Appeal No 69 of 1964
Appeal by special leave from the judgment and decree dated October 10 1961 of the Andhra Pradesh High Court in Second Appeal No 872 of 1958
AV Viswanatha Sastri K Rajendra Chaudhuri and K R Chaudhuri for the appellants
SV Gupte Solicitor General and T Satyanarayana
for respondent No 1
TVR Tatachari and BRGK Achar for respondent No 2
The Judgment of the Court was delivered by Subba Rao J
On November 22 1927 the Government of Madras in exercise of its powers under section 31 of the IX of 1910 hereinafter called the Act issued a licence to the Bezwada now Vijayawada Municipal Council for the supply of electric energy within the municipal limits of Bezwada at rates not exceeding the maximum charges given in the third annexure to the said licence
The appellants who are some of the consumers of electric energy for domestic and industrial purposes entered into agreements with the licensee for the supply of electric energy to them for domestic industrial and other purposes agreeing to pay the current official scale of rates
On December 13 1940 the Municipality passed a resolution bringing into force new rates for the supply of electric energy from April 1 1940
The consumers paid the rates so fixed  till the year 1956
On April 30 1956 the Municipal Council passed another resolution enhancing the rates from 1 4 1956
The appellants filed a representative suit against the Vijayawada Municipality in the Court of the District Munsif Vijayawada for a declaration that the said resolution dated April 30 1956 passed by the Municipal Council was illegal invalid and unenforceable and for an injunction restraining the said Municipality from collecting charges from the consumers of electric energy in the licensee s area at the new revised rates in pursuance of the impugned  resolution
The learned District Munsif held that the demand of enhanced rate was legal and valid and dismissed the suit
On appeal the learned Subordinate Judge held that the levy from the date of the said resolution was good but it could  not be given retrospective operation
He further held that the claim for duty at half an anna per unit was invalid
In the result he modified the decree of the District Munsif
On a further appeal a Division Bench of the Andhra Pradesh High Court confirmed the decree of the Subordinate Judge
By special leave the present appeal has been filed in this Court
Mr AV Viswanatha Sastri learned counsel for the appellants raised before us the following two contentions 1 The rates agreed upon between the consumers and the Municipality cannot be unilaterally altered and increased by the Municipality to the prejudice of the consumers and therefore the said resolution dated 278 April 30 1956 was invalid and unenforceable and 2 as the said resolution was passed without obtaining the previous sanction of the State Government under section 212 of the Act it was void for that reason also
The first contention turns upon the relevant clauses of the agreement entered into between the Municipal Council and the consumers
exhibit B 4 is one such agreement dated May 27 1932 between the Municipality and one of the appellants herein
The material clauses of the agreement read Para IV
The consumer shall pay to the licensee for all electrical energy so supplied at the rates and in accordance with the terms given in the licensee s Current Official Scale of rates and  the signing of this Agreement is held to imply concurrence in the terms of the said Scales of rates
Provided that the minimum rates as specified therein shall be paid irrespective of whether energy to the extent has been consumed or not
Para V A consumer under this Agreement is required to state see Schedule under which of the rates set out in the licensee s Official Scale of energy Rates he desires to be charged
Para X
This Agreement shall be read and construed as subject in all respects to the provisions of the Bezwada Municipal Electric Licence 1927 and to the provisions of the  and of any modification or re enactment thereof for the time being in force thereunder so far as the same respectively may be applicable
The supply of electrical energy under this agreement is subject to following among other provisions of law namely The schedule above referred to
2 Purposes to which the supply is to be given and in the case of domestic supply under which rate to be charged as referred to in paragraph V a Supply Domestic Purposes
b Rate Rs 0 6 0 per unit
3 Maximum electrical power required by the consumer0 54 KW 4 Minimum monthly charge Rs 2 8 0 in accordance with a class rate in the Schedule of Rates
The Schedule of Rates mentioned in this agreement presumably refers to scale of rates fixed by the resolution of the Municipality
The conflicting arguments centre on the question whether the words current official scale of rates in para
IV relate to the scale of rates current on the date when the agreement was entered into 279 or refer to the scale of rates current from time to time in accordance with the resolution passed by the Municipality
The expression current means vogue or prevalent and current rate may mean the rate obtaining at a particular time or at a future time or from time to time
The term goes well with the present future and recurrent
It is capable of different meanings depending upon the context or setting in which it appears
As the meaning of the word is ambiguous it is legitimate in order to ascertain its true meaning not only to study the document as a whole but also to ascertain its meaning from the circumstances whereunder the said agreement came into existence
Under para
X of the agreement the said agreement shall be subject to the provisions of the licensee and the provision of the Indian Electricity Act 1940 that is to say the said provisions are incorporated by reference into this agreement
Under the licence the licensee is precluded from charging rates higher than those prescribed thereunder
On April 1 1940 the Electricity Department of the Vijayawada Municipality prepared a document styled as Conditions and Rates of Supply
It does not contain any statutory rules but only administrative directions in regard to providing inter alia
for the method of entering into agreements and for charging rates for the energy supplied
This embodies the administrative practice of the Municipality in the matter of charging rates for the energy supplied
Paragraph is thereof under the heading Method of charging for current
reads The price and method of charging for current supplied shall be such as may from time to time be fixed by the licensee in accordance with the provisions of the Act and of his licence or such as may be made subject of Special agreement between the consumers and the licensee
 This makes a distinction between the official rate and the contractual rate
The official rate is that fixed by the licensee from time to time and the contractual rate is that fixed by special agreement between the parties
It may be assumed that this dual method is followed by the Municipality in the matter of entering into agreements
The form of application prescribed for the supply of electric energy contains the following clause I agree to pay for the said  energy service connection and other dues including the deposit of such security as may be demanded in accordance with the scale of rates and the rules of the licence
 The scale of rates in the context means the official scale of rates that may be fixed by the Municipality
When an application is filed an obligation is imposed trader s22 of the Act on the licensee to supply energy except in so far as is otherwise provided by the terms and  conditions of the licence on the same terms as those on which any other person in the same area is entitled in similar 280 circumstances to corresponding supply
Section 23 of the Act says that a licensee shall not in making any agreement for the supply of energy show undue preference to any person
The combined operation of these provisions is that the licensee cannot discriminate between the applicants in the matter among others of rates chargeable for the energy supplied
Unless the Municipality enters into an agreement with a consumer enabling it to charge him at a rate fixed by it from time to time it would be very difficult for the Municipality to maintain equality of treatment between the consumers in the matter of rates
To illustrate if under certain agreement a rate obtaining at a particular date is agreed upon and the rate is binding on the Municipality even if it is raised later on the Municipality may be guilty of discrimination which it is asked to avoid by statute if it charges other consumers at a higher rate this difficulty can be avoided if there is a term in the agreement executed by every consumer that he will pay the official rate fixed by the Municipality from time to time subject to the maximum fixed by the licence
That apart a public body like the Municipality in supplying energy to different consumers cannot run the risk of incurring loss by agreeing to fixed rates for the Government may increase the licence fee as it has done in the present case or there may be a rise in the cost of distribution
On the other hand if the term in the agreement is flexible to meet the said  eventualities the maintenance of continuous supply of electric energy may be assured without any loss to the public body
The circumstances obtaining at the time when the agreements between the consumers and the Municipality were entered into were these The licensee had power to fix the rates subject to the maximum prescribed by the Government
The administrative directions provided for charging for the current supplied at rates that may be fixed from time to time
The Municipality was in practice fixing the rates from time to time having regard to the relevant circumstances
The said rates fixed by the Municipality from time to time were the Official Scale of Rates
The consumers applied to the Municipality for supply of energy agreeing to pay for the energy supplied at the scale of rates fixed by the Municipality
With this background if we look at paragraphs IV and V of Ex
B 4 the meaning of the expression current official scale of rates will be clear
Paragraph IV speaks of current official scale of rates whereas para
V mentions official scale of energy rates
These two paragraphs bring out the distinction between the official scale of rates and the official scale of energy rates the former refers to the scale of rates maintained by the Municipality as modified from time to tme by appropriate resolutions and the latter refers to the different rates payable in respect of energy supplied for different purposes
Under para
IV the consumer specifically agreed to abide by the official scale of rates
If the intention of the parties is that the consumer shall pay only the scale of energy rates obtaining at the time the agreement is entered into there is no necessity for this 281 specific agreement for para
V serves that purpose
On the other hand the said express condition and the use of the word current make it clear that the consumer agrees to pay at the official scale of rates current from time to time
The adjective current will become a surplusage if the intention is to pay the rates obtaining at the time the agreement is entered into for the agreement itself gives the existing rates
The use of the adjective current emphasizes the fact that the official scale of rates is not the existing rates but the scale of rates current from time to time
We have
therefore on a reasonable construction of the ambiguous expression current having regard to the entire document and the surrounding circumstances come to the conclusion that the words current official scale of rates in para
IV of the agreement mean the official scale of rates current or prevalent from time to time during the currency of the agreement
If so it follows that the appellants were under a contractual liability to pay the enhanced rates covered by the impugned resolution
The next question turns upon section 212 of the Act which as it then stood read Subject to the provisions of sub section 1 a licensee may with the previous sanction of the State Government given after consulting the local authority make conditions not inconsistent with this Act or with his licenee or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers and may with the like sanction given after the like consultation add to or alter or amend any such conditions and any conditions made by a licensee without such sanction shall be null and void Under this sub section the licensee cannot make conditions to regulate his relations with the consumers or amend any such conditions without the sanction of the State Government
Mr Viswanatha Sastri argued that to enhance the rates was to alter a condition within the meaning of sub section
2 of section 21 of the Act and as admittedly the sanction of the State Government was not obtained before such alteration the said resolution was void
The learned Solicitor General contended that section 21 2 of the Act was a general provision relating to conditions whereas section 23 thereof was a specific provision in regard to fixing of rates and that section 23 would therefore prevail over section 21 and that section 23 did not prescribe the sanction of the Government as a condition precedent for fixing the rates Mr Tatachari while supporting this argument added that on the interpretation of para
IV of the agreement suggested by the respondents there was no alteration in the conditions at a11 and  therefore there was no scope for invoking section 21 of the Act
It is not necessary to express our opinion in this case on the question whether section 23 excludes the operation of section 212 of the Act in the matter of fixation of rates for we are satisfied that there is no alteration of any condition of 282 the agreement within the meaning of section 212 thereof
We have held that under para
IV of the agreement that was entered into between the consumers and the licensee the consumers agreed to pay the rates that were fixed by the Municipality from time to time
If the said term was a condition within the meaning of section 212 of the Act there was no change at all in that condition for the change in the rates was not in derogation of the condition but in terms of it
To state it differently the same condition embodied in para
IV of the agreement continued to operate between the parties even after the rates were enhanced under the impugned resolution
Therefore no sanction of the State Government was necessary for enhancing the rates
No other point was raised before us
In the result the appeal fails and is dismissed with one set of costs
Appeal dismissed


Summary:
The Government of Madras issued a licence to the respondentMunicipality under s31 of the  for the supply of electric energy within its municipal limits at rates not exceeding the maximum charges given in the licence
The appellants some consumers of the electric energy entered into agreements with the Municipality for the supply and agreed to pay the current official scale of rates
The rates were increased by resolutions of the Municipality twice and on the second occasion the appellants filed a representative suit for a declaration that the later resolution was illegal and for an injunction restraining the Municipality from collecting charges at the new rates
The trial court dismissed the suit and the dismissal was confirmed on appeal by the High Court
In appeal by special leave the appellants contended that i the rates agreed between the consumers and the Municipality could not be unilaterally altered and increased by the Municipality to the prejudice of the consumers and therefore the impugned resolution was invalid and unenforceable and ii as the impugned resolution was passed without obtaining the previous sanction of the State Government under section 212 of the Act it was void
HELD i The consumers were under a contractual liability to pay the enhanced rates covered by the impugned resolution
Under sections 22 and 23 of the Act the Municipality cannot discriminate between consumers in the matter of rates chargeable for the energy supplied
Unless the Municipality enters into agreement with the consumer enabling it to charge him at a rate fixed from time to time it would be difficult for the Municipality to maintain equality of treatment between the consumers
That difficulty can be avoided if there is a term in the agreement executed by every consumer that he will pay the official rate fixed by the Municipality from time to time subject to the maximum fixed by the licence
Further a public body in supplying electric energy to different consumers cannot run the risk of incurring loss by agreeing to fixed rates for the Government may increase the licence fee as had been done in the instant case or there may be a rise in the cost of distribution
280 A D Therefore having regard to the entire document and the surrounding circumstances the words current official scale of rates in the agreement mean the official scale of rates current or prevalent from time to time during the currency of the agreement
281 C ii No sanction of the State Government was necessary for enhancing the rates
There was no alteration of any condition of the agreement within the meaning of section 212 of the Act
The consumers had agreed to pay the rates that would be fixed from time to time
and if that term was a condition within the meaning of that section there was no change at all in that condition for the change in the rates was not in derogation of the condition but in terms of it
282 A B 277