ON Civil Appeal Nos 156164 of 1989
From the Judgment and Order dated 2471987 and 741988 of the Patna High Court in CWJC Nos 253 266 262255260 265 555254 of 1986 and CWJC No 17 of 1988 respectively
Dr YS Chitale and Pramod Swarup for the Appellants
NR Choudhary and LR Singh for the Respondents
The Judgment of the Court was delivered by OZA J
Leave granted
These special leave petitions have been filed against the judgment of the High Court of Patna by which several writ petitions were disposed of
All these special leave petitions have been preferred in this Court aggrieved by that judgment
The common question which arises in all these SLPs is that under the agreement arrived at between the consumers and the Bihar State Electricity Board there is a clause 171 Of payment of minimum guarantee which indicates that even if the consumer does not consume electricity above the minimum guarantee that it will be incumbent upon the consumer to pay charges for energy which is the annual minimum guarantee provided in the agreement pertaining to Industrial units
The relevant facts are that for the years 1973 74 to 1982 83 the bills for annual minimum guarantee were served on the appellants by the Electricity Supply Division Forbesganj and on receipt thereto the appellants filed their claims as provided under clause 13 of the agreement on the ground that appellant was not liable to pay any such charges because the appellant did not supply constant electricity as provided in the agreement during the period in question and there were tripping load shedding and power cut which resulted in a great loss to the petitioners and as the supply was not in accordance with the agreement liability to pay annual minimum guarantee bills could not be fastened on the consumer
The Chief Engineer who was the authority under the agreement negatived the claim and so they filed writ petitions in the High Court
The High Court by the impugned judgment came to the conclusion that under clause 1 of the agreement it was incumbent for the Electricity Board to supply constant electricity and the consumer will be liable to pay annual minimum guarantee charges only if in spite of the fact that the Board supplies power as contemplated in the agreement and the consumer does not utilise the power then the liabil ity to pay annual minimum guarantee charges will arise and on this basis the High Court quashed the demands made for these years on the basis of annual minimum guarantee as it found that power was not supplied according to the agree ment
Learned counsel appearing for the Electricity Board contended that clause 1 of the agreement does not in any manner mean that there should be a continuous supply
The term used in clause 1 of the agreement only talks of con stant supply of electrical energy at the pressure of volts cycles 3 phase 3 wire etc
but it does not talk of contin uous supply without any break and it therefore could not be contended that if there was no supply for a few minutes it will amount to failure on the part of the Electricity Board to provide constant supply
It was contended that the con stant supply cannot mean continuous supply
It was also contended that clause 4 of the agreement clearly talks of the payment of annual minimum guarantee charges and there fore it could not be said that because of the power cut or situations beyond the 172 control of the Electricity Board if the power could not be supplied for all the 24 hours every day the respondent consumer can deny the liability to pay annual minimum guar antee bills
It was also contended that in view of clause 13 of the agreement which provides that if there was shortage of supply and that shortage resulted in short supply then the consumer was entitled to a proportionate reduction of the annual minimum guarantee bill as determined by the Chief Engineer Bihar State Electricity Board and consequently the respondent in this case went to the Chief Engineer who ultimately decided on the basis of facts that respondents were not entitled to any proportionate reduction and it was because of this that the petitions were filed before the High Court
It was contended that the learned Judges of the High Court have failed to appreciate clause 13 of the agree ment
Learned counsel also placed reliance on the decisions in Amalgamated Electricity Co Ltd vs Jalgaon Borough Municipality   Ms Northern India Iron  Steel Co etc
vs State of Haryana  Anr
  Ms Man Industrial Corporation vs Rajasthan State Electrici ty Board and others AIR and Mukand Iron and Steel Works Ltd vs Maharashtra State Electricity Board and another AIR 1982 Bombay 580
Learned counsel for the respondents on the other hand contended that clause 1 provides for constant supply of power the variations permitted have been indicated in this clause itself and it is contended that it is only where the electricity Board discharges its duty to supply power as contemplated in clause 1 and the consumer because of his difficulties is not able to utilise power even upto the level of minimum guarantee that the liability to pay annual minimum guarantee bills could be fastened on the consumer but if the Board fails to discharge its responsibilities as contemplated in clause 1 of the agreement it could not compel the consumer to pay the annual minimum guarantee
It was frankly conceded that in the petition itself originally relief sought was proportionate reduction of the annual minimum guarantee bills but in view of the interpretation of clauses 1 4 and 13 the High Court came to the conclusion that there is no liability on the consumer to pay annual minimum guarantee bills as the Electricity Board has failed to supply power as contemplated in clause 1 of the agree ment
Learned counsel however contended that the Chief Engineer in his order has misunderstood the whole situation but before the High Court the facts were not disputed and in each case average hours of supply per year during the dis puted period have been stated which have not been disputed by the Electricity Board and if at all the High Court judg ment is not maintained the respondents are entitled to 173 proportionate reduction of the annual minimum guarantee bills in the light of the hours of supply per year which have been stated in the High Court judgment and is not disputed
Clause 1 of the agreement reads as under 1
a The Board shall furnish to the consum er and the consumer shall accept at the point of supply mentioned in the schedule hereto on and from the date on which the said premises shall be connected with the supply Distribut ing mains and during the continuance of the agreement a constant supply of electrical energy at the pressure of 
Volts 50 cycles 3 phases 3 wires alternat ing current system subject to standard varia tions as provided in Indian Electricity Rules 1956 or any other statutory modifica tion thereof as may be in force from time to time for the purpose and upto the maximum specified hereinafter referred to as the contract demand and under the conditions laid down in the Schedule
 This clause talks of constant supply of electrical energy providing for voltage cycles phases and wires
It is clear that it does not talk of continuous supply nor does it talk of non continuous or intermittent supply
In fact this clause in our opinion is not very material for the decision of the case as the sole controversy pertains to interpreta tion of clause 13
Clause 4 of the agreement provides for the minimum guarantee and there is no dispute that if the consumer is not able to utilise electricity even upto the level of minimum guarantee
This clause provides for payment of charges of minimum guarantee
The real controversy pertains to the interpretation of clause 13
In fact in Northern India Iron  Steel Co case
this Court had the occasion to consider a situation of this kind where this Court on this aspect of the matter has observed that where the Electricity Board fails to supply power because of shortage of energy power cut or any other circumstances as per demand of the consumer according to the contract it will be considered as a circumstance beyond the control of the consumer which prevented it from consuming electricity as per the contract
Their Lordships observed as under 174 We are therefore of the view that the inability of the Board to supply electric energy due to power cut or any other circum stance beyond its control as per the demand of the consumer according to the contract will be reflected in and considered as a circumstance beyond the control of the consumer which prevented it from consuming electricity as per the contract and to the extent it wanted to consume
The monthly demand charge for a particular month will have to be assessed in accordance with subclause b of clause 4 of the tariff and therefore from a proportionate reduction will have to be made as per sub clause f
We hope in the light of the judgment there will be no difficulty in working out the figures of the proportionate reduction in any of the cases and for any period
In case of any difference or dispute as to the quantum of the demand charge or the proportionate reduction parties will be at liberty to pursue their remedy as may be available to them in accordance with law
 It appears that reading clause 13 in the present case clear ly provides for the contingency and it provides for the failure on the part of the supplier and also failure on the part of consumer in the circumstances like strike riot fire flood explosion or act of God or any other reason beyond the control of either of the parties
Clause 13 of the agreement reads If at any time the consumer is prevented from receiving or using the electrical energy to be supplied under this agreement either in whole or in part due to strikes riots fire floods explosions act of God or any other case reasonably beyond control or if the Board is prevented from supplying or unable to supply such electrical energy owing to any or all of the causes mentioned above then the demand charge and guaranteed energy charge set out in the schedule shall be reduced in pro portion to the ability of the consumer to take or the Board to supply such power and the decision of the Chief Engineer Bihar State Electricity Board in this respect shall be final In view of this language of the clause clearly providing for the proportionate reduction of the annual minimum guarantee bills it could not be doubted that the High Court was not right in coming to the conclusion that the respondents were not liable to pay annual minimum 175 guarantee bills at all
The judgment of this Court also clearly indicated that the respondents consumers
are enti tled to a proportionate reduction of the minimum guarantee bills
In clause 13 of the agreement this is clearly stated that the authority competent to determine the proportionate reduction is the Chief Engineer and it appears that it was because of this that the respondents consumers approached the Chief Engineer for consideration
But it appears that the learned Chief Engineer also did not clearly understand the meaning of clause 13
The judgment of the High Court on which reliance is placed have only followed the judgment referred to above
In our opinion therefore the High Court was not right in coming to the conclusion that the respondents were not liable at all to pay annual minimum guarantee charges
In fact they are only entitled to the proportionate reduction
The judgment of the High Court clearly states the hours every year in dispute when the power was not supplied and on this basis the respondents consumers will be entitled to proportionate reduction as ordinarily the consumers are expected to have continuous power supply
It is therefore directed that the Chief Engineer of the Electricity Board on the basis of hours of non supply as indicated in the High Court judgment and not disputed in the High Court will assess the proportionate reduction of the annual minimum guarantee bills in respect of disputed years indicated above and it is also directed that until this is not done the power supply will not be disconnected on the basis of fail ure to pay the annual minimum guarantee bills for the peri ods stated above
However after the proportionate reduction is made and fresh demand is made Electricity Board will be entitled to take recourse to the normal procedure if the consumers fail to pay
In the circumstances no order as to costs
TNA Appeals allowed


Summary:
Rule 49A of the Central Excise Rules 1944 provided for payment of different rates of interest on the excise duty on the yarn payment of which was deferred at the option of the manufacturer till the manufacture and clearance of the fabrics made out of the dutiable yarn depending on whether cotton fabrics were cleared grey  unproceased or after processing 
When the fabrics were cleared grey the interest payable was 1 12 of the yarn duty
But where the cotton fabrics were cleared after processing  it was 3 of yarn duty
Appellant Company engaged in the manufacture of cotton fabrics in its composite mills opted for such deferment of payment of duty of excise
The cotton fabrics cleared admit tedly underwent the process of calendering  and shearing 
The Appellate Tribunal held that calendering  and shear ing  were finishing processes  which rendered the grey  fabrics to cease to be unprocessed  and thus attracted interest at 3 of yarn duty
In the appeal before this Court it was contended on behalf of the appellant company that whether the fabric after calendering  and shearing  ceased to be unproc essed  fabric would require to be resolved on the language of the Rule 49A itself and that the differentium for the attraction of the different rates of interest was whether the cotton fabrics cleared were grey fabrics  as known and understood in the textile industry and that the condition for levy of 1 12 was not whether some process or processes were applied to the grey fabrics  205 but whether such process or processes to which the grey fabric was subjected had the effect of making such grey fabric ceased to be greyfabric  and that actual processes or calendering  and shearing  involved in the present case were amongst the simplest of the processes and did not have the effect of bringing about any change in the greyfabric  as to take it out of Rule 49A1b
On behalf of the Revenue it was contended that the conditions for the choice of the different rates of interest were not envisaged in the context whether the process or processes amounted to manufacture  within the meaning of section 2fv of the Act but only in the context of estimating the extent of time consumed by the process or processes and that the test appropriate in this context was not whether the greyfabrics under went any change in their nature or quality as a result of the processes but was whether any time consuming process whatever be its nature was resorted to by the manufacturer which in turn occassioned delays in the clearance of the cotton fabrics and thereby delayed payment of the yarn duty
Allowing the appeals HELD 1
Though the purpose of Rule 49A of the Central Excise Rules 1944 was to provide for rates of interest depending on the time consumed by the processing the meas ure of the delay so as to attract one or the other of the rates is not in terms of any period of time specified but is prescribed to be with reference to the nature of the processes
The measure of the delay in deferment of yarn duty legislatively considered appropriate to attract higher rate of interest at 3 is in terms of the processes that would be required to make the greycloth  cease to be grey cloth
Any processing that can take a case out of Rule 49A1b must be a process which renders cotton fabric cease to be grey  fabric as commercially known and under stood
That is why in Rule 49A1 of the expression grey  is used while in Rule 49A2 that word is omitted
209E F The matter has to be examined by those standards which in turn depends on the fact whether the process or proc esses concerned were such as to change the nature of the grey fabric 
209G H 21 There is no dispute that before clearance the cotton fabrics were subjected to calendering  and shearing  which in the jargon of the textile industry are finishing process es
207G 206 22 Both calendering  and shearing  involve an assort ment and variety of processes some of which might and some others might not affect or alter the nature of the fabric
Both the expressions calendering  and shearing  are collective expressions representing number of sub species of operations which depending upon the nature of the particu lar operation may or may not alter the nature of the greyfabric  as such
212B C 23 These matters depend on particularities of the facts of each case and are to be decided on a case by case basis
212E In the present case the claim of the appellant before the authorities that the calendering  process employed by them was such as to give temporary finish by pressing the fabric is not controverted
No lasting change is brought about
There is no finding to the contrary
Likewise the claim as to the shearing which was only to trim protrud ing stray fibres from the fabric
If these are the nature of the operations the grey  fabric in the facts of these cases does not become new and commercially different com modity and cease to be grey  cloth
There is thus no justi fication to take it out of Rule 49A1b
212G H 213A