court had to deal with the ambit of the expression income in Navin Chandra Mafatlal vs CI TBombay 26 ITR SC 333 The Indian Income tax and Excess Profits Tax Amendment Act 1947 had inserted section 12 B in the Indian Income tax Act 1922
Section 12B imposed a tax on capital gains
The validity of the said Amendment was questioned on the ground that tax on capital gains is not a tax on income within the meaning of entry 54 of list 1 nor is it a tax on the capital value of the assets of individuals and companies within the meaning of entry 55 of list 1 of the seventh schedule to the Government of India Act 1935
The Bombay High Court repelled the attack
The matter was brought to this Court
After rejecting the argument on behalf of the assessee that the word income  has acquired by legislative practice a restricted meaning and after affirming that the entries in the seventh schedule should receive the most liberal construction the Court observed thus What
then is the ordinary natural and grammatical meaning of the word income According to the dictionary it means a thing that comes in See Oxford Dictionary Vol
Vp 162 Stroud vol
II pp
14 16
In the United States of America and in Australia both of which also are English speaking countries the word income is understood in a wide sense so as to include a capital gain
Reference may be made to Eisner vs Macomber    Merchants  Loan and Trust Co vs Smietanka 1920   L and United States of America vs Stewart   and Resch vs Federal Commissioner of Taxation   In each of these cases very wide meaning was ascribed to the word income as its natural meaning
The relevant observations of learned Judges deciding those cases which have been quoted in the judgment of Tendolkar J quite clearly indicate that such wide meaning was put upon the word income not because of any particular legislative practice either in the United States or in the Commonwealth of Australia but because such was the normal concept and connotation of the ordinary English word income
Its natural meaning embraces any profit or gain which is actually received
This is in consonance with the observations of Lord Wright to which reference has already been made
The argument founded on an assumed legislative practice being thus out of the way there can be no difficulty in applying its natural and grammatical meaning to the ordinary English word income 
As already observed the word should be given its widest connota 334 tion in view of the fact that it occurs in a legislative head conferring legislative power
Since the definition of income in section 224 is an inclusive one its ambit in our opinion should be the same as that of the word income occurring in entry 82 of list 1 of the Seventh Schedule to the Constitution corresponding to entry 54 of list 1 of the Seventh Schedule to the Government of India Act
In Bhagwandas Jain vs Union of India SC The challenge was to the validity of section 232 of the Act which provided that where the property consists of house in the occupation of the owner for the purpose of his own residence the annual value of such house shall first be determined in the same manner as if the property had been let and further be reduced by one half of the amount so determined or Rs 1800 whichever is less
The contention of the assessee was that he was not deriving any monetary benefit by residing in his own house and therefore no tax can be levied on him on the ground that he is deriving income from that house
It was contended that the word income means realisation of monetary benefit and that in the absence of any such realisation by the assessee the conclusion of any amount by way of notional income under section 232 of the Act in the chargeable income was impermissible and outside the scope of entry 82 of list 1 of the Seventh Schedule to the Constitution
The said contention was rejected affirming that the expression income is of the widest amplitude and that it includes not merely what is received or what comes in by exploiting the use of the property but also that which can be converted into income
Sub clause ix of section 224 refers to lotteries crossword puzzles races including horse races card games other games of any sort and gambling or  betting of any form or nature whatsoever
All crossword puzzles are not of a gambling nature
Some are some are not
See State of Bombay vs RMD Chamarbaugwala AIR 1957 SC699Even in card games there are some games which are games of skill without an element of gamble See State of Andhra Pradesh vs
K Satyanarayan1968 2 SCR 515
The words other games of any sort are of wide amplitude
Their meaning is not confined to games of a gambling nature alone
It thus appears that sub clause ix is not confined to mere gambling or betting activities
But says the High Court the meaning of all
the aforesaid words is controlled by the word winnings  occurring at the inception of the subclause
The High Court says relying upon certain material that the expression winnings  has come to acquire a particular meaning viz receipts from activities of a gambling or betting nature alone
Assuming that the High Court is right in its interpretation of the expression winnings  does it follow that merely because 335 winnings from gamblingbetting activities are included within the ambit of incomethe monies received from non gambling and non betting activities are not so included What is the implication flowing from insertion of clause ix If the monies which are not earned in the true sense of the word constitute income why do moneies earned by skill and toil not constitute income Would it not look odd
if one is to say that monies received from games and races of gambling nature represent income but not those received from games and races of non gambling nature The rally in question was a contest if not a race
The respondent assessee entered the contest to win it and to win the first prize
What he got was a return  for his skill and endurance
Then why is it not income which expression must be construed in its widest sense
Further even if a receipt does not fall within subclause ix or for that matter any of the sub clauses in section 224 it may yet constitute income
To say otherwise would mean reading the several clauses in section 224 as exhaustive of the meaning of income  when the Statute expressly says that it is inclusive
It would be a wrong approach to try to place a given receipt under one or the other sub clauses in section 224 and if it does not fall under any of the sub clauses to say that it does not constitute income
Even if a receipt does not fall within the ambit of any of the sub clauses in section 224 it may still be income if it partakes of the nature of the income
The idea behind providing inclusive definition in section 224 is not to limit its meaning but to widen its net
This Court has repeatedly said that the word income  is of widest amplitude and that it must be given its natural and grammatical meaning
Judging from the above standpoint the receipt concerned herein is also income
May be it is causal in nature but it is income nevertheless
That even the casual income is income  is evident from section 10 3
Section 10 seeks to exempt certain incomes  from being included in the total income 
A casual receipt which should mean in the context casual income is liable to be included in the total income if it is in excess of Rs 1000 by virtue of clause 3 of section 10
Even though it is a clause exempting a particular receiptincome to a limited extent it is yet relevant on the meaning of the expression income 
In our respectful opinion the High Court having found that the receipt in question does not fall within sub clause ix of section 224 erred in concluding that it does not constitute income
The High Court has read the several sub clauses in section 224 as exhaustive of the definition of income when in fact it is not so
In this connection it is relevant to notice the finding of the Tribunal
It found that the receipt in question was casual in nature but it opined it was nevertheless not an income receipt and fell outside the provision of section 10 3 of the Act
We have found it difficult to follow the logic behind the argument
For the above reasons we hold that the receipt in question herein does 336 constitute income  as defined in clause 24 of section 2 of the Act
The appeal is accordingly allowed and the question referred by the Tribunal under section 2561 of the Act is answered in the negative ie in favour of the Revenue and against the assessee
There shall be no order as to costs
Appeal allowed


Summary:
Under the General Terms and Conditions for supply of electricity notified by the Andhra Pradesh State Electricity Board under Section 491 of the  the consumers were obliged to keep with the Electricity Board an amount equivalent to three month s demand and energy charges as consumption deposit on which Interest at the rate of 3 per annum was payable by the Board
In the event of delay in payment of consumption deposit within the stipulated period not only surcharge was payable by consumer but also the supply was liable to be disconnected
Various petitions were riled before Andhra Pradesh High Court challenging the validity of terms and conditions contending that the consumption deposit should In no event exceed two months average consumption charges and that In view of the judgment of Supreme Court In Ms Jagdamba Paper Industries vs HSEB Board 1983 4 SCC 508 the Board was liable to pay Interest at the game rate as Is paid by a Scheduled Bank on fixed deposit
The High Court dismissed the petitions
In appeals to this Court It was contended on behalf of the consumers that 1 Section 49 of the is unconstitutional since there are no guidelines for framing the terms and conditions of supply of electricity 2 in view of the fact that in case of power intensive consumers the cost of Electricity is very high the condition requiring 3 months  security deposit is arbitrary and illegal for power intensive consumers and 3 there is no power under the Electricity Supply Act to enable the Board to raise revenue or to cover its capital cost etc
except by way of adjusting tariffs as seen from under Section 59 of the Supply Act 1948
Therefore consumption deposit cannot be used for the purpose of revenue or raising revenue
On behalf of the Electricity Board it was contended that 1 In view of the fact that the object of consumption deposit which is In the nature of advance payment and not a security deposit Is to ensure prompt payment of electricity supply It cannot be contended that 3 201 month s consumption deposit Is arbitrary 2the fact that some of the consumers pay large amounts by way of electricity charges has nothing to do with the nature of deposit
Merely because a unit Is power based it cannot be treated separately for the terms of supply relating to consumer deposit must be uniform
In the case of Rajasthan Electricity Board the General Conditions expressly provided that no Interest will be paid by the Electricity Board on security deposit
Futher the Electricity Board issued notices requiring the consumers to deposit the enhanced amount of cash security as well as bank guarantee on the basis of maximum power consumption
The consumers flied petitions In the Rajasthan High Court contending that provision for no Interest was bad In law and that the enhanced security deposit must he calculated not on three months maximum consumption but on the basis of minimum power consumption
A Single Judge of the High Court allowed the petitions
On appeal the Division Bench held that the clause relating to nonpayment of interest was not reasonable
Relying on Section 4 of the as well as on the Model Form of draft conditions contained In Schedule VI of the 1948 Act the Division Bench held that interest was payable on the security deposit
In appeals to this Court it was contended on behalf of the Rajasthan State Electricity Board that 1 there is no statutory provision which casts an obligation on the Board to pay Interest on the security deposit nor even Interest is payable under common law or in equity 2 the High Court erred In relying on the Model Form conditions as well as on the  3 the security deposit for three months is neither unreasonable nor arbitrary 4 even if the contract between the Board and consumer is adhesion contract it is not necessarily unconsciable 5 in Jagdamba Paper Industries case the right of Interest was based on the concession of parties and the Court had no occasion to decide the rate or interest
On behalf of the consumers it was contended that 1the scheme of the Electricity Act and Supply Act together with the Rules suggest the payment of interest 2 since the money is deposited but the consumers with the Board to secure the Board against default In payment of bills the Board Is in the position of a trustee in respect of 202 this money 3 even under English Law interest was payable on security for electricity
For the intervenor on behalf of the Electricity Board of Orissa it was submitted that Regulation 7 of the Orissa State Electricity Board General Conditions of Supply Regulations 1981 providing that no interest would be payable on security deposit is just and reasonable and is not arbitrary or violative of Article 14 of the Constitution
The Uttar Pradesh State Electricity Board was also paving 3 interest on consumption deposit
The consumers preferred writ petitions before the Allahabad High Court claiming 12 interest but the same were dismissed
In appeals to this Court it was contended on behalf of the consumers that in a number of matters this Court has also ordered interest at the rate of 12 on security deposit and the same principle should apply to this case 2 if interest is not paid security deposit cannot be demanded as this will amount to unconscionable bargain and 3 the security deposit does not contemplate appropriation
On behalf of the Electricity Board it was contended that 1 in cases where 12 per cent interest was awarded it was only by way of ad interim measure
Therefore orders are not conclusive on this aspect 2 under Article 226 of the Constitution the court is to conduct a limited scrutiny whether by imposing a condition the Board has not acted as a private trader and thereby shed off its public utility character
If the Court comes to the conclusion that the Board has not acted as a private trader and the nature of deposit has a rational relationship the issue will fall outside the scope of judicial purview
The Bihar State Electricity Board was paying 5  interest on the security deposit
The consumers claimed interest at the rate payable on fixed deposit by a nationalised bank and the High Court allowed the same
The Electricity Board filed petition in this court contending that the High Court erred in awarding a higher rate of interest
On behalf of the consumers it was contended that the increase in security deposit without assigning any reason was had in law
203 In the connected writ petition the challenge is to the validity of Sections 49 and 79 of the Supply Act
According to the Punjab State Electricity Board while the Electricity Board is required to make colossal advances to generate electricity and supply to consumers the consumers also use and consume electricity on credit ranging from 2 to 3 months depending upon the category of consumers
To off set part of the amount that the consumer owes to the Board constantly and also to ensure timely payment of advances by the Board to its suppliers an advance consumption deposit is insisted upon before commencing supply to the consumer
If this is not so taken the Board will be left with no other option than to increase the tariff
Thus advance deposit cannot be termed as a fixed deposit as the amount cannot be utilised against nonpayment of dues from consumers
Besides the consumers can also ask for the refund
Therefore Sections 491 and 79 j cannot be termed as arbitrary
It was also contended on behalf of the Punjab State Electricity Board that the amendment to clause 23 of abridged conditions of supply requiring consumers to pay advance consumption deposits is perfectly reasonable
For the intervenor on behalf of Calcutta Electricity Supply Corporation it was submitted that the deposit though called security deposit is really an adjustable advance payment of consumption charges
The amount is revisable from time to time depending upon the average consumption charges on the basis of actual consumption over a period
In short it is in the nature of a running account
The security deposit does not remain in tact like a fixed deposit but gets depleted day after day depending on the extent of consumption
More often than not
the consumption charges and other dues exceed the security deposit
That necessitates calling for additional advance to make up a shortfall
In the absence of any usage or contract or an provision of law requiring payment of interest is not payable for wrongful detention of money
In this case there is no wrongful detention of even Section 42 of the has no application to this deposit
204 Disposing the petitions this Court HELD1
Section 49 of the is valid Sub section1 of the said section starts with the words Subject to the provisions of the Act and all regulations if any made in this behalf
Therefore the Board has to conform to the various provisions of the Act and the regulations
Section 49 contains two powers 1 to prescribe terms and conditions of supply and 2 fix the tariff
No guidelines are required in this regard
278A 248CE Hindustan Zinc Ltd vs APSEB   Mysore State Electricity Bought vs Bangalore Woolen Cotton and Sill Mills Ltd AIR 1963SC 1128 Jagdamba Paper Industries Pvt Ltd vs Haryana State Electricity Board   referred to
Roberts vs Hopwood  Pyx Granite vs Minister of Housing and Local Government  cited
11Where regulations are made under Section 49 read with Section 79 j the validity of the regulations could be examined by the court whether they are reasonable or not
249 D Southern Steel Ltd Hyderabad vs The Andhra Pradesh State Electricity Board AIR 1990 Andhra Pradesh 58 and Ms BR Oil Mills
Bharatpur vs Assistant Engineer D RSEB Bharatpur AIR  referred to
12The terms and conditions notified under Section 49 must relate to the object and purpose for which they are issued
Certainly that power cannot be exercised for a collateral purpose
In this Section 49 is valid
251 C 2The nature of consumption deposit is to secure prompt payment and is intended for appropriation
The deposit though called security deposit is really an adjustable advance payment of consumption charges
The payment is in terms of the agreement interpreting the conditions of supply
This security deposit is revisable from time to time on the basis of average consumption charges depending upon the actual consumption over a period
This is the position under the 205 terms of supply of energy with reference to all the Boards
278 A 252 D E 21The cycle of Billing by the Board demonstrates that in the very nature of things the consumer is supplied energy on credit
The compulsory deposit in the context of billing cycle is hardly adequate to secure payments to the Board by the time the formal hill by the Board is raised on the consumer
In one sense the consumption security deposit represents only a part of the money which is payable to the Board on the bill being raised against the consumer
Thus the Board secures itself by resorting to such deposit to cover part of the liability
253 F G 22The deposit made cannot be equated to a fixed deposit
In the case of daily supply of electricity there is a consequential liability to pay for each day s consumption of electricity
To ensure that payment the security deposit is furnished
Hence it cannot he equated to a deposit at all
It is in the nature of a running current account
262 A 23The argument that the deposit does not contemplate appro priation is not correct because in the nature of contract it is liable to be appropriated for the satisfaction of any amount liable to be paid by the consumer to the Board for violation of an conditions of supply in the context of wide scale theft of energy tempering with the meters and such other methods adopted by the consumers
Therefore the said consumption security deposit serves not only too secure the interest of the Board for any such violation but should serve as a deterrent on the consumer in discharging his obligations towards the Board
264 F 6 Union of India vs AL Rallia Ram   Riches vs West minister Bank Ltd 1947 Appeal Cases 390 held inapplicable
24While the Electricity Board is required to make colossal advances to generate electricity and supply to consumers the consumers use and consume electricity on credit ranging from 2 to 3 months depending upon the category of consumers
To off set part of the amount the consumer owes to the Board continually to ensure 206 timely payment of bills by the Board to its suppliers the advance consumption deposit is required to he kept with the Board before commencing supply to the consumer
The clauses in the contract in relation to conditions of supply of electric energy enable the Board to adjust the bill against such deposits
Therefore this is not a case of mere deposit of money as in commercial transaction
In demanding security deposit it is open to the court to take note of pilferage
254 F H Ashok Soap Factory vs Municipal Corporation of Delhi JT  referred to
Corpus Juris Secundum Vol26Ap194Davidson vs US CCA Pa  752 referred to
25Three month s security deposit cannot be characterised either unreasonable or arbitrary
1255 F Jagdama Paper Industries P Ltd vs Haryana State Electricity Board 1993 4SCC508 KC Works vs Secretary APSEB Vidyut Soudha AIR 1979 Andhra Pradesh 291 Municipal Corporation for Greater Bombay vs Ms DM Industries  Haryana Ice Factory vs Municipal Corporation of Delhi AIR 1986 Delhi 78 referred to
Southern Steel Ltd Hyderabad vs The AP State Electricity Board AIR 1990 Andhra Pradesh 58 approved
Indian Aluminium Company vs Karnataka Electricity Board   cited
26Under the regulations framed by the Board in exercise of powers of Section 49 read with Section 79 j the consumer is only entitled and the Board has an obligation to supply energy to the consumer upon such terms and conditions as laid down in the regulations
If therefore
the regulations prescribed a security deposit that will have to be complied with
In cases where regulations have not been made Rule 27 of the Rules made under the Electricity Act enables the adoption of model form of draft conditions of supply
207 Annexure VI in clause 14 states that the licensee may require any consumer to deposit security for the payment of his monthly bills for energy supplied and for the value of the meter and other apparatus installed in his premises
Thus the Board has the power to make regulations to demand security from the consumers
251F H 252A B 27Under Section 59 the Board is obligated to carry on its operation as to ensure that it generates a surplus of 3 per cent or as specified by the State Government
The Board is obligated to adjust its tariffs for ensuring such surplus
The condition of supply requiring a consumption security deposit has a direct bearing on the operations of the Board which are to be conducted in such a manner as to ensure a surplus
The language in Section 59 of the Supply Act is carry on its operations under this Act and adjust its tariffs
 The language of the said Section is not by adjusting tariff
Therefore the argument that the only manner in which the Board can achieve a surplus is to adjust its tariffs does not flow from the language of Section 59
So read in the context of the insistence of a security deposit which has direct bearing on the operations of the Board is per se reasonable and constitutional
266 E 6 Kerla State Electricity Boaed vs SN Govinda Prabhu  Bros 3There is no liability on the Electricity Board either under the statute or common law or equity to pay interest on security deposit
278 B 31There is no statutory provision which casts an obligation on the Board to pay interest on security deposit
Model form of draft conditions of supply containing Clause 14 relating to interest on security deposit as found in Annexure VI
traceable to Rule 27 of Indian Electricity Rules 1956 is applicable only to a licensee as defined in Section 2 4 of the Electricity Act
Even for a licensee it is not compulsory to adopt the model condition of supply
These is an option available to adopt the model conditions of supply with such modifications as the circumstances of each case require
259G H 260 A C 208 32Schedule VI has been framed in exercise of powers under Sections 57 and 57A
In defining clear profit paragraph 2of clause XVII Item v makes a reference as interest on security deposits which is a part of expenditure properly incurred by the licensee
From this it is impossible to hold that this clause imposes an obligation on the licensee to pay interest on security deposits All that would when is if interest is paid then it qualifies as an item of expenditure properly incurred
This is the position with regard to licensee
But this cannot apply to the Board which is not a licensee
For the same reason Item L 1 c of Form IV of the Electricity Rules relating to interest paid and accrued on consumers  security deposits is of no avail because that relates to the manner of keeping accounts by the licensee not being applicable to a Board
Therefore there is nothing to indicate under the scheme of the Electricity Act or Schedule VI of the Supply Act that interest must be paid on the security deposit
Accordingly the Division Bench of Rajasthan High Court has erred in holding that is applicable
260 F H 261 A B 33Section 42 of the has no application to a case where on account of a contractual term or a statutory provision payment of interest is not permitted
A careful reading of Section 42 would disclose that it merely enlarges the category of cases mentioned in Section 41
Even otherwise there is nothing to indicate that Section 42 could override other statutory provisions or a contract between the parties
No doubt Section 42 contains a non obstante clause
But such a clause is restricted to the provisions of and cannot extend to other laws or a contract between the parties
261 F 6 Civil Special Appeal No 83 of 1987 decided on 30th July 1991 by a Division Bench of the Rajasthan High Court overruled
34The word interest  would apply only to cases where there is a relationship of debtor and creditor
A lender of money who allows the borrower to use certain funds deprives himself of the use of those funds
He does so because he charges interest which may be described as a kind of rent for the use of the funds
For example a bank or a lender lending out money on payment of interest
In this case there is no relationship of debtor and creditor
Accordingly the claim for 209 interest cannot be legally founded either on common law or equity
262 G 265 A Halshury s Vol
32 para 108 Discussing cases where interest is payable under common law para 109 Discussing cases where there is equitable rights to interest held inapplicable
Bengal Nogpur Railway vs Ruttanji Ramji AIR 1939 PC 67 referred to
35The object of the deposit is to secure the payment of consumption charges
These charges may vary depending upon the daily consumption depending on the level of supply The amount due by way of consumption charges would also be liable to he appropriated
Therefore it is incorrect to state that the Board is a trustee
The relationship between the Board and consumer is not that of a trustee and a beneficiary but a depositor and deposits
This is not event case of a constructive trust under Section 90 of the Indian Trust Act since no advantage is gained by the Electricity Board in derogation of the rights of the consumer
1262 D F 4The clause not providing for interest on security deposit is neither arbitrary nor palpably unreasonable not even unconscionable for the following reasons aThe consumer made the security deposit in consideration of the performance of his obligation for obtaining the service which is essential to him
b The electricity supply is made to the consumers on credit
cThe billing time taken by the Board is to the advantage of the consumer
dPublic revenues are blocked in generation transmission and distribution of electricity for the purpose of supply
The Board pays interest on the loans borrowed by the Board
This is in order to perform 210 public service
On those payments made by the Board it gets no interest from the consumers
e The Board needs back its blocked money to carry out public service with reasonable recompense
f The Board is not essentially a commercial organisation to which the consumer has furnished the secu rity to earn interest thereon
269 F H 270 A C 41The argument that the Board is monopolistic in character and therefore the consumers have no other option but to enter contract appears to be misconceived
The consumption security deposit whether or not it carries interest is a condition precedent for the supply of electric energy
The scrutiny by the Court In determining the uncon stitutionality of a provision not providing for interest must be tested on the touchstone whether in imposing such a condition the Board has acted as a private trader and thereby shed off Its public utility character In imposing such a condition the Board has not acted as a private trader
The nature of deposit has a rational relationship to the object which is Incorporated a condition of supply
266 A D Jagdamba Paper Industries Pvt  Ltd vs Haryana State Electric in Board   referred to
42Assuming that the contract Is an adhesion contract still it is not unconscionable
Conditions and the terms of supply providing for non payment of interest is not so unconscionable as to shock the conscience of the Court
266 H Central Inland Water Transport Corporation vs Brojo Nath Ganguly  Bihar State Electricity Board vs Green Rubber Industries 1990 1 SCC 731 referred to
Farmsworth on Contracts 2nd Edn
319320 para 427 referred to
Gillespie Brothers Ltd vs Roy Bowles Ltd 1973 1 A E R 193 211 GB Mahajan and Ors
vs Jalalgaon Municipal Council and Ors
 cited
43In Jagdamba Papers the question of Interest on security was not raised before the Court
Therefore the Court had no occasion to decide this issue of interest
That part of the judgment is sub silentio
271 E 272 A C Jagdamba Paper Industries Pvt Ltd vs Haryana State Electricity
Board   explained and held inapplicable
44This Court never Intended to adjudicate upon the rate of interest or render a decision on that question
Therefore it cannot be contended that the disposal of the Writ Petition though by a Bench of 3 Judges would be binding on a Bench of two Judges because it was entirely based on interlocutory order
Therefore this Court is free to decide the question on Its merits
273 F 6 45The Division Bench of the Rajasthan High Court erred in striking down condition No 20 of the General Conditions of the Rajasthan Electricity Board as violative of Article 14 of the Constitution of India
271 D 46The rate of interest on security deposit cannot be equated with the rate of interest on the fixed deposit
Firstly if the consumption charges are to be appropriated the moneys accrued by way of deposits cannot be held in fixed deposits
Nor all deposits need carry Interest In every transaction
Secondly the nature and character of the security deposit is essentially different from fixed deposit
270 D E 5It may be that the consumers of electricity where it is raw material would be prompt in their payment in their own interest
On that basis it cannot be contended that they cannot be treated in the same way as defaulters
The test in Court s considered opinion is whether in the general application of law there is any discrimination
Merely because some of the consumers are prompt those isolated cases cannot render the provision unconstitutional
273 H 274 Al 212 The Collector of Customs Madras v Nathella Sampathu Chetty   Vivian Joseph vs Municipal Corporation
Bonmbay   Fatehchand Himmatlal vs State of Maharashtra 19772 SCR 828 and B Banerjee vs Anita Pam 19752 SCR 774 referred to