cement of additional security deposit
It stands to reason that if there is a revision in the rate of tariff there must he an upward revision in the consumption security deposit since it has direct hearing to the level of supply in consumption of electricityThis being a condition of supply no reason need be given at the timeof upward revision
278 C 277 A C  CIVILAPPELLATE JURISDICTION Civil Appeal Nos
2117 to 2122 of 1993 etc
From the Judgment and Order dated 2841989 of the Andhra Pradesh High Court in W P Nos
1116284 1896887 1200784 1513187 505082 and 1574687
Altaf Ahmed VR Reddy Addl
Solicitor General Narasimha murthy K Parasaran Anil B Divan Harish N Salve Soli j Sorabjee G Ramaswamy PP Rao Gobind Mukhoty Dr Shanker Ghosh Shanti Bhushan GL Sanghi Pawan Kumar PS Poti BM Patnaik
Sanjay Parikh P Niriop Kailash Vasdev section Khaitan K K Khaitan Darshan Singh Sushi Kumar Jain AP Dhamija section Atreya
EC Agarwal A V Palli
Atul Sharma Ms Reena Aggarwal A K Mehta R K Gupta PC Kapur TVSN Chari B Reddy Ms Pramila Anil K Sangal Ajay K Tayal
Koka Raghava
B Kanta Rao Shiv Prakash Pandey Ms Rekha Pandey
RK Priyokumar Singh TV Ratlinain KR Chowdhary K Ram Kumar Ashok Kr
Gupta RB Misra  Pradeep Misra Mrs Sheil Mohini Seth Jain Hansaria  Co RP Gupta Ms Sarla Chandra Ms Mitter Mitter  Co Ms Abha Jain Ranjit Kumar MP Jha SK Jain Vinoo Bhagat Surva Kant Aruneshwar Gupta Badridas Sharma Prabhu Dayal Sudarshan La Aneja R Venkataramani YP Rao DK Garg KC Agarwals OP Khaitan PB Agarwala Mohinder Rupal Mrs Kamakshi Mehllwal Ms Archna Kau For Gagrat  Co  Vijay Hansaria R section Sodhi  DA Dave Raian Karanjwala Mrs Manik Karanjawala Rajesh mar Ms Suruchi Aggarwal KJ John Ms Deepa Dixit For 213 Swarup John  Co A T Patra SR Agarwal Ms Bina Gupta Prashant Bhushan K Rajendra Choudhary Rakesh K Sharma Shivi Shamia Anil K Chopra Pallav Sisodia Ravinder Narain For JBD  Co  Praveen Kumar Virender Kaushal Bimal Rao Jad Ms Malini Poduval KK Lahri and section Sukumaran for the appearing parties
The judgment of the Court was delivered by MOHANJ
Leave granted
These civil appeals are directed against the judgment of the Division Bench of Andhra Pradesh High Court reported in Southern Steel Ltd vs A P State Electricity Board Hydrabad AIR 1990 Andhra Pradesh 58
The facts briefly are as under The Andhra Pradesh State Electricity Board is constituted under Section 5 of the Electricity Supply Act 1948 hereinafter referred to as the Act
The said board is engaged in generation distribution and supply of electricity in the State of Andhra Pradesh
Electric energy is supplied for industrial commercial agricultural and domestic purposes
To such of these industries using energy about a particular level it is supplied at a higher voltage
They are classified as high tension consumers HT consumers
All the appellants herein belong to that category
Section 49 of the Act empowers the Board to notify the terms and conditions upon which it will supply electricity to a person
It is also empowered to frame uniform tariffs in that behalf
Sub section 2 specifies in fixing the uniform tariff the Board shall have regard to all or any or the following factors namely a the nature of the supply and the purposes for which it is required b the coordinated 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 214 being served or adequately served by the licensee c the simplification and standardisation of methods and rates of charges for such supplies d the extension and cheapening of supplies of electricity to sparsely developed areas
Sub section 3 empowers the Board to enter into a special agreement with any consumer any prescribe different tariffs for Wm
Under Section 4 an obligation is cast on the Board not to show undue preference to any person while fixing the tarrif and terms and conditions for the supply of electricity
In all these cases the appellants are covered by the general terms and conditions notified under Section 49 1 of the Act
The terms and conditions were notified by the Board and the BPMS No 690 dated 17th of September 1975
It is not necessary to refer in detail to the various terms and conditions
However what requires to be noticed is the terms and conditions oblige every consumer executing an agreement in the prescribed form undertaking to abide by the term and conditions prevailing on the date of agreement and also agreed to be bound by the terms and conditions as may be notified from time to time
It is important to note under Section 25 the Board has unilateral right to vary the term from time to time under clause 251
The terms and conditions for supply of electricity by special or general proceedings
Condition 32 1
provides the Board shall as far as possible within 15 days after the expiration of each calendar month cause to be delivered to every consumer a bill of charges stating the amounts payable by the consumer towards charges for energy supplied and any other sum in connection with supply of energy by the Board
 Conditions 322
1 obliges the consumers to pay the amount shown in the bill within 15 days of the date of the bill in default whereof they are liable to pay an additional charge of 2 per month or part thereof for the period of delay in paying the bill
Condition 323 empowers the Board to disconnect the supply in case of default in paying the bill without prejudice to its right to recover the amount due
Condition 243 also lays down that the consumer shall pay to the Board 215 every month the charges for electrical energy supplied to him during the preceding month at the tariff in force from time to time
Condition 28 obliges the consumers to deposit an amount equivalent to three months consumption charges with the Board
It would be appropriate to set out condition No 28 as far as it is necessary for our purposes committing what is not relevant as under 28Consumption deposits 281 Initial consumption deposit
The consumer shall deposit with the Board a sum in cash equivalent to estimated three month s consumption charges
The consumer coming under the LT category domestic  shall however pay at Rs 3000 per Kilowatt or part thereof connected load Provided that the Board may in the case of industrial consumers accept by way of consumption deposit a sum equivalent to two months consumption charges during a period of three years from the date of first release of supply of electricity
2812In the event of the consumer failing to pay to the Board any sum that may become due for payment to the Board on the dates fixed for payment thereof the Board may in addition to and without prejudice to the other rights of the Board appropriate a part or whole of such deposit towards the sum due from the consumer
282Additional Consumption Deposit All consumers other than those LT Domestic consumers whose monthly bills are less than Rs 500 for a continuous period of six months shall keep with the Board an amount equivalent to charges for three months demand and energy charges as consumption deposit
The aduacy of the consumption deposit shall be reviewed by
the Board usually once in every year and or at any time during the year if so warranted dur to upward revision of tariffs enhancement of the con 216 tracted demand by the consumer charges in the pattern of consumption by the consumer relaxation of power restrictions or such other factors which in the opinion of the Board warrant review of the adequacy of the existing consumption deposit
The review shall take into account the following factors iIn the case of consumers where there is no change in the contracted demand the average consumption for the preceeding twelve months after taking into consideration the quantum and nature of restrictions imposed if any during that period shall be the basis
iiin the case of consumers who were sanctioned additional demand and availed it during a part of the period average recorded consumption for the period of review shall be from the date of utilisation of increased demand to the date of review after taking into consideration the nature and quantum of restrictions imposed if any during that period
iiiThe demand shall be contracted demand of the consumer at the time of review
ivThe rates at which the demand or energy charges shall be calculated will be tariff rates prevailing as on the date of review
Based on such review if the consumption deposit of the consumer is found inadequate or has fallen short on account of adjustments made as indicated in clause 2812hereof the consumer shall deposit within 30 days of receipt of notice in this regard such additional amountas may be required by the Board or replenish the required amount as the case may be
283 Interest on consumption deposit Interest shall be paid by the Board on deposits of more than Rs 60 made in cash at the rate of 3 per annum or such other 217 rate as may be fixed by the Board from time to time
Full calender months only shall be taken into account for the purpose of calculating interest and interest shall be calculated to nearest five paisa
The interest accruing to the credit of the consumer shall be adjusted every year in the month of April in the Electricity Supply bills
284 Disconnection or non payment of consumption deposit If the consumer does not make payment of amount of consumption deposit or additional consumption deposit or where the deposit is given in Government security or National Saving Certificate Bank guarantee etc
 he fails to replace them by deposit in cash when so demanded by Board within the notice period of 30 days supply of consumer shall be liable for disconnection
285 The Consumption Deposit so calculated as per the Clause 281 and or 282 above shall not be less than three times the monthly minimum charges applicable to the consumer under the category to which he belongs
286 All consumers shall pay the Consumption Deposit or additional consumer deposit within thirty days from the date the demand notice if there be any delay in payment the consumer shall pay surcharge thereon equal to 1 12 per month or such other percentage to be fixed by the Board from time to time of the demanded amount for each month of delay or part thereof
This will be without prejudice to the Board s right to disconnected supply of electricity
Clause 1 of condition 28 is general in nature
It applies to all consumers
12 enables the Board to appropriate a part or whole of the said deposit towards any amount due to the Board and not paid within the prescribed period
2 applies to all consumers except those LT Domestic consumers whose monthly bills are less than Rs 218 
500 per month for a continuous period of six months
Such consumers are obliged to keep with the Board an amount equivalent to three months  demand and energy charges as consumption deposit
The deposit is liable to be reviewed by the Board from time to time having regard to the factors mentioned in the said clause
3 prescribes interest which the Board has to pay on such deposit
It is 3 per annum
Clause 4 empowers the Board to disconnect the supply if consumption deposit additional consumption deposit is not made or is not replaced whenever called upon to do so
Clause 5 prescribes a certain floor below which consumption deposit shall not go
Clause 6 says that the consumption deposit or additional deposit shall be paid within thirty days of the notice demanding such deposit
In default not only interest is payable but the supply also is liable to be disconnected
The attack before the High Court was that according to Condition No 32 1 the bill is served within 15 days of the expiration of each calendar month
The amount covered by the bill is payable within 15 days of the date of the bill
The period of 15 days for payment is calculated not from the date of service of the bill but from the date of the bill
A bill could be served even on the very first day of the succeeding month in which event it will become payable within 15 day of the date of the bill
In such a situation it is not correct to say that a consumer goes on availing and enjoying energy for a period of three months without paying for it
Invariably it does not exceed six weeks or at any rate two months
In the event of non payment under Condition No 323 supply of energy can be disconnected without seven days notice as contemplated under Section 24 of the 
Therefore 1It was urged that the consumption deposit should in no event exceed two months average consumption charges
2The second attack was the payment of 3 interest by the Board on such consumption deposit is no longer good law in view of the judgment of Supreme Court rendered in Ms Jagdamba Paper Industries p Ltd vs HS E Board   since this Court had taken the view that the interest on such deposit should be paid at the same rate as is paid by the schedule bank on fixed deposit
219 It was generally urged that the Electricity Board being a State within the meaning of Article 12 it has to act fairly
Any term of condition will have to answer the test of reasonableness
On the contrary if it is arbitrary it would be violative of Article 14
The High Court after analysing the object behind Condition No
28 relating to the consumption deposit held The condition requiring the consumer to pay the charges within 15 days from the date of the bill and on such failure a right is conferred on the Board to disconnect the supply
The condition merely refer to the power of the Board
Existence of power is distinct from exercise of power
The Board cannot blindly act upon Condition 323 and disconnect the supply the moment 15 days time from the date of the bill expires
It has to take a realistic view of the situation
After all these industries are engaged in production of goods essential to the community
A blind and mechanical adherence to Condition 323 instant disconnection may indeed prove counter productive in larger sense
It was also not possible for the Board to notice the non payment immediately in view of the large number of consumers and the extensive nature of organisation
Besides huge sums are required by the Electricity Board as rotating capital
It borrows large amounts from organisations like LIC and Banks on which it pays interest to them
Hence it is well entitled to require the consumer to co operate by paying their bills regularly by furnishing security deposits and by conforming to the terms and conditions of supply
Under these circumstances the requirement of three months deposit could not be said to be unreasonable and unjustified
As regards the payment of 3  interest the High Court was of the view that the decision of this Court in Jagdamba Paper Industries P Ltd supra could not be read as a decision of the Supreme Court on the basis of which it could be declared that the earlier Bench decisions of the High Court were no longer binding Accordingly it dismissed the writ petitions
Aggrieved by this decision the present SLPs have come to be preferred
Mr RN Narasimha nmurthy learned counsel for the appellant 220 after drawing our attention to clauses 28 and 32 would submit that if there is any laxity on the part of the Board in preparing the bill that cannot be a ground to make a consumer to pay three months deposit
The tariffs of 1974 provided for the payment of bills within 14 days from the date of the bill while the quantum of deposit is three months consumption charges
Originally the time for payment was 30 days from the date of the bill
That has been reduced to 15 days which is a drastic change
The security deposit is a provision for continued default of the consumer
The quantum of such a deposit is reckoned on the basis of the lapse of time between the consumption charges that become due after expiry of time required for reading of meter billing delivery of the bill to the consumer grace time allowed and the reasonable time required for disconnecting the consumer s service connection
The reduction to 15 days has great relevance on the quantum of deposit as the deposit is intended to cover the defaulted amount by the time of disconnection
However considering that the bills of power intensive industries are prepared within 3 days of meter reading and also considering the close monitoring that is feasible in verification of payments of bills of these consumers and the small number of these consumers distributed among the several Circle Offices of the Board any default is detectable within 20 days of the bill for appropriate action to be taken immediately
The purpose of consumption deposit is only to safeguard the actual consumption charges that become payable by the time penal action could be initiated
Even the judgment of the High Court indicates that a time lapse of 37 days from the date of the meter reading without considering the 7 days notice prescribed under Section 24 of the 
The balance time of 23 days to make up for 90 days is provided for the laxity in the Board administrative system which justifiably cannot be passed on to the consumer by way of consumption deposit
In view of the high stakes involved in the case of power intensive consumers the Board should evolve a suitable system of payments and must keep the security deposit to the minimum instead of three months
It is further submitted that the security deposit could be in the form of bank guarantee
There is no justification to require cash deposit
As a matter of fact as noted in Ms Haryana Ice Factory vs Municipal 221 Corporation of Delhi and Another AIR 1986 Delhi 78 the security in the form of Government Bond is permissible
In Jagdamba Paper Industries Case supra paragraph 11 of the judgment deals with rate of interest
That is a case where 8 was increased to 10 by consent
If really it is in the nature of a deposit there is no Justification as to why bank rate should not be awarded
It seen from The Chairman Karnataka Electricity Board and Others vs Gadag Mining Co  Ors etc
AIR 1986 Karnataka 252 10 interest had been awarded
Mr Anil B Divan learned counsel for the appellant in SLP c No 256492 would submit is under Power intensive units like the appellant s form a distinct class of consumers
The Ferro Silicon plant of petitioner No 1 is a power intensive one where the cost of electricity constitutes about 55 of the price of the ferro silicon produced
Electricity thus is the basic raw material for this industry
On an average the appellant is consuming electricity worth Rs 16 crores per month
If there was full supply of electricity without there being a power cut the monthly bill would be approximately Rs 4 crores at a present tariff
The power intensive plant of the appellant maintains a very high load factor of 09
Ordinary HT consumers work at a load factor of only 60 and the units consumed at only 50 per KVA demand
The HT 111 tariff for power intensive consumers requires a minimum consumption of 4033 units per KVA demand
This means more than 8 times that of HT consumers
The Electricity Board has always classified power intensive units as a separate category
At present there is a special tariff called HT III tariff with a fist of power intensive industries specified in the tariff notification
The appellant No 1 had deposited Rs 107 crores in cash towards the security deposit
A bank guarantee for Rs 5364 lacs had also been furnished
A further demand of Rs 965 lacs prompted the filing of the writ petition in the High Court
As per the order of this Court in SLP No 1207784 it was directed on 621987 that a sum of Rs 1 crore be paid by the 3rd of every month and the balance within 7 days of the 222 presentation of the bill This order came to be modified that Rs1 Crore was to be paid on the 30th of the month and the balance within one week of the receipt of the bill
The said arrangement has been working satisfactorily
There has not been any default in payment of electricity bills
Therefore the entire dispute is a theoretical one as to what the quantum of the security deposit can or ought to be
A deposit in cash of an amount equal to three months average bills at full supply at the present tariff without any power cut will amount to Rs 12 cores on the basis of tariff revised in October 1992
With ever increasing tariffs the deposit demanded will also keep increasing
Under these circumstances the condition requiring three months security deposit is arbitrary and illegal for power intensive consumers
The paid up share capital of appellant No 1 is Rs 38 crores
The gross value of the plant and machinery of the power intensive unit is Rs 794 crores
The total advances made by the consortium of bankers for working capital is Rs 425 crores
The total net worth of all the divisions of appellant No 1 that is Merine products Sugar  Engineering Machine Building and the power intensive Ferro Silicon Plant is Rs 146 crores
The security already furnished namely Rs 57 crores is crippling the Ferro Silicon Plant division
A demand of three months cash deposit would be in the range of Rs 12 crores
It is arbitrary and unjustifiable to require appellant No 1 to deposit several times its share capital by way of security
If this demand is enforced strictly the plant of the appellant will become sick and ultimately will have to be wound up
In other States the provision is not so harsh
If the security deposit is consumption deposit  and it is for meeting the cost of supply in advance then the Electricity Board cannot charge penal interest at 2 per month for non payment of bills within the stipulated period
The deposit first must be appropriated against the dues and the interest charged only if there is balance due
The Stand of the Electricity Board is perverse and illegal
Equally there can be no question of supply on credit  if deposit is adjusted against consumption all the time
The consumer has got a right to negotiate
In The Indian Aluminum Co vs Karnataka Electricity Board  this Court directed the Electricity Board to adopt a realistic policy
Here also Condition No 28 must be altered
223 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
In this case the Electricity Board had not placed any material to give interest only at 3
Mr K Parasaran learned counsel appearing in SLP No 13004 89 after referring to the passage occurring at page 66 of Haryana Ice Factory case supra submits that the security deposit cannot go to buildup the capital or fixation or tariff
Under Sections 49 and 59 of the Supply Act finance is required to be adjusted including the payment of interest
Demand of three months consumption deposit cannot be resorted to
In support of his submission reliance is placed on Hindustan Zinc Ltd etc
vs Andhra Pradesh State Electricity Board  Ors  Mr Kailash Vasudev
learned counsel for appellant in SLP 1300489 submits that under Section 49 of the Supply Act it is enjoined upon the Board to adjust its tariffs by keeping the factors detailed in the said Supply Act
Therefore the Board cannot have recourse methods not provided under the said Act
The demand for a deposit to ensure the due payment of the bills for electrical energy consumed amounts to framing an additional tariff
The Board cannot do indirectly what it cannot do directly
The Board being a state monopoly  has to act reasonably and not arbitrarily
The terms and conditions of supply cannot be unfair and oppressive
Mr R Venkataramani learned counsel in his written submis sions in Writ Petition Nos
129389  135389 and SLP c Nos
4791 9290  4793 9490 would urge that Section 49 of the Supply Act is unconstitutional since there are no guidelines for framing the terms and conditions of supply of electricity
The said Section does not specifically spell out fairness of action
Clause 28 of the terms and conditions of supply is a clear illustration of arbitrariness and subordinate legislation
224 The words as the Board thinks fit ought to be interpreted so as to be consistent with the fairness of State action
They are to be construed as reasonably thinks fit as held in Roberts vs Hopwood and Granite vs Minister of Housing and Local Government Clause 28 of the terms and conditions of supply relation to fixation of 3 interest and additional charges are vitiated due to non application of mind
Under clause 286 of the terms and conditions in the event of delay in payment of consumption deposit or additional consumption deposit within the stipulated period the consumer is obliged to pay surcharge at 18
The obligation to pay surcharge and the power of the Board to vary the percentage from time to time would constitute draconian provision
Money wherever it is held in deposit could only be used to earn some interest
Therefore paying 3 interest on the consumer deposit is not at all justified
A public institution cannot be allowed to get excessive interest
In meeting these arguments the learned Additional Solicitor General submits that under Electricity Supply Act the finances of the Board are controlled to the minutest detail
Originally prior to 1978 Section 59 required the Board as far as practicable and after taking credit for any subvention from the State Government not to carry on its operation on loss
For this purpose it was empowered to adjust its charges accordingly from time to time
Section 59 was amended by Act 23 of 1978
After the amendment the Board after taking credit for any subvention from the State Government was required to carry on its operations and to adjust its tariffs so as to ensure that the total revenues in any year after meeting of the expenses left such surplus as state government may specify from time to time
This Court has taken the view in Kerala State Electricity Board vs SN Govinda Prabhu  Bros  Ors  that even if the Government had not prescribed surplus the Electricity Board could generate surplus
After the amendment by Act 16 of 1983 which came into force on 225 141985 the Board was to create a minimum surplus of 3 or such higher percentage as the State Government would specify in this behalf
It is in this background
 the matter will have to adjuged
The reason why three months security deposit is demanded is for two months the consumer gets free electricity
For supply of such electricity the Board has to borrow and make payment of interest
If there are no consumer deposits the tariff shall have to be increased
That will effect all the consumers
Interest at 2 is charged in case of default only in order to ensure proper payment
It is penal in character
In the judgment under appeal the High Court held that the burden relating to interest can be reflected either in the tariff or could be set off by calling upon the consumer to make deposit
In fact this Court has upheld the tariff revision effected by Andhra Pradesh Electricity Board as seen from Hindustan Zink Ltd Etc
v Andhra Pradesh State Electricity Board  Others  It cannot be contended that the three months consumption deposit is arbitrary
This argument ignores the following important factors iThis is not a security deposit but a consumption deposit
ii It in the nature of an advance payment
iiiIn the event of failure to pay it could be proceeded against as seen from clause 2812
iv Consumption deposit is variable as per clause 282 iv If therefore the object of consumption deposit is to ensure proper payment with reference to electricity supply there is nothing arbitrary or unjustifiable
The fact that some of the appellants pay large amounts by way of electricity charges will have nothing to do with the nature of deposit
Merely because it is a power based unit it cannot be treated separately
Nor can the appellant make a virtue out of necessity
The terms of supply relating to consumer deposit must be uniform therefore it is not correct to contend that the power based unit must be treated separately
As regards payment of interest at 3 electricity supply is made on 226 credit basis
Therefore it is a matter of adjustment of Board finances
Strictly speaking the consumer deposit is in the nature of fidelity guarantee to ensure proper payment by consumer
The consumer may not be entitled to interest at all
However where the Board has so adjusted finances and pay 3 interest the Board cannot be defaulted
Jagdamba Paper Industries case supra cannot be said to be a decision as to the rate of interest payable by the Electricity Board
Upon reading paragraph 11 of the judgment it will be clear that it proceeded on the consent of the counsel
RAJASTHAN The writ petitioners applied to appellant Board for the supply of high tention power for their factories
After the execution of the necessary agreement and furnishing of security deposit power connections were given
Subsequently the Board issued notice requiring the consumers to deposit the enhanced amount of cash security as well as the bank guarantee on the basis of maximum power consumption of three months
With regard to security deposit Part 11 of the General Conditions of Supply and Scale of Miscellaneous Charges in Note II stated that no interest will be paid by the Board on the security deposit
Two contentions were raised in the petitions i Note II providing for no interest was bad in law ii the enhanced security must be calculated not on three months maximum consumption but on the basis of minimum power consumption
These two contentions found favour with the learned Single Judge
The Rajasthan Electricity Board filed special appeals while the consumers filed cross appeals
The Division Bench held as under iThe Board has power to demand additional security but the average consumption of three months should be taken as the basis for calculating the amount of such security
iiThe clause relating to non payment of interest was not reasonable
Interest must be allowed on the entire amount of cash security from the date of the writ petition
The appeals by the Board were dismissed while cross appeals by the consumers were allowed
Ag 227 grieved by this judgment the present SLPs have come to be preferred by the Rajsthan Electricity Supply Board
Mr Soli J Sorabjee learned counsel appearing for the appellant argued as follows There is no legal obligation to pay interest on a deposit made by the consumer with the Board in terms of Clause 20 a  c of the General Conditions of Supply
Nor even interest is payable under common law or in equity
In this connection the learned counsel draws our attention to Halsbury s 4th Edition volume 32 pages 54 55
There is no legal or equitable obligation to pay interest for detention of monies
In support of this argument learned counsel relies on Bengal Nagpur Railway company Ltd vs RuttanjiRamji 1937 LR 65 IA 66 and Union of India vs AL Rallia Ram   pages 187 189 190
There is no contract or agreement which provides for payment of interest
On the contrary Clause 9 b ii of the General Conditions expressly provides that no interest will be paid by the Board on security deposit
There is no statutory provision which casts an obligation on the Board to pay interest on the security deposit
The High Court erred in relying on the model form of draft conditions of supply because the said model form is applicable to only licensee as defined under Section 2 h of Electricity Act
It is not applicable to a Board which is not a licencee
Further it is not necessary on the part of the Board to adopt model form
Schedule VI of 1948 Act again cannot be pressed into service as the Board is not a licencee clause 2 b v of Schedule VI merely specifies interest on security deposit as properly incurred item of expenditure for the purpose of determining the clear profit  of the licencee
The said clause does not and cannot by itself impose an obligation on the licencee to pay interest on security deposit
Should interest be paid then it qualifies as an item of expenditure properly incurred
The High Court also erred in relying on Section 4 2 of the 
Section 4 2 has no application where on account of contractual term or a statutory provision payment of interest is not permitted
Section 4 2 of the merely enlarges the 228 categories of cases mentioned under Section 4 1
The said Section cannot override other statutory provisions or a contract between the parties
The non obstante clause under Section 4 2 is restricted only to the provisions of Interest Act 1948
It is submitted that under the billing practice prevalent with the Rajasthan Electricity Board the consumer has free use of electricity during the period between consumption of electricity and expiry of period after notice
During this period which varies from 2 to 2 12 months the consumer in effect enjoys a credit facility
Therefore if security deposit is demanded for three months it is neither unreasonable nor arbitrary
As a matter of fact the security demanded by the appellant Board is in the form of cash for one month and bank or insurance guarantee for two months
Therefore it is all the more reasonable
In support of this reliance is placed on Kistna Cement Works Tadepalli vs The Secretary APSEB Vidyut Soudha AIR 1979 AP 291 BR Oil Mills Bharatpur vs Assistant Engineer D RSEB Bharatpur AIR  Municipal Corporation for Greater Bombay vs Ms Devidayal Metal Industries  Haryana Ice Factory vs Municipal Corporation of Delhi AIR 1986 Delhi 78 and Southern Steel Ltd vs The AP State Electricity Board Hyderabad AIR 1990 AP 58
On the question of the constitutionality of the provisions regarding non payment of interest and whether it is violative of Article 14 it is submitted iArticle 14 does not mandate mathematical exactitude or scientific precision iiThe mode and period of security should be related to the billing practice prevailing in Rajasthan Electricity Board
iiiThe consumer with open eyes has entered into the agreement and has solemnly undertaken to abide by the condition regarding nonpayment of interest
He cannot resile from that condition
There is nothing inherently objectionable nor is the condition illegal or void as opposed to public policy
Even assuming the contract between the consumer and the Board is an adhesion contract it is not necessarily unconscionable
In this connection reference is invited to Black s Law Dictionary 6th Edition page 40
That passege has been cited with 229 approval in Central Inland Water Transport Corpn
vs Brojo Nath Ganguly
In such matters relief is given to the party only if the contract is so unreasonable as to be unconscionable
In this connection reliance is placed on Gillespie Brothers Ltd vs Roy Bowles Ltd at 200 g Farmsworth on Contracts 2nd Edition 319  320 para 427
The rate of interest on security deposit cannot be equated with the rate of interest payable on fixed deposit because the nature and character of a security deposit is basically different from fixed deposit
This is clearly brought out by the Companies Acceptance of Deposits Rules 1975
The said Rules expressly exempt security deposit in definition of Rule 2 clause v  vi In Jagdamba paper Industries case supra
the rate of interest was based on a concession by the parties
The Court had no occasion to decide the rate of interest
That part of the judgment proceeds sub silentio
The argument based on surcharge levied for delayed payment is a non sequitur
If the provision for non payment of interest is valid and not arbitrary it does not become arbitrary and unconstitutional because surcharge is levied at 2 per month
In fact surcharge has not been challenged
Surcharge is attracted only if the bill is not paid within the due date
The submissions based on Sections 57  59 of the Supply Act in relation to security deposit proceed on a misconception of the nature and character of payment as a security deposit
The object of security deposit is to secure prompt payment of electricity bills
They are not intended to finance the Board s transaction
Section 57 read with sixth Schedule is meant to ensure a reasonable return
expression charges  in the Sixth Schedule clearly shows that security deposits are not included within the expression charges 
There is no mutual exclusivity between increase of tariffs and earning interest on security deposits It is also incorrect to contend that prompt payees of electricity bills are treated on par with the defaulters and thus anequals are treated alike
The real test is whether in the general application of law there is any discrimination
In support of this submission the learned counsel placed his reliance on The Collector of Customs Madras vs Nathella Sampathu Chetty 230   Vivian Joseph Ferreira vs Municipal Corporation of Greater Bombay  B Banerjee vs Anita Pan 975 2 774 and Fatehchand Himmatlal vs State of Meharashtra  The last submission of the learned counsel is that a statutory provision may be struck down as unconstitutional only if it is palpably arbitrary and irrationality is writ large
Merely because the Court considers a particular provision to be unwise or undesirable it is never struck down
The learned counsel fairly concedes that the enhanced security deposit could be calculated only on the average consumption of three months of the previous years
Mr Altaf Ahmad learned counsel supporting the arguments of Mr Soli J Sorabjee would urge In this case the consumers are those who use HT and E H T lines
Section 49 3 gives the clue that each Board can have its own scheme
Section 79 of the Supply Act speaks of the power to make regulation
Clauses i and j are relevant because they talk of principles governing the making of arrangements with licensees under Section 47 and other then licensees under Section 49
The industrial consumers constitute the majority user of the electricity amounting to 4951 per cent
the transmission losses for 1992 93 alone are 22 per cent
Besides the Board is also purchasing power from other corporations and States
Therefore the demand for security deposit is fully justified and there is nothing arbitrary in not providing for interest
That is what is provided under clause 21 a of the agreement in relation to high tension supply
The consumption deposit cannot be equated to the deposit in a bank and interest could be demanded as of right
Mr Kapil Sibal learned counsel appearing for the Haryana Board which Board has now withdrawn payment of interest has filed intervention application since the present day position of the Haryana Board is on a par with Rajasthan
Mr RK Mehta learned counsel for the intervenor on behalf of 231 the Orissa Electricity Board through his written submissionsurges that it may be that the regulations in the case of Andhra Pradesh Utter Pradesh and Bihar Provide for payment of interest at a certain rate on the security deposit
However the Rajasthan and Orissa regulations provide that no interest shall be payable on the securities furnished by the Board
In the impugned judgment the Division Bench has not given any cogent or valid reason for striking down Condition No 20 of the General Conditions of the Rajasthan Electricity Board
The High Court had failed to appreciate the following factors while quashing the impugned clause of the regulations
Electricity is an item which cannot be sold and supplied immediately after generation
For the sale of electricity one has to take meter reading meant for the said purpose and therefore the Board sends the bill for particular duration
It is obvious that the reading of the meter could not be taken at every point of time but only for durationperiod
In the process 2 12 months elapse
The Board does not charge any interest at least for 2 12 month from its consumers
At the same time the Board needs finance for production supply and other charges necessary for supply of electricity
The Board is thus obliged to take loans from various financial institutions
The consumers who are utilising electricity for 2 12 months without making any payment will be unjustifiably enriched at the cost of general public in the absence of security deposit
Further taking of advance money without interest for Providing other services in the market is a general practice
Therefore a similar provision in the general conditions for supply of the Board cannot be treated as arbitrary or unreasonable
A consumer is not entitled to claim interest on his security deposit having regard to the following considerations
1The security deposit is furnished in consideration of the performance of the consumer s obligation for obtaining the service essential to the life and the well being of community
The electricity supply is made to that consumer on credit withoutrequiring him to make instant payment
The billing time taken by the Board is for the benefit and convenience of the consumer as he saves additional expenditure on 232 account of instant or shorter billing time possibly through electronic devices which will be included in the tariffs
4The public revenues Ire blocked in the generation transmission and distribution of electricity for the performance of supply on which the Board pays interest in so far as they form part of the loans borrowed by the Board for performing the public service
On the return of the blocked moneys the Board gets no interest from the consumers
5The Board needs back its blocked money to carry out service with a reasonable recompense
6The Board is not essentially a commercial Organisation to which the consumer furnishes the security deposit to earn interest
Having entered into a contract with open eyes it is not open to the consumer to say that interest should be paid
The basis of supply of electricity and the conditions on which it is supplied being statutory the provisions under the conditions of supply that the Board shall not pay interest on the security deposit has statutory basis and accordingly cannot be struck down as arbitrary on the basis of a commercial transaction governing a bank deposit
Therefore it is 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
Mr Shanti Bhushan learned counsel opposing the stand of Rajasthan Electricity Board submits that the only question in this special leave petition is whether Electricity Board is obliged to pay interest on the cash security deposits as the Board compels industrial consumers to secure against default in payment of electricity bills
In the first place as laid down in Jagdamba Paper Industries Pvt Ltd vs Haryana State Electricity Board  this Court has indicated that the security amount should bear the same interest as admissible on fixed deposit of scheduled banks
The interest rate on 10 per cent was decided not really on the basis of admission but on a positive finding
Apart from this this Court has in several other writ petitions ordered interest at 12 per cent
233 It is submitted that the scheme of Indian Electricity Rules of 1956 and the scheme of the Electricity Supply Act also show that the interest on security deposit is supposed to be payable
The Board is not entitled to use the deposits to augment its finances
They are meant only to secure the default in payment of the bills
Section 59 of the Supply Act indicates that the only condition in which the Board could raise the revenue is by adjustment of its tariff
Section 49 of the Act makes provision for the sale of electricity by the Board to persons other then licensees under the terms and conditions as the Board thinks fit
It can be seen from the definitions of the Sixth Schedule to the Supply Act that the scheme was meant to be applicable to licensees
The place of the licensees has been taken over by the Board
That is why clause 2 b v of Schedule VI of the definition of clear profit states that the interest on security deposits was to be a part of the expenditure properly incurred by licensees
Then again the manner in which the accounts are to be maintained by the licensees also shows that the licensees have to make a provision for payment of interest on security deposits
The High court is right in relying on Section 4 of the Interest Act
The contract in the instant case is between a consumer however high he might be and a monopolistic public utility company
It is clearly an adhesion contract
This Court in Central Inland Water Transport Corporation vs Brojo Nath Ganguly has clearly held that an unreasonable term of an adhesion contract will not be enforced by the Court
Interest on security deposit is also admissible under equity or common law
Halsbury s 4th Edn
32 paragraph 106 at page 53 defines interest as the return or compensation for the use or retention by one person of a sum of money belonging to or owing to another
The Board is clearly in the position of a trustee in respect of this money since the money is deposited by the consumers in trust with the Board to secure the Board against default in payment of bills
The deposit of security is like the usufructory mortgage which is provided for in Section 76 of the Transfer of property Act
Section 76 G  H 234 provide that the mortgagee in a usufructory mortgage would have to keep account of the incomes received from the mortgagee in his use and would have to pay compensation for the benefit derived by the user of the mortgaged property
The position here is more or less similar
It is not correct to state that security is an advance payment
If it is so it would amount to Board taking three months advance payment from the consumers
In such a case the Board cannot disconnect the electricity until the period of three months is over
But the rules of the Board enable it to disconnect even if the consumer fails to pay his bills on the due date
Then again a penal interests is charged in case of default
If it is in the nature of an advance payment there is no scope for charging 2 12 per cent penal interest
Lastly it is submitted that even under English Law interest is payable on security for electricity as seen from Halsbury s Volume 16 paragraph 129 129
Giving of security
Security required under the Schedule to be Electric Lighting Clauses Act 1899 to be given to an electricity board See the Electric Lighting Clauses Act 1899 Schedule sections 25 2 27 2 3 and paras
115 118 ante may be by deposit or otherwise and of an amount agreed or failing agreement determined by a magistrates  court and that court may deal with the caused of the proceedings and its decision is final and binding on all parties bid Schedule section 71 Electricity Act 1947 section 57 2 1 Sch 4 Part 111 Where security is given by way of deposit the party to whom it is given must pay interest at the rate of 4 per annum an every sop for each period of Six months during which it remains so deposited
Electric Lighting Clauses Act 1899 Schedule section 71 proviso Decimal Currency Act 1969 section 10 I UTTAR PRADESH STATE ELECTRICITY BOARD The question raised before the High Court was as to the rate of 235 interest
The respondent UPState Electricity Board  amended the rate of security deposit as Rs 2 per KVA
On such deposit it paid only 3 per cent interest whereas on late payment of the bills it charged more than 24 per cent surcharge from the consumer
The appellants preferred writ petitions in so far as they were denied 12 per cent interest on the deposit taken from the consumers
The Division Bench of the High Court held These petitions are dismissed with a direction that in case the Supreme Court decided that the interest at a rate higher that 3 should be paid on such security and additional security deposit the benefit of the same judgment shall also be extended to the petitioners herein without the necessity of any further proceedings being taken by the petitioners Hence the special leave petitions
Mr G Ramaswami learned counsel for the appellants would urge that Jagdamba s case supra has decided that rate of interest
Therefore that should govern
In a number of matters this Court has also ordered interest at 12 per cent
The same principle should apply to this case as well
1Security Deposit is a compulsory levy
The consumer has no option
2Even in contractual matters if the Board which is a State does not behave fairly this Court can always interfere
3The Board cannot compel the consumer to make a security deposit without corresponding obligation to pay interest
Deposit does not contemplate appropriation
Prior to appropriation what is the character of the deposit requires to be determined
It is not the payment of money by way of 236 advance
As to the meaning of interest it could be gathered from the case in Riches vs West minister Batik Limited
1947 Appeal Cases 390 at 400
In Union of India vs AL Rallia Ram  this Court held that interest is awardable in equity
A distinction will have to be made between unreasonable and unconscionable
In Administrative Law mere unreasonableness is enough to set aside a contract while unconscionable relates to private law
If interest is not paid security deposit cannot be demanded as this will amount to unconscionable bargain
As to the meaning of unconscionability Black s Law Dictionary
Fifth Edition at page 1367 can be usefully referred to Basic test of unconscionability of contract is whether under circumstances existing at time of making of contract and in light of general commercial background and commercial needs of particular trade or case clauses involved are so one sided as to oppressor unfairly surprise party
Division of Triple 7
Service Inc vs Mobil oil Corp 60 Misc
2d 720  201
Unconscionability is generally recognized to include an absence of meaningful choice on the part of one of the parties
to a contract together with contract terms which are unreasonably favorable to the other party
Gordon vs Crown Central Petroleum Corn DC Ga 423F Supp 58 61
Typically the cases in which unconsionablity is found involve gross overall one sidedness or _gross one sidedness of a term disclaiming a warranty limiting damages
or granting procedural advantages
In these cases one sidedness is often coupled with the fact that the imbalance is buried in small print and often couched in language unintelligible to even a person of moderate education
Often the seller deals with a particularly susceptible clientele
Kugler vs Romain 58 NJ 522 237 As to the meaning of reasonableness it is stated in GB Mahajan and Ors
vs Jalgaon Municipal Council and Ors  at 109
Under English Law relating to electricity supply as seen from Halsbury s Vol 16 at paragraph 129 it is clearly stated that interest on security deposit is payable
Therefore all the more the reason why here also it must be held to be payable
Mr Kapil Sibal opposing the stand of Mr G Ramaswami arguers that there is no order of this Court adjudicating the rights of the Board on the consumer in respect of the validity of consumption security deposit being condition precedent for the supply of electricity by the Board as we II as the liability of the Board to pay interest to the consumer in respect of the consumption security deposit
In the absence of any such adjudication the question of Board being bound by the previous orders of this Court
does not arise
In cases where 12 per cent interest was awarded it was only by way of ad interim measure
The other orders are also not conclusive on this aspect
Therefore the matter will have to be decided afresh in the instant cases
Far from being a compulsory levy the consumption security deposit is not only a deposit in cash to safeguard recovery of electricity dues for the energy supplied to the consumer on credit but also a security towards payment or satisfaction of any money For example theft which may become due and payable to the Board by the consumer
The obligation to pay interest to the consumer proceed on the assumption that the Board is keeping the security deposit and depriving the consumer of tile use of the money which is alleged to be earning interest with the Board
This assumption is not warranted for the followings reasons 1 The cycle of billing demonstrates that in the very nature of things the consumer is supplied energy on credit
The security deposit is hardly sufficient to secure the payment to the Board by the time the formal bill by the Board is raised on the consumer
2The consumption security deposit indeed represents only part of he money which is payable to the Board at the end of the billing 238 cycle  The said amount can be appropriated at any time towards the payments that are due to the Board and reflected in the formal bill
3In the nature of billings cycle it is the Board which has to receive interest on the energy supplied to the consumers on credit
4The concept of interest earned on a fixed deposit is alien to the issue
The liabilities of the consumer increase on a daily basis depending on the level of supply and consumption
Therefore the amounts due are liable to be appropriated forthwith
That is not possible where moneys are placed either on fixed deposit or a savings bank account
It is incorrect to contend that the amount is lying in trust with the Board
The amount lying with the Board could also be appropriated for satisfaction of any amount liable to he paid by the consumer for violation of any conditions of supply in the context of wide scale theft of energy and tempering with meters
Therefore the security deposit serves not only to secure the interest of the Board but also serves as a deterrent on the consumer in discharging his obligation towards the Board
Under section 49 the Board is enabled to supply electricity upon such terms and conditions as it thinks fit under Article 226 of the constitution the Court is to conduct a limited scrutiny whether by imposing such a condition the Board has not acted as a private trader and there by shd off its public utility character
Should the Coust come to the conclusion that the Board has not acted as a private trader and tile nature of  deposit has a rational relationship the issue will fall outside the scope of judicial purview
Section 49 must be read alongwith Section 59
The contention that the Board can achieve a surplus by adjusting its credit does not flow from the language of Section 59
The requirement of consumption security deposit is a condition of supply
It has a direct bearing on the operation of the Board
Hence it is per se  reasonable and constitutional
If there is a revision in the rate of tariff there has to be an upward revision of the consumption security deposit since it has a direct bearing on the level of supply in consumption of electricity
In October 239 1986 the tariffs in the State of Uttar Pradesh were adjusted upwards
The revision in the form of an additional security deposit with interest at the rate of 3 per cent was made in January 1987
These facts would suggest the rationale in the imposition of additional security deposit
This being a condition of supply no reasons need be given at the time of upward revision
Union of India vs AL Rallia Ran  relates to the award of interest by an Arbitrator
The nature of consumption security deposit is such that it represents the moneys of the Board
There is no relationship of debtor and creditor
There is no deprivation of property which alone will entail the consequences like payment of interest
The learned counsel has also filed a tabulated statement to show that the security deposit made by the appellant is 7242 lakh for all industries while the affairs in electricity come to 96573 lakh
A formal chart has been filed based on the figures for August
September and October 1991 to show that after the third month the consumption charges total to 4509 lakh
While security that is offered is 1595
The same is the position with reference to other industries as well concerning whom the learned counsel has filed a tabulated statement
This so to establish how the Electricity Board has supplied electricity on credit to the various consumers and the security deposit is hardly sufficient even for one month s consumption
BIHAR SLP 11799 of 1989 The appellant Bihar Electricity Board provided 4 per cent interest per annum on security deposit
When this was questioned in CWJC No 3000 of 1987 in the matter of Dhanbad Flour Mills a Division Bench of the High Court was of the view that an interest at 4 per cent appeared to be unreasonable and directed the Board to examine the question of enhancement of the rate of interest
Similar directions were issued in another case
The appellant Board after examining the matter issued a Notification on 27th of May 1988 and enhanced the rate of simple interest to 5 per cent per annum
This was because the amount of security deposit was kept in the savings account which earned 5 per cent interest which was passed on the consumer
The said notification was questioned before the High Court by seeking 240 a writ of mandamus claiming interest at the rate payable on fixed deposit by a nationalised bank in view of the decision by this court in Jagdamba s case supra
By the impugned judgment the High Court directed payment of interest on security deposit at the rate payable on fixed deposit by nationalised banks
Aggrieved by this judgment the Bihar State Electricity Board has preferred the special leave petition
Mr G L Sanghi learned counsel appearing for the Bihar Board draws our attention to clause 153 of the tariff notification and submits that the consumption security deposit is not only for the supply of energy on credit but also for satisfaction of any money payable by him
If the consumer does not pay the dues in time the arrears of consumption charges will have to be adjusted against the security deposit
Therefore the security deposit can never be kept in bank under fixed deposit
This is the reason why the amount is kept in savings bank account and whatever interest is earned thereon
that is passed on to the consumer
Therefore the High Court was not right in awarding a higher rate of interest
In other respect the learned counsel adopts the argument of the other learned counsel appearing for the various Boards including the contention that Jagdamba s case supra did not lay down the rate of interest
Normally in market transaction when any one supplies on credit to a consumer a guarantee is taken for the payment on dues
Such a guarantee may be in the shape of a bank guarantee fixed deposit
Similarly the Board when it supplies electricity on credit it keeps tile security for the amount of supply of the electricity
According to Board s standing order No 433 dated 311274 dues at any time are not allowed to exceed amount of security deposit and adjustment is to be made against the security deposit after the disconnection of supply
Therefore it is not correct to state that the security is not adjusted towards the bill and is kept in tact
Section 24 of the Electricity Act is the only provision to ensure payment is indicated in Bihar State Electricity Board Patna vs Ms Green Rubber Industries and other 1990 1 SCC 731
In meeting these arguments it is submitted by Mr MP Jha learned counsel for the respondent that the stand of the Board in 241 making payment of interest at 45 per cent is clearly arbitrary
The security aspect of the Board requirement can easily be satisfied by the board resorting to liquidation of security deposit
As a matter of fact the security deposit was never adjusted by the appellant Board
As a result large amounts were kept without investing them in fixed deposit
Learned counsel for the respondent relies on the orders issued by this Court and submits that the question of interest is settled by the ruling in Jagdamba s case supra
Section 24 is of no help for payment of a lower percentage of interest
WP No 578 of 1987 In this writ petition under Article 32 of the Constitution the challenge is to the increase of security deposit for L and H power consumers above 100 BHP
It has been increased from Rs 170 to Rs 200
No reason whatever has been assigned for such an increase of security deposit
That will he bad in law as laid down in Central Inland Water Transport Corporation Limited supra
This is the argument of Mr Gobind Mukhoty This is countered saying that when there is an increase in tariff the security deposit also is liable to be increased
PUNJAB WP NO
1317 of 1990 In this writ petition the challenge is to the validity of Sections 49 and 79 of the Supply Act
According to the respondent Punjab State Electricity Board the writ petition is not maintainable
A challenge to the imposition of advance consumption of deposit does not involve any fundamental right
The Punjab State Electricity Board is a licensee of the State of Punjab
The electrical energy is generated through hydro as well as thermal plants for ultimate sale to consumers
50 of powers generated through hydro while the remaining through thermal plants which consume coaloil
The coal companies and those major suppliers of power plants are demanding cost of coal in advance
On these advances no interest is payable to the Board
Therefore while the Electricity Board is required to make colossal advances to generate electricity and supply to consumers the consumers also use and consume electricity 242 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
This advance deposit cannot be termed as a fixed deposit as the amount cannot be utilized against non payment of dues from consumers
Besidesthe consumers can also ask for the refund
Sections 491 and 79 j cannot be termed as arbitrary
In fact this Court has upheld the validity of Section 49 1 in Jagdamba s case supra
Lastly it is submitted that the Board is generating electricity and each unit so generated costs the Board rupee one per unit
The Board is selling at an average rate of 50 paisa per unit to the consumer which includes the agricultural sector
Therefore the amendment to clause 23 of abridged conditions of supply requiring to pay advance consumption deposits is perfectly reasonable
Mr PP Rao learned counsel appearing as intervenor on behalf of Calcutta Electricity Supply Corporation supplements the submissions of Mr Soli J Sorabjee
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
The true nature of transaction in these cases is one of advance for consumption of electricity estimated for a period of three months subject to adjustment revision if necessary
Such an advance is liable to be made good and kept at a stipulated level from month to month
It is open to the consumer to permit adjustment of the advance in the first instance
Thereafter make good the shortfall in consumption charges and the security deposit before actual disconnection of supply which takes at least about three months
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 243 additional advance to make up a shortfall
In the absence of any usage or contract or any 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 4 2 of the Interest Act has no application to this deposit
When electricity supply is duly made with a consequential liability to pay for each day s consumption the so called security deposit is not a deposit in the real sense for the consumers to claim the benefit of Interest Act
We will now proceed to consider the correctness of the above submissions with reference to the following aspects i Whether Section 49 is bad for want of guidelines
iiThe nature of consumption deposit irrespective of the nomenclature by which it is called
iiia The liability of the Electricity Board to pay interest
b Whether the clause in the terms of supply providing for nonpayment of interest is unconstitutional or arbitrary
ivThe demand for additional consumer deposit Whether valid VALIDITY OF SECTION 49 The law relating to electricity is principally contained in two Acts
iThe of 1910 hereinafter referred to as the Electricity Act Ms provides for grant of licences in relation to supply of electricity and the projects of undertakings
It also provides for supply of electricity including the protective clauses
iiThe of 1948 hereinafter referred to as the Supply Act provides for constitution of State Electricity Boards the powers and duties of such Boards
Certain important 244 provisions of the Act may now be seen
Section 2 is interpretation Section Under Section 2 2 the Board means a State Electricity Board constituted under Section 5
Under Section 2 10 states that regulation means regulations made by the Board under Section 79
Section 5 deals with the constitution and composition of State Electricity Board
Section 49 is the provision for sale of electricity by the Board to persons other than the licensees
Sub section 1 of the said Section commences with the words Subject to the provisions of this Act and of Regulations
This means if there are any provisions regulating the Board in the matter of supplying electricity to any persons not being a licensee then the supply by the Board will he subject to all those provisions
It has been so laid down in Mysore State Electricity Board vs Bangalore Woollen Cotton and Silk Mills Ltd 28 at page 1136 The expression Subject to the provisions of this Act merely that if there are any provisions regulating the Board in the matter of supplying electricity to any person not being a licensee then the supply by the Board will be subject to those provisions
No provision has been brought to our notice which regulates the Board in the matter of the charges which it may fix for the supply of electricity This Court had occasion to deal with the scope of the said Section and Section 59
In Hindustan Zinc Ltd vs Andhra Pradesh State Electricity Board  at pages 317 319 it has been observed thus Section 49 makes provision for the sale of electricity by the Board to persons other than licensees
Sub 245 section 1 starts with the words Subject to the provisions of this Act and of regulations if any made in this behalf 
This means that the provision made therein is subject to other provisions of the Supply Act and the regulations
It then proceeds to say that 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 
Sub section 2 then enumerates several factors which the Board is required to have regard to  in fixing the uniform tariffs
The meaning of the expression have regard to is well settled it means that the factors specifically enumerated shall be taken into account while performing the exercise which in this case is fixation of the uniform tariffs
Ordinarily therefore uniform tariffs are required to be framed by the Board for making such supply
Sub section 3 then proceeds to say that nothing in the earlier enacted provisions 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 having regard to the geographical position of any area the nature of the supply and purpose for which supply is required an d any other relevant factors 
Sub section 4 then says that in fixing the tariffs and terms and conditions for the supply of electricity the Board shall not show undue preference to any person
 In other word subsection 4 provides against any unreasonable dis crimination in fixing the tariffs and terms and conditions for supply of electricity
The power of fixation of tariffs in the Board is provided in this manner by Section 49 of the Supply Act which requires the fixation of uniform tariffs ordinarily having regard particularly to the specified factors and enables fixation of such tariffs for any person having regard to the factors expressly stated and any other relevant factors providing further that no unreasonable or undue preference shall be shown to any person by the Board in exercise of its powers of fixin the tariffs
246 The next important provision is Section 59 of the Supply Act
For appreciating the argument based on Section 59 it is necessary to bear in mind the distinction in Section 59 as it stood prior to 1978 as amended by Act 23 of 1978 and finally as amended by Act 16 of 1983 quoted earlier
Prior to 1978 Section 59 required the Board as far as practicable and after taking credit for any subventions from the State Government under Section 63 not to carry on its operations under this Act at a loss and for this purpose it was empowered to adjust its charges accordingly from time to time
Under the provision as it then existed the main thrust was to avoid the Board incurring any loss and for that purpose it could adjust its charges accordingly from time to time
Section 59 as amended by Act 23 of 1978 required the Board after taking credit for any subventions from the State Government under Section 63 to carry on its operations under this Act and to adjust its tariffs so as to ensure that the total revenues in any year after meeting all expenses properly chargeable to revenue including those specifiedleft such surplus as the State Government specified from time to time
The shift was therefore towards having a surplus
as the State Government specified from time to time
Sub section 2 then provided guidelines for the State Government in specifying the surplus under sub section 1 and mentioned the factors to which regard was to be had for this purpose
The effect of the amendment made in Section 59 by Act 16 of 1983 which came into effect from April 1 1985 was to provide for a minimum surplus of three per cent or such higher percentage as the State Government is to specify in this behalf
In other words prior to 1978 amendment the requirement from the Board was towards ensuring a surplus as specified by the State Government and after the 1983 amendment the Board is required to ensure a surplus of at least three per cent unless the State Government specifies a higher
sur 247 plus
This is the scheme of Section 59 and it is Section 59 as amended by 1978 Act but prior to its amendment by the 1983 Act with which we are concerned in the present case
It cannot be doubted that Section 59 requiring the Board to adjust its tariffs for the purpose of Board s finance is to be read along with Section 49 which provides specifically for fixation of tariffs and the manner in which that exercise has to be performed while dealing with any question relating the revision of tariffs
into force from April 1 1985 is that the Board entitled to adjust its tariffs to ensure generating a surplus of not less than three per cent even without such specification by the State Government and when the State Government specifies a higher surplus then the Board must ensure generating the higher specified surplus
This is of course subject to the accepted norm of the Board acting in consonance with its public utility character and not entirely with a profit motive like that of a private trader
The pre 1978 concept of the Board s functioning to merely avoid any loss is replaced by the shift after 1978 amendment towards the positive approach of requiring a surplus to be gener ated the quantum of Surplus being specified by the State Government with a minimum of three per cent surplus in the absence of the specification by the government of a higher surplus after the 1983 amendment
This construction made of Section 59 as it stood at different times in Govinda prabhu case  indicated earlier cannot be faulted in any manner
In Govinda Prabhu case the same argument which is advanced before us was expressly rejected
We are of the same view
 The next Section is Section 79 which talks of power to make 248 regulations
Clause j deals with the principles governing the supply of electricity by the Board to persons other than the licensees under Section 49
In accordance with this each of the Boards has framed regulations
All consumers are required to execute agreements governing the supply of energy
The attack against Section 49 is that it does not contain any norm of guideline with regard to framing of terms and conditions for the supply of electricity and in particular the demand of payment of interest on the amounts due to the Board
Further the principle of fairness of action has not been explicitly set out so as to make it a visible guide
The words occurring in the Section as the Board thinks fit must be construed as reasonably thinks fit
We are unable to countenance this argument
A careful reading of Section 49 clearly discloses as was noted in Hindustan Zinc Ltd vs APSEB  at 317 sub section 1 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
In Jagdamba Paper Industries Pvt Ltd vs Haryana State Electricity Board  at 513 14 it was pointed out as follows We are of the view that the Board has been conferred statutory power under Section 49 1 of the Act to determine the conditions on the basis of which supply is to be made
This Court in Bisra Stone Lime Company Ltd vs Orissa State Electricity Board   took the view that enhancement of rates by way of surcharge was well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act
What applied to the tariff would equally apply to the security that being a condition in 249 the contract of supply
Each of the petitioning consumers had agreed to furnish security in cash for payment of energy bills at the time of entering into their respective supply agreements
There was no challenge in these writ petitions that the demand of security at the time of entering into supply agreements has to be struck down as being without jurisdiction
Section 49 1 of the Act clearly indicates that the Board may supply electricity to any person upon such terms and conditions as the Board thinks fit
In exercise of this power the Board had initially introduced the condition regarding security and each of the petitioners had accepted the term Emphasis supplied Where therefore under Section 49 read with Section 79 j regulations are made the validity of the regulations could be examined by the Court whether they are reasonable or not
In Southern Steel Ltd Hyderabad vs The Andhra Pradesh State Electricity Board AIR 1990 Andhra Pradesh 58 at 66 67 it was observed Before we proceed to deal with the rival contentions it would be appropriate to notice the scope of judicial scrutiny by this Court in such matters
Acting under article 226 of the Constitution this Court does not sit as an appellate authority over the Electricity Board
Indeed the Act has not chosen to provide an appeal against the terms and conditions under S49
The jurisdiction exercised by this Court under article 226 is supervisory in nature
It is to ensure the observance of fundamental right the rule of law and to keep the authorities within their bounds
Undoubtedly the Electricity Board is a State  within the meaning of article 12 and hence it is subject to Parts III and IV of the Constitution
The scope of enquiry therefore would be to examine whether the power conferred 250 upon the Board by S49 of the Act has been exercised so unreasonably and arbitrarily that interference by this Court is called for
For the purpose of this enquiry it is not necessary for us to go into the question whether the terms and conditions notified under S49 are statutory in nature or not
We shall proceed on the assumption that they are not statutory
We shall also proceed on the assumption that the terms and conditions notified under section 49 ought to be reasonable in the sense that they must be related to the object and purpose for which they are issued
We are equally aware that the power under section 49 cannot be allowed to be used for oblique purposes or for purposes unrelated to the one sought to be achieved by a given condition
 In Ms Mills Bharatpurv Assistant EngineerD RSE B Bharatpur AIR at 109 it was observed Where demand for deposit of cash security for one month s estimated consumption charges and bank security equal to two months estimated charges as contemplated by Regulation 20 read with the Schedule theret o was made by the Electricity Board from a consumer of high tension electricity the demand could not be said to be unreasonable and the consumer would not be entitled to continuation of the energy under Sec
24 of the Electricity Act on his failure to deposit such security even if no agreement had been entered
into between the consumer and the Board after the commencement of high tension supply
Once the supply for electricity had commenced the consumer was bound by the terms and conditions of supply contained in the Regulations
Further in such a case merely because the Board did not encase or could not encash a small portion of the security deposited in the form of National Saving Certificates before coming into force of the Regulations it could 251 not be said that the demand of cash security in the form of Bank guarantee by the Board under the Regulations was unreasonable
furthermore the demand of security from the consumer which was in accordance with the Regulations framed by the Board could not be said to be unreasonable merely because no interest is paid on the cash security deposited by the consumer
 In other words the 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 view we hold Section 49 as valid
NATURE OF CONSUMPTION SECURITY DEPOSIT Each of the Electricity Boards before us is a State within the mening the meaning of Article l2 the Constitution of India
The Boards are different from licensees
Emphasis supplied Each of the Board has framed the tern is and conditions of supply
One such condition relates to security deposits
Such a deposit varies from Board to Board
For example under the terms and conditions notified by Andhra Pradesh Electricity Board under Condition No 28 11 the consumer is required to deposit with the Board a sum in cash equivalent to estimated three months consumption charges
In the case or Rajasthan the security is in the form of cash for one month and bank or insurance guarantee for two months
The legislative Sanction behing the power of the Board to direct a consumer to furnish security may be examined
It has already been seen that the Supply Act is complementary to the Electricity Act 1910
Section 26 of the supply Act states that the Board shall have all the powers and obligations of a licensee under the Electricity Act
And this shall be deemed to be a licence of the Board for the purpose of the Act
Under 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
It also requires to be noticed under clause 6 of Schedule II of 252 the Electricity Act that the requisition for supply of energy by the Board is to be made under proviso a after a written contract is duly executed with sufficient security
This together with the regulations stated above could be enough to clothe it with legal sanction
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
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
The next question will be what is the object in demanding security 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 terms of supply of energy with reference to all the Boards
As a matter of fact electricity is supplied in anticipation of payment
In almost every case it takes nearly 2 12 months for the recovery of the amount before action for disconnection could be taken
We will give one illustration as is in the case of Rajasthan
The followingis the billing cycle a Consumption period 30 days b Period consumed after taking the meter readings to issue bills
10 days c Period allowed for payment 17 days d Notice for disconnecting 253 supply if consumer fails to deposit energy bill in 7 days time
e Period taken in actual disconnection after expiry of notice
10 days Total 74 days In practice some time is also taken between the period allowed for payment and the notice of disconnection
At the same time there is no obligation that the consumer must use only a particular quantum of electricity
He could even consume more than the average consumption
The Board after 2 12 months recovers amount for the electricity supplied by it
It could charge late surcharge in case of high tension tariff after the expiry of the said period
Thus it will be clear that the true nature of the transaction in these cases is one of advance payment of charges for consumption of electricity estimated for a period of approximately three months
Such an advance is liable to be made good and kept at the stipulated level from month to month
It is open to the consumer to permit adjustment of the advance in the first instance
Thereafter he could make good the shortfall in consumption charges and the security deposit before actual disconnection
Actually speaking it is only after three months the disconnection takes place
Hence it is like a running current account
The 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 bill 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
For supply of electricity the Board needs finance for production supply and other charges necessary for supply of electricity
For this purpose it takes loans from various financial institutions
This is best 254 illustrated if one looks at the transactions of Punjab Electricity Board where electric energy is generated through hydro as well as thermal plants for ultimate sale to the consumers of the total power generated about 50 per cent is through hydro plants
The remaining energy is generated through thermal power plants which are operated on coal oil
Due to limited hydro resources within the State of Punjab the dependency on power on thermal plants is on the increase
The present requirement for working of thermal plants is more than 52 lakh tonnes of coal per annum
In addition 60 thousand kolo litre of furnace oil is required
The coal companiesCoal India Limited together with major suppliers of power plant like Ms BHEL demand cost of coal sparesprojects in advance for the supply of material
The Board is also required to purchase power from Central projects NTPC NHPC in order to meet the demand for power by the consumers
For purchase of such power again advance payment are made by the Board
On such advances the Board is not paid any interest
The effect is the Board is obliged to bear the liability of hundreds of crores of rupees per annum
It has no option but to pay the charges and deposits in order to keep the power available at a level to meet with the demand of the consumers
It is the case of the Board that it has opened letters of credit by making advance deposits in favour of National Thermal Power Corporation and the suppliers
Coal India Limited has also asked the Board to open revolving letters of credit in favour of Coal companiesCoal India Limited
Despatch of coal is only against the letter of credit
From the above it is clear that while 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 timely payment of bills by the Board to its suppliers the advance consumption deposit is required to be 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 as laid down in Ashok Soap Factory vs Municipal Corporation of Delhi JT at page 137 255  
The variation in the electricity consumed by different consumers indicated that the charge of pilferage of electricity and gross under utilisation or consumption of electricity compared to the sanctioned load was not without foundation 
The meaning of he term deposit is given in Corpus Juris Secundum Vol
quoted in Davidson vs US CCAPa  752 as follows In the sense of an Act
A deposit has been described as a mere incident of custody and in its ordinary signification implies something more than mere possession negatives all idea of loan with contemplation of use for profit and has been defined as an act by which a person receives the property of another binding himself to preserve it and return it in kind the act of one person giving to another with his consent the possession of personal property to keep for the use and benefit of the first or of a third party
It may mean a permanent disposition of the thing placed or deposited or a mere temporary disposition or placing of the thing
In these circumstances we conclude that the object of security deposit is to ensure proper payment of bills
Three months  security deposit cannot be characterised either unreasonable or arbitrary
This Court had occasion to point out in Jagdamba Paper industries Pvt
supra at paragraph 10 which reads as under We agree however on the facts placed that the stand of the Board that a demand equal to the energy bill of two months or a little more is not unreasonable
Once we reach the conclusion that the Board has the power to unilaterally revise the conditions of supply it must follow that the demand of higher additional security for payment of energy bills is unassailable provided 256 that the power is not exercised arbitrarily or unreasonably Several High Court decisions also had taken this view as seen from KC Works vs Secretary APSEB
Vidyut Soudha AIR 1979 Andhra Pradesh 291 at 294 The reasonableness of such a requirement is explained by the Board in its counter in WP No 2359 75 out of which WA No 156 of 1977 arises
In the counter it was stated as follows The consumer is billed for such month separately
The consumers electricity consumption during the month is billed at the end of the succeeding month and 30 days time is given to him for payment of the bill
If he does not pay the bill his supply is liable to be disconnected after giving one week s notice under Section 24 of the 
Meanwhile he will be consuming the power
So by the time the supply is disconnected to a defaulting consumer the would have consumer energy for 3 months
The Board s interest requires that there should be some protection by way of security of advance payment in respect of the consumption of this three months period
 This is how the Board sought to explain the reasonableness of the requirement of security representing three months average consumption charges
Nobody can say that this is unreasonable
For three months a consumer can go on consuming electrical power without paying any charges
It is therefore eminently reasonable for the Board to require the consumer to furnish security for three months charges
Therefore we are satisfied that the requirement of security for three months consumption charges is reasonable
 At page 295 it was observed thus 257 As a matter of fact it may be that the writ appellant and the writ petitioner before us are prompt in paying their electrical dues
but the Board alees with lakhs and lakhs of consumers and it should have a uniform policy in demanding security
It cannot make a dis tinction or discrimination from one consumer to another
That is why a uniform policy has been laid down by incorporating it in the conditions aforesaid
For these reasons we are satisfied that the requirement of security for three months average consumption charges by way of cash deposit is reasonable
 In Municipal Corporation for Greater Bombay vs Ms DM Industries at 256 it was observed thus This brings us to the last argument advanced by Mr Hidayatullah that Clause 12 of the draft agreement is arbitrary and unreasonable
The argument was that the power to impose conditions cannot be exercised to impose unreasonable conditions and it must also be ascertained whether the condition achieves the object for which it is imposed
On principle the proposition is undisputable
Clause 12 which can be described as unreasonable and whether this Clause has no nexus with the object of the Act and the Rules
The argument appears to be that if the object of security is to secure payment of bills then insistence on cash deposits would be unreasonable because the object could also be served by furnishing of any security and it is said that the consumer was willing to furnish a bank guarantee
In addition it is urged that the period of
consumption for which these security is required should not exceed two months and therefore the determination of three months is arbitrary
 In Haryana Ice Factory vs Municipal Corporation of Delhi AIR 1986 Delhi 78 It was held thus Also the demand of the security was corelated to the 258 consumption Pattern of the consumers and to cover the energy charges from the date of its consumption till the date of ultimate disconnection as a result of non payment of the changes due
The court cannot enter into mathematical calculations to come to a conclusion that in stead of three months it should be 212 months
The fixing of the period of security equal to energy consumption of three months is reasonable
It may be that the Haryana Electricity Board has fixed the period of security deposit equal to the amount of energy consumed for a period of two months but that would depend upon the billing cycle adopted by the Haryana State Electricity Board
 In Southern Steel Ltd Hvderabad V The AP State Electricity Board AIR 1 990 Andhra Pradesh 58 at pages 68 69 it was observed It is also stated by the Board that huge sums are required by it as rotating capital that it borrows large amounts from organisations like LIC and Banks that it pays interest to them and that in such circumstances it is well entitled to require the consumer to co operate by paying their bills regularly by giving security deposits and by conforming to the terms and conditions of supply
It is argued that this consideration was also one of the bases of condition No 28
We do not think it necessary to express any opinion on this question though the truth of the matter cannot be denied
There are two views upon the matter
The petitioners say that the interest burden should be reflected in the tariffs while the Board says that interest burden can be reflected in consumption deposits and not necessarily in tariffs
All that can say is that there no hard and fast rule in this behalf
The interest burden can be reflected either in tariffs or can be sought to be set off by calling upon the consumers to make deposits
In this case however
It is unnecessary to go into this aspect since the requirement of three months deposit in our opinion cannot be said to be unreasonable and unjustified having regard to the facts mentioned above
It cannot be said that the said condition is so unreasonable and
arbitrary as to call for interference by this Court under article 259 226 of the Constitution
We reiterate that even if this court comes to the conclusion that the deposit should not be 3 months but 2 months 7 days or 2 12 months it would not be entitled to interfere in the matter not being an appellate authority
It cannot substitute its own opinion for the opinion of the Board
It can interfere only when the exercise of power is shown to be arbitrary and unrelated to the object sought to be achieved
 We are in agreement with the above extracts
The liability of Electricity Board to pay interest on Security Deposit Now we come to the crucial question as to whether interest is payable on security deposit or advance consumption deposit
We will examine from the following angle a The scheme of Electricity Acts
b Schedule VI of the Supply Act
c d Equity or Common Law
a  6 Scheme of Electricity Acts  Schedule VI of Supply Act It is the submission of Mr Shanti Bhushan learned counsel appearing for the respondent against Rajasthan Electricity Board that the scheme of the Electricity Act and Supply Act together with the rules suggest the payment of interest
The Board is not entitled to utilize the security deposits for augmenting its finances as they are meant to secure the Board against default in payment of the bills
The correctness of this argument may now be seen There is no statutory provision which casts an obligation on the Board to pay interest on security deposit
However reliance is placed on model form of draft conditions of supply as is found in Annexure VI traceable to Role 27 of Indian Electricity Rules 1956
Clause 14 relating to security deposit of the said Annexure reads 260 
Interest at the rate of per cent per annum will be paid by the licensee on deposits exceeding Rs 251 
Emphasis supplied The model form is applicable only to a licensee as defined in Section 2 4 of the Electricity Act
Though Rule 27 prescribes a model form it is not compulsoryeven for a lincesee to adopt the model condition of supply
This is because Rule 27 itself Stipulates the model conditions of supply contained in Annexure VI may with such variations as the circumstances of each case require be adopted by the licensee
 Therefore there is an option available to adopt with such modifications
In such a case the adoption of the model form becomes permissive
In this connection Section 26 of the Supply Act to which we have made a reference earlier must be looked at
Though the Board is to have powers and obligations of a licensee under the Electricity Act the second proviso to this Section assumes importance
It reads Provided further that the provisions of Clause VI of the Schedule to that Act shall apply to the Board in respect of that area only where distribution mains have been laid by the Board and the supply of energy through any of them has commenced Second proviso of the Supply Act leads us to Schedule VI
This Schedule has been framed in exercise of powers under Sections 57 and 57A
In defining clear profit paragraph 2 of clause XVII Item v makes a reference as interest of 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 mean 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 as stated above 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
261 In the above premises it follows that 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
c  applicability
As regards the applicability of  we find that the Division Bench of Rajasthan High Court has erred in holding that it is applicable
Section 42 g of the of 1978 reads as under Notwithstanding the aforesaid and without prejudice to the generality of the provisions of sub section 1 the Court shall in each of the following cases allow interest from the dates specified below to the date of institution of the proceedings at such rate as the Court may consider reasonable unless the court is satisfied that there are special reasons why interest should not be allowed namely aWhere money or other property has been deposited as security for the performance of an obligation imposed by law or contract from the date of the deposit
 This section 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 of the 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
Accordingly we overrule the judgment of Rajasthan High Court which holds the is applicable
262 The deposit made cannot be equated to a fixed deposit
It has already bee In seen that 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 be equated to a deposit at all
It is in the nature of a running current account
d Position in Equity or Common Law If this be the position could interest be claimed either on equity or common law The argument on behalf of the consumers is if money belonging to any person is used by someone else he is oblilsed to pay interest for the period of its user
Halsbury s Volume 32 page 53 para 106 defines interest as the return or compensation for the use or retention by one person of a sum of money belonging or owed to another
Therefore it is contended that the Board is clearly in the position of a trustee in respect of this money since the money is deposited by the consumer in trust with the Board to secure the Board against default in payment of interest
The object of the deposit is to secure the payment of consumption charges
These charges may very depending upon the daily consumption depending on the level of supply
The amount due by way of consumption charges would also be liable to be 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 deposited
This is not even a 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 in view of what we have observed above
Strictly speaking the word interest would apply only to two 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 as already noted there is no relationship of debtor and creditor
We may now refer to Halsbury s Vol
32 para 108 26 108
When interest is payable at common law
At common law interest is payable 1 where there is an express agreement to pay interest 2 where an agreement to pay interest can be implied from the course of dealing between the parties or from the nature of the transaction or a custom or usage of the trade or profession concerned 3 in certain cases by way of damages for breach of a contract other than a contract merely to pay money where the contract if performed would to the knowledge of the parties have entitled the plaintiff to receive interest
Except in the cases mentioned debts do not carry interest at common law
 Consumption security deposit does not fall under any of categories mentioned above
Para 109 says Equitable right to interest
In equity interest may be recovered in certain cases where a particular relationship exists between the creditor and the debtor such a mortgagor and mortgagee obligor and obliged on a bond personal representative and beneficiary prin cipal and surety vendor and purchaser principal and agent solicitor and client trustee and beneficiary or where the debtor is in a fiduciary position to the creditor Interest is also allowed on pecuniary legacies not paid within a certain time on the dissolution of a partnership on the arrears of an annuity where there has been misconduct or improper delay in payment or in the case of money obtained or retained by fraud
It may also be allowed where the defendant ought to have done something which would have entitled the plaintiff to interest at common law or has Wrongfully prevented the plaintiff from doing something which have so entitled him This Paragraph is also inapplicable to the present case
264 Even a case of wrongful detention of money cannot arise
In Bengal Nagpur Railway vs
RuttanjiRamji AIR 1938 PC67 the question arose whether interest was payable on damages on account of wrongful detention of money
It was held The however contains a proviso that interest shall be payable in all cases in which it is now payable by law
 This proviso applies to cases in which the Court of equity exercises jurisdiction to allow interest As observed by Lord Tomlin in Maine and New Brunswick Electrical Power Co Ltd vs Hart 1 In order to invoke a rule of equity it is necessary in the first instance to establish the existence of a state of circumstances which attracts the equitable jurisdiction as for example non performance of a contract of which equity can give specific performance The present case does not however attract the equitable jurisdiction of the Court and cannot come within the purview of the proviso
 The very passage was noted by this Court in Union of India vs AL Rallia Ram  at 188 189
The argument of Mr G Ramaswami learned counsel that the deposit does not contemplate appropriation 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 any 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 to 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
Mr G Ramaswami would rely on Riches vs Westminster Batik Limited 1947 Appeal Cases 390 at 400
265 That is a case which arose under Income Tax Act
That has no application to this case
What came up for consideration in AL Rallia Ram s case supra was the power of the Board to award interest
Hence that case has no application
Accordingly it is held that the claim for interest cannot be legally founded either on common law or equity
As is rightly contended by Mr Kapil Sibal learned counsel and the other learned counsel appearing for the various Boards it is the Board which should be entitled to receive interest on energy supplied to the consumers on credit as the consumers enjoy a credit facility as noted already
We are also unable to accept the argument advanced on behalf of consumers that because the Electricity Boards charge interest on belated payments interest must be paid on security deposit
Interest on belated payments is by way of penalty
That has no bearing Clause providing for non payment of interest Whether unrea sonable While the terms and conditions of supply of Andhra Pradesh Uttar Pradesh and Bihar provide for payment of interest at certain rate in the case of Rajasthan and Orissa the Boards have clearly stipulated that no interest shall be payable on the securities furnished to the Board
Whether that clause could be considered unconstitutional or arbitrary In examining the constitutionality of this provision in that it is violative of Article 14 of the Constitution of India the following factors have to be borne in mind 1Article 14 does not mandate mathematical exactitude or scientific precision
2The mode and the period of security vis a vis the billing practice must form the consideration
3The consumer with open eyes has entered into the agreement and solemnly undertaken to abide by the conditions regarding nonpayment of interest
He cannot resile from the condition because there is nothing inherently objectionable about such a condition nor is such a condition per se illegal or void as opposed to public policy
It is not uncommon in commercial transaction such a provision is entered into
266 The argument that the Board is monopolistic in character and therefore the consumers have no other option but to enter into contract appears to be misconceived
The Board under Section 49 of the Supply Act is entitled apart from framing uniform tariff to insist upon such terms and conditions as the Board thinks fit
This has also been so stated in
Jagdamba case Supra
The consumption security deposit whether or not it carries interest is a condition precedent for the supply of electric energy
We are clearly of the view that the scrutiny by the Court in determining the unconstitutionality of a provision not providing for interest must be tested on the following touchstone In imposing such a condition has the Board acted as a private trader and thereby shed off its public utility character  By referring to Hindustan Zinc Ltd supra we have earlier pointed out the interrelationship between Sections 49 and 59 as noted by this Court
We are therefore
of the view that 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 as a condition of supply
Some of the learned counsel appearing for the consumers would draw our attention to Section 59 of the Supply Act as well
Under the said section 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
We will assume for a moment that the contract is an adhesion contract
But still it is not unconscionable
267 In Central Inland Water Transport Corporation vs Brojo Nath Ganguly at 208 adhesion contract is defined quoting Black s Law Dictionary Fifth Edition at page 38 as follows Adhesion contract
Standardized contract form offered to consumers of goods and services on essentially take it or leave it  basis without affording consumer realistic opportunity to bargain and under such condition that consumer cannot obtain desired product or services except by acquiescing in forth contract
Distinctive feature of adhesion contract is that weaker party has no realistic choice as to its terms is
Not every such contract is unconscionable With reference to these contracts the Court offered relief to the parties against such a clause if it is so unreasonable as to be unconscionable
As a matter of fact at page 21 1 paragraph 83 of Central Inland Water Transport Corporation vs Brojo Nath Ganguly it stated thus Yet another theory which had made its emergence in recent years in the sphere of the law of contracts is the test of reasonableness or fairness of a clause in a contract where there is inequality of bargaining power
Lord Denning MR appears to have been the pro pounder and perhaps the originator at least in England of this theory
In Gillespie Brothers  Co Ltd vs Roy Bowled Transport Ltd  416 where the question was whether an indemnity clause in a contract on its true construction relieved the indemnifier from liability arising to the identified from his own negligence Lord Denning said at pages 415 416 The time may come when this process of construing  the contract can be pursued no further
The words are too clear to permit of it
Are the courts then powerless Are they to permit the party to enforce his unreasonable clause even when it is so unreasonable 268 or applied so unreasonably as to be unconscionable When it gets to this point I would say as I said many year ago there is the vigilance of the common law which while allowing freedom of contract watches to see that it is not abused  John Lee  Son Grantham Ltd vs Railway Executive  584
It will not allow a party to exempt himself from his liability at common law when it would be quite unconscionable for him to do so
emphasis supplied Farms worth on Contracts 2nd Edn 319 320 para 427 states 427 Precursors of Unionscionability
Courts of equity did not share the reluctance of common law courts to police bargains for substantive unfairness
Though mere inadequacy of consideration alone was not a ground for with holding equitable relief a contract that was inequitable or unconscionable one that was so unfair as to shock the conscience of the court  would not be enforced in equity
In one such case a man promised to give a 20 percent interest in all property that he might later acquire in Alaska in return for the Promisee s payment of 1000 and his cancellation of an 11225 debt of questionable collectability
When the promiser acquired property worth over  750000 the promises sought specific Performance
The court refused to grant it
Though the fairness of the bargain was to be judged as of the time that the bargain was made in equity as at common law here the inadequacy of consideration for the promise sought to be enforced was so gross as to render the contrast unconscionable In dealing with the validity of the agreement containing a clause 269 relating to minimum guarantee this Court had occasion to observed in Bihar State Electricity Board vs Green Rubber Industries 1990 1 SCC 731 at page 740 as follows It is true that the agreement is in a standard form of contract
The standard clauses of this contract have been settled over the years and have been widely adopted because experience shows that they facilitate the supply of electric energy
Lord Diplock has observed If fairness or reasonableness were relevant to their enforceability the fact that they are widely used by parties whose bargaining power is fairly matched would arise a strong presumption That their terms are fair and reasonable
SchroederA Music Publishing Co Ltd vs Macaulayr 624
in such contracts a standard form enables the supplier to say If you want these goods or services at all these are the only terms on which they are available
Take it or leave it
It is a type of contract on which the conditions are fixed by one of the parties in advance and are open to acceptance by anyone
The contract which frequently contains many conditions is presented for acceptance and is not open to discussion
It is settled law that a person who signs a document which contains contractual terms is normally bound by them even though he has not read them even though he is ignorant of the precise legal effect
 In the light of the above discussion we hold that the clause not providing for interest is neither arbitrary nor palpably unreasonable nor even unconscionable
In holding so we have regard to the following 1The consumer made the security deposit in consideration of the performance of Ms obligation for obtaining the service which is essential to Wm
2The electricity supply is made to the consumers on credit as has been noted above
270 3
The billing time taken by the Board is to the advantage of the consumer
4Public 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 public service
On those payment made by the Board it gets no interest from the consumers
5The Board needs back its blocked money to carry out public service with reasonable recompense
6The Board is not essentially a commercial Organisation to which the consumer has fumished the security to earn interest thereon
Weshould also observe that the rate of interest on security deposit cannotbe equated with the rate of interest on the fixed deposit
First of all 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
It is worthwhile in this connection to refer to Companies Acceptance of Deposits Rules 1975
In Rule 2 it is stated 2
Definitions
In these Rules unless the context otherwise requires a b deposit means any deposit of money with and includes any amount borrowed by a company but does not include i ii iii 271 iv   v any amount received from an employee of the company by way of security deposit vi any amount received by way of security or as an advance from any purchasing agent selling agent or other agents in the course of or for the purposes of the business of the company or any advance received against orders for the supply of goods or properties or for the rendering of any service 
We may add that merely because the English Acts provide for interest it is not necessary the same should be adopted here as well
Thus we hold that the 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
Has this Court decided the question of rate of interest in jagdamba Paper Industries Pvt Ltd vs Haryana State Electricity Board  In that case the following two points were raised as seen from paragraph 3 at page 51 1 1The enhancement made in the security amount towards the meter is without any justification
The enhancement of security deposit was not warranted
On the question of interest in paragraph 11 at page 515 in Jagdamba s case supra it is stated thus On the security amount interest at the rate of 4 per cent was initially payable
The same has already been enhanced to 8 per cent per annum
Since the amount is held as security we indicated to the counsel for the Board that security amount should bear the same 272 interest as admissible on fixed deposits of Scheduled Banks for a term of years and we suggested keeping the present rate of interest in view that it should be enhanced to 10 per cent
Board s counsel has now agreed that steps would be taken to enhance the present rate of interest of 8 percent to 10 percent with effect from October 1 1983
 It requires to be carefully noted that 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 as rightly contended by Mr Soli J Sorabeejee learned counsel is sub silentio
However the learned counsel for the consumers pressed into service the various orders passed by this Court in relation to interest and urged that it is concluded by those orders
We are unable to accept his argument
All the orders have their root in Interlocutory Application No1 of 1989 in Writ petition No 578 of 1987
That order is extracted in full We have heard counsel for the parties
Mr Gopal Subramaniam  counsel for the State Electricity Board on instructions states that the initial deposit which has been made by the consumer petitioner to the tune of Rs 100737881 was intended as security for pay ment of energy dues
In terms of our order of 5th May 1988
the petitioner would be entitled to the interest on that amount from the date of the deposit at the rate of 12 per annum
Mr Gobind Mukhoty counsel for the petitioner now agrees to deposit the balance amount of Rs 691621 minus the interest which is said to be the additional security and while making the deposit of the additional amount the petitioner is entitled to deduct the interest already accrued on the deposit of Rs 100737881 from the date of the deposit at the rate of 12 per annum
The balance amount after deduction of the interest shall be deposited in two equal quarterly instalments the first being due by 151089
273 The application for directions is disposed of accordingly
 Based on this in Writ Petition No 613 of 1990 it was stated thus In view of the order made by this Court in the connected matters on September 7 1989 after hearing parties in Writ Petition No 57887 on the amount deposited by the consumer as security interest at the rate of 12 would be admissible
The Writ petition is disposed of accordingly
 Two other orders remain to be seen
One rendered in WP 5582 of 1989 which was disposed of by consent and the other in WPNo576 of 1990 where the writ petition was disposed of in the following manner If the Electricity Board has been directed to allow interest at the rate of 12 per annum on the security deposited with the Board by the petitioners similarly situated the claims of the petitioners should similarly be dealt with by the Board
The Writ Petition is disposed of
 On careful examination of the above orders we do not think the Court ever intended to adjudicate upon the rate of interest or render a decision on that question
Therefore it cannot be contended that the disposal of Writ Petition No 613 of 1990 though by a Bench of 3 judges would be binding on us because as pointed out above
It was entirely based on Interlocutory order
We are of the view that we are free to decide the question on its merits
The argument of Mr Anil Divan learned counsel that unequals are treated equals has no basis
It 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 274 cannot be treated in the same way as defaulters
The test in our considered opinion is whether in the general application of law there is any discrimination
Merely because some of the consumers are prompt those related cases cannot render the provision constitutional
We may usefully refer to the following cases The Collector of Customs Madras vs Nathella  at 829 30 it was observed The deleterious effects of smuggling as pointed out in the extract from the Report are real and it is not in dispute that the prevention and eradication of smuggling is a proper and legally attainable objective and that this is sought to be achieved by the relevant law
If therefore for the purpose of achieving the desired objective and to ensure that the intentions of Parliament shall not be defeated a law is enacted which operates somewhat harshly on a small section of the public taken in conjunction with the position that without a law in that form and with that amplitude smuggling might not be possible of being effectively checked the question arises whether the law could be held to be violative of the freedom guaranteed by article 19 1 f  g as imposing an unreasonable restrain
That the restrictions are in the interest of the general public is beyond controversy
 In Vivian Joseph vs Municipal Corporation Bombay  at 276 77 it was observed The levy of the cess under section 27 of the Act is not based on the principle of quid pro quo
Its object is not to repair all residential premises but to preserve and prolong their lives in order to avert the dilema caused by the acute shortage of residential accommodation on the one hand and the reluctance andor inability of the owners to carry out repairs resulting from the Rent Act on the other and to establish an agency so that structural repairs to buildings in dangerous or ruinous 275 conditions can be carried out
The finances for these objects are provided from a fund from the impugned cess and contributions by the State and the Corporation
The contention that some of the buildings falling in categories B and C would not need structural repairs throughout the life of the Act or that such repairs would carried out in buildings not cared for by defaulting landlords takes no notice of the fact that the primary object of the Act is not to repair all buildings subject to cess but to prevent the annually recurrent mischief of house collages and the human tragedy and deprivations they cause
The cess being thus levied to prevent such disasters there is no question of unequal treatment between one class of owners and another
The classification of buildings into three categories is based as already stated on their age and the construction current during the periods of their erection
It istherefore based on an intelligible differentia and is closely related to the objects of the legislation
There is therefore no question of unequals being treated as equals as each building of the Board and has to be structurally repaired if the need were to arise In B Banerjee vs Anita Pan  at 787 88 it was observed Moreover what is the evil corrected by the Amendment Act The influx of a transferee class of evictors of tenants and institution of litigation to eject and rack rent or re build to make larger profits
Apparently the inflow of such suits must have been swelling slowly over the years and when the stream became a flood the Legislature rushed with an amending bill
Had it made the law merely prospective these who had in numbers already gone to Court and induced legislative intention would have escaped the inhibition
This would defeat the object and so the application of 276 the additional than to pending actions could not be called unreasonable
To omit to do so would have been unreasonable folly
The question is whether those cases which were filed several years ago should have been carved out of the category of transferees hit by the act Where do you draw the line When did the evil assume proportions These are best left to legislative wisdom and not court s commensense although there may be grievances for some innocent transferees
If this be the paradigm of judicial review of constitutionality we have to ignore exceptional cases which suffer misfortune unwittingly
The law is made for the bulk of the community to produce social justice and isolated instances of unintended injury are inevitable martyre for the common good since God Himself has failed to make perfect laws and perfect justice Freaks have to be accepted by the victims rightly or wrongly as froensic fate In Fatelichand Himmatlal vs State of Maharashtra  at 851 it was observed May be some stray money lender may be good souls and to stigmatize the lovely and unlovely is simplistic betise
But the legislature cannot easily make meticulous exceptions and has to proceed on broad categorisations not singular individualisations
so viewed pragmatics overrule punctilious and unconscionable money lenders fall into a defined group
Nor have the creditors placed material before the Court to contradict the presumption which must be made in favour of the legislative judgment
After all the law makers representatives of the people are expected to know the socioeconomic conditions and customers
Since nice distinctions to suit every kindly creditor is beyond the law making process we have to uphold the grouping as reasonable and the restrictions as justified in the circumstances of the case
In this 277 branch there are no finalities
 The attack on additional consumer deposit is that no reasons have been adduced for additional demand
It stands to reason that if there is a revision in the rate of tariff there must be an upward revision in the consumption security deposit since it has direct bearing to the level of supply in consumption of electricity
For examplein the State of Uttar Pradesh the tariffs were adjusted upwards in October 1986
The revision in the form of an additional security deposit with interest at the rate of 3 per cent was made in January 1987
These facts indicate the rationale in the demand of additional security deposit
As stated above this being a condition of supply no reason need be given at the time of upward revision
Therefore
we reject the argument of Mr Govind Mukhoty learned counsel in this regard
In view of the above finding upholding the clause relating to nonpayment of interest for example Rajasthan and Orissa what is to happen to such of those cases where interest is provided like Andhra Pradesh Utter Pradesh and Bihar In all those cases wherever the electricity boards have framed a provision for payment of interest after adjusting its finances at a stated rate they cannot be allowed to delete such a clause
The provision for interest has been made by the various Boards having regard to the overall budgetary and financial position
Further keeping in view the quantum and made of security deposit and billing and recovery practice
Nor again could the Board withhold payment of interest on the basis of this judgment
However if there is any change in the circumstances affecting the budgetary and financial position the Board can examine the case and decide the future course of action
But any change resulting in non payment or reduction of interest will have to be justified by cogent reasons and materials having a bearing on the financial position of each Board and facts and circumstances of each case
We also add that not withstanding Jagdamba s case supra as on today Haryana Electricity Board has dispensed with payment of interest
We make it clear by this judgment that we are not deciding the validity of such provision since the matter is stated to be pending
Inconclusion We hold 278 1 Section 49 of the Supply Act is valid
2 The nature of consumption deposit is to secure prompt payment and is intended for appropriation
3There is no liability on the Electricity Board either tinder the statute or common law or equity to pay interest
4Conditions and the terms of supply providing for non payment of interest is not so unconscionable as to shock the conscience of the Court
5No reason need be given for
enhancement of additional security deposit
Accordingly we uphold the judgment of Andhra Pradesh High Court and reverse the judgment of Rajasthan High Court
In the result the following cased filed against Andhra Pradesh Electricity Board are dismissed SLP c Nos
1300489 14995891462989148998915739 8915817897475906374909661 65905461906371005294 90 677990 549290 592190 555990 4793 9490 4791 9190 637590
657090 1227090 992690 1154890 260090 63727390 6035 4490 650590637490 609400 6765 6890646290 5306 0890 913200 1242490 637090 CA No 177990 SLP c Nos
1746591 1767991 17865 6691 2012591 1953291 1804391 19586 9391 19597 600 2007691 2192 64992 2564925782 83928336929124 2592948892123189212506 92 1261092 1280592 1280492 1281492 1443992 1444992 1455592 1739 4343A92 1359392 CA No 240992 WP c Nos
6039245592 355883 56692 135389 4892 36292 1293 89 677090
The Transfer Petition c No 36692 filed by the Andhra Pradesh Electricity Board is allowed
279 The following cases filled by Rajasthan State Electricity Board are allowed CA Nos
471491 4028 4391S1Pc Nos4469270392 1294190
433 3692 439 4292  A Nos
534292
1187 8892 451292 45 1092
451192 280092
120492 406 43692 section L P c No 20924602479250925302449 45292494025169248924992510252925492559243 459256 7292428 43292 443 44492453 45792503 0892
512 1492530 33921445092
The following cases filed by the Bihar Electricity Board are allowed SLPc Nos
1179989 185690 831892 1602892
The following cases against Uttar Pradesh Electricity Board are dismissed
WP c Nos 51387 80487 114487
74387 53187 72587
73987 52691
57687 57787 80187 83387
76987 67687 578 87 72887 76287
81887 52687 74487
74287
54087 123887 7388768487 SLP c Nos 2952 561987 1588591  129029 1
The WP c No 131790 filed against Punjab Electricity Board is dismissed
All the IAs are allowed
However there shall he no order as to costs
T N A Petitions disposed of


Summary:
The three appellants In the two appeals along with 3 others were tried for having committed murder
One of the accused being a minor his trial was separated so that the same could he conducted by the Children Court
The case of the prosecution was that on the night intervening 6th and 7th October 1982 the deceased and PW16
who was the first cousin of the deceased were returning after witnessing Ram Leela
At that time the aforesaid 5 accused were also
returning from the show and it was alleged that they teased some girls of the village who had also gone to see the Ram LeeLa and that the deceased and PWI6  objected to this behaviour of the accused persons
On this the accused persons abused them which was followed by exchange of abuses from both the sides
PW13 intervened and pacified them
Next day at about 230pmthe deceased and Pw16 went to their flour mill to bring back 62 their bullocks and fodder cart
Tub of the accused with Pharsas one with a Ballam and three others with sticks came there
One of the accused abused the deceased and Pw16 saying that they would teach them a lesson for abusing them the previous night
Having said so one of the accused gave a pharsa blow from the blunt side on the head of the deceased
The other gave a pharsa blow on the head of the deceased
PW16raIsed an alarm and the remaining accused gave blow to PWI6
PW16 also got a blow of Ballam from the blunt side on his head
Thereafter an alarm was raised and all the accused persons fled away from the place of occurrence
The victim was taken to the local Hospital on a tractor and thereafter he was referred to AIIMS New Delhi where PWI examined him and also sent information to the police post at about 415 pm
The victim reached the AIIMS at about 725 pm where he was examined
ASI PW17 who had got the information about the occurrence went to the Institute and the statement was recorded
PW17 took up the investigation
The victim died in the Institute the next morning at 700 am
The postmortem examination was held by PW15 on 8th October 1982 at 430 pm on 12th October 1982 PWI examined one of the accused Suresh under the orders of judicial Magistrate and he made a report regarding the injuries he had received the duration of the time in respect of the injuries which he stated was 3 to 6 days
The five accused were put up for trial and the Session Judge convicted and sentenced all these accused for offences under Section 302 read with 149 Sections 148 and 323 read with Section 149 to imprisonment for life
The High court having dismissed their appeals the three appellants filed two appeals to this Court
In the appeals to this court it was contended on behalf of the appellants that on the materials on record the Courts below should have come to the conclusion that the prosecution had suppressed the real manner of occurrence and had disclosed a version of the occurrence which cannot be accepted
It was pointed out that the accused Suresh Vijender and Virender were the sons of accused Hari Sing who was age d about 60 years and that it was highly improbable on the part of  Hari Singh to join his sons for committing the murder of the deceased 63 Mange Ram who had protested about the behaviour of his sons
It was submitted that in view of the admitted position that the residential unit and the tube well being by the side of the flour mill of the deceased there was no question of the accused persons going to the flour mill of the deceased to assault the deceased and PWI6
It was further submitted that in the First Information Report the name of accused Suresh was mentioned in connection with the previous night s incident and that he and Satbir gave pharsa blows on the head of the deceased that PW 16 modified his version of the FIR in court by saying that the injuries on the head of the victim were caused by the back side of the pharsa and that this improvement was introduced after it was found during the postmortem examination that injuries had been caused by application of blunt force which was inconsistent with the case of assault on the head of the deceased by pharsa
The State raised an objection that in view of the dismissal of the Special Leave Petition of the two accused namely Suresh and Vijender against whom similar allegations had been made it was not open to this Court to entertain any plea on behalf of the present 3 appellants because it will be deemed that while dismissing the special leave petition this Court had affirmed the findings recorded by the Trial court and the High Court in respect of the manner of occurrence and participation of the accused persons including the 3 appellants
Allowing the appeals in part and setting aside the convictions of the appellants under Section 302 read with Section 149 of the Penal Code under Sections 148 and 323 read with Section 149 this court HELD 1
Appellant Satbir convicted under section 304 Part II and sentenced to undergo rigorous imprisonment for seven years
Appellant Gulbir convicted for an offence under Section 325 Penal code and sentenced to undergo rigorous imprisonment for three years
Appellant Hari Singh convicted for an offence under Section 323 of the penal code and sentenced to the period of imprisonment already undergone
75 H 76 A B 2 a
In the system of the justice which is being administered by the Courts
One of the basic principles which has to be kept in view is that Courts of coordinate jurisdiction should have consistent 64 opinions in respect of an identical set of facts or on question of law
If Courts express different opinions on the identical sets of facts or question of law while exercising the same jurisdiction then instead of achieving harmony in the judicial system it will lead to judicial anarchy
72 D E b Before any such principle is applied It must be held that the earlier order passed by this Court dismissing the Special Leave Petition of the co accused amounts to a judgement or an affirmance of the findings of the High Court about the manner of the occurrence participation of the different accused persons and the nature of offence committed by them
72 F 3
Article 136 1 of the constitution confers overriding and extensive powers of granting special leave to appeal or rejection thereof in the discretion of this Court
Article 136 does not confer a right to appeal it confers only a right to apply for special leave to appeal which taking all facts and circumstances into consideration may he granted or rejected
Even in a case where the special leave application is rejected the order of the High Court does not merge In the Order of this Court as is the case while exercising the appellate power
Similarly when Special Leave Petition is entertained against any final or interlocutory order this Court does not convert itself to a Court of appeal
72 D H Gian Chand vs Kunjbehanlal   referred to
76 E 4
It is a basic principle of the administration of justice that like cases should be decided alike
It is a very sound rule and practice otherwise on same question of law or same set of facts different persons approaching a Court can get different orders
73 D 5
The doctrine of precedent is not applicable to an order passed by this Court rejecting a Special Leave Petition
Any such order cannot be held to be stare decisis so that it is a binding on the Court
73 F 6
Rejection of the Special Leave Petition gives a finality to an 65 order of the High Court Inasmuch as the same accused cannot file more than one Special Leave Petition
But In rare and exceptional cases this Court has exercised power under Article 32 of the Constitution so that there should not he miscarriage of justice and to avoid a direct conflict and confrontation between two orders of this court
73 H 74 A Harbans Singh vs State of U P   Pyare Singh vs State of Madhya Pradesh 1992 SUPP 3 SCC 45 and 77 F AR Antulay vs RS
Nayak
  referred to
78 C 7
The mare rejection of the Special Leave Petition of co accused persons cannot seal the fate of the appeals of the appellants which have been entertained after leave having been granted by this Court
The appellants to whom leave has been granted can urge all questions within the framework of Article 136 of the Constitution for consideration
by this Court and a relief to which such appellants may be entitled cannot be denied to them merely on the ground that a Special Leave Petition In respect of co accused persons with more or less similar charges evidence and convictions has already been rejected
75 F G 8
On the basis of the evidence of PW16 the informant it cannot he said that the accused persons had an Intention to cause such injuries son the victim which may result In his death
When they caused the injuries from the blunt side of the Pharsa it will have to be presumed that they had knowledge that those Injuries can cause the death but there was no intention on their part to cause death
As such the Trial Court and the High Court should not have convicted the appellants under Section 302 read with Section 149
71 G H 9
a On the materials on record in the Instant case the prosecution has not been able to prove and establish that the appellants had the common object or shared the common intention to cause the murder of the victim
From the evidence of the prosecution Itself It appears that the flour mill of the deceased and the residential unit of the accused persons being adjacent to each other suddenly a right took place in which the appellant Satbir gave a blow by the back side wooden part of the Pharsa which caused one of the two injuries on 66 the head of the deceased
It cannot be held that appellant Satbir had an intention to cause the death of the victim
In such circumstances it can be said that he had only knowledge that such blow may cause an injury resulting in the death of the victim
He should have therefore been convicted under Section 304 Part II of the Penal Code
75 C E b So far as appellant Gulbir is concerned according to the prosecution case he was carrying a stick and he is alleged to have given a stick blow to the deceased on a non vital part of the body
In this background he can be held to have committed the offence only under Section 325 of the Penal Code
75 F c In regard to the appellant Hari Singh he was aged about 60 years at the time of the occurrence and the prosecution case itself is that he is said to have given a stick lathi blow to the informant PW 16
He is not alleged to have given any blow to the deceased
He has thereforeto be held guilty for an offence only under Section 323 of the Penal Code
75 G