IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE NINTH DAY OF SEPTEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE SRI JUSTICE V.V.S.RAO WRIT PETITION No.3691 of 2002 Between: M/s cheminar Drugs Limited, Rep by its Manager (Engineering) V.V.Dhikshit, Bacaepally Vellage, Qtbullapur Mandal, Ranga Reddy District. ..... PETITIONER AND 1 Transmission Corporation of Andhra Pradesh Limited, Rep by Chief Managing Director, (A.P.TRANSCO), Vidyuth Soudha, Kahairatabad, Hyderabad. 2 The Director (Commercial & Cordination), A.P.TRANSCO, Vidyuth Soudha, Kahairatabad, Hyderabad. 3 The Superintending Engineer, Operation R.R.Circle, Central Power Distribution Company Ltd A.P.TRANSCO, Kukatpally, Hyderabad. 4 The Divisional Engineer, Operation R.R.Circle, Central Power Distribution Company Ltd A.P.TRANSCO, Kukatpally, Hyderabad. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to issue a Writ or order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the respondents in levying the Maximum Demand at charges by deeming the petitioners Contracted Maximum Demand at 1000 KVA with eﬀect from Oct, 1996 as highly, arbitrary, unjust and void the consequently set aside the Proceedings of the 2nd respondent in Letter No.CE/COML/BL-A1/F.CHEM-DRUG/D.No.9/02 dt: 29.1.2002 and pass such other order or orders as this Hon’ble Court may deem fit and proper in the circumstances of the case. Counsel for the Petitioner: SRI D.V.NAGARJUNA BABU Counsel for the Respondents: O.MANOHAR REDDY(SC FOR APTRANSCO) The Court made the following : THE HON'BLE SRI JUSTICE V.V.S.RAO WRIT PETITION No.3691 of 2002 ORDER: The petitioner is an incorporated entity for manufacturing drugs and pharmaceuticals. It applied to the respondents for availing high-tension power with a Contracted Maximum Demand (CMD) of 1000 KVA in two phases, namely, 430 KVA load in ﬁrst phase and 570 KVA load in second phase. By a communication dated 20.02.1996 the Member Secretary, Andhra Pradesh State Electricity Board (APSEB), informed the petitioner that the Board accorded approval for extension of supply with the revision phasings, namely 430 KVA from the date of release of supply and 570 KVA after six months of ﬁrst phase release. As required under the Terms and conditions of Supply of Electrical Energy by APSEB (terms and conditions, for brevity), the petitioner entered into HT agreement (Appendix – III to terms and agreement). Clause Nos.3, 5 and 6, which are relevant, read as under. 3. LOAD/MAXIMUM DEMAND We agree to take from the Andhra Pradesh State Electricity Board Electric Power for a maximum load not exceeding of 1000 KVA with a total contracted load of 1649 K.W + 109 K.W + 229 K.W (L.L) which shall be taken to be our contracted demand for our exclusive use for the purpose above mentioned at our factory situated at Bachepally Village, Quthbullapur Mandal, Ranga Reddy District, Andhra Pradesh. We shall request eﬀect change in the maximum demand in the phased manner as follows: Phase – I: C.M.D of 430 KVA with CL of 262.5 K.W + 40 K.W + 70 K.W (L.L) at 33 KV immediately. Phase – II: Additional C.M.D of 570 KVA totaling to 1000 KVA ultimate CMD with total C.L of 1649 K.W +109 K.W + 229 (L.L) 6 months after release of Phase – I. We shall not eﬀect any change in the maximum demand of contracted load. 5. OBLIGATION TO COMPLY WITH REQUIREMENT OF ACTS AND TERMS AND CONDITIONS OF SUPPLY We further undertake to comply with all the requirements of the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948, the rules thereunder, provisions of the tariﬀs scales of miscellaneous and general charges and the terms and conditions of supply prescribed by the Board from time to time and agree not to dispute the same. 6. DATE OF COMING INTO FORCE OF THE AGREEMENT We shall begin/take Electrical supply from the Board under the conditions of this contract within three months, from the date of issue of intimation in writing to us by the Oﬃcer of the Andhra Pradesh State Electricity Board, that supply of electrical energy is available. The provisions of this agreement shall be deemed to come into force from the date of commencement of energy or the date of three months, notice above referred to whichever is earlier. A reading of above three conditions would show that the consumer is required to comply with the Indian Electricity Act, 1910 (1910 Act, for brevity), the Electricity (Supply) Act, 1948 (1948 Act, for brevity), the rules made thereunder, provisions of the tariﬀ scales and the terms and conditions of supply prescribed by the Board. As per clause No.6, the consumer shall begin to take electricity supply from the Board within three months from the date of issue of intimation in writing by an Oﬃcer of APSEB that supply of electrical energy is available, and the provisions of the agreement shall be deemed to come into force from the date of commencement of energy or the date of three months notice, whichever is earlier. Reading clause Nos.3 and 5 read with clause No.6 together it is clear that so as to avail power supply a HT consumer is required to comply with all the requirements of 1910 Act, 1948 Act, rules made thereunder and the terms and conditions before the Board starts supplying electricity after giving three months notice. As per clause No.11 of the agreement it is only when the consumer is not able to consume electricity that the Board can levy minimum charges as prescribed in tariﬀ and terms and conditions. The petitioner commenced taking 430 KVA from 30.03.1996. Between this and April 1997 for about a period of one year the respondents did not inform about their readiness to supply 570 KVA towards second phase release. The fourth respondent on 10.04.1997 advised the petitioner to obtain the approval of the Chief Electrical Inspector to Government (CEIG). The fourth respondent also informed on 29.07.1997 to obtain consent letter from the Andhra Pradesh Pollution Control Board (PCB). Be it noted, admittedly, as per Rule 63 of the Indian Electricity Rules, 1956 (Electricity Rules, for brevity), every HT consumer has to get approval from the CEIG and consent from PCB, which are mandatory requirements for availing power supply. There is no dispute on this. The petitioner obtained consent from PCB in August 1997. In January 1998 the CEIG inspected the petitioner’s premises and issued necessary approval for second stage release of 570 KVA. Statedly, a copy of the certiﬁcate was communicated to the fourth respondent. In addition to this, the petitioner also submitted the said certiﬁcate in February 1998, in response to which, the fourth respondent advised the petitioner to deposit a sum of Rs.8,70,060/- towards consumption deposit for second stage, which was duly paid on 13.04.1998. In the meanwhile, the respondents collected penal charges as the petitioner exceeded CMD over and above the ﬁrst stage supply of 430 KVA. It was also advised to regulate its demand. In the meanwhile, on 21.12.1998 the third respondent again advised the petitioner to obtain consent of PCB and to send along with two copies of certiﬁcate of CEIG. These were duly submitted, but yet, there was no intimation of release of second phase supply, in spite of reminders by the petitioner company requesting for release of 570 KVA of electricity under second phase supply. From March 1996 when the petitioner was supplied 430 KVA out of sanctioned supply of 130 KVA in the ﬁrst phase, the petitioner was issued bills for 430 KVA as per the prevailing tariff. In all the bills for the purpose of levy, CMD was treated as 430 KVA, and twice the amount was charged for the additional load availed by the petitioner. However, suddenly in the bill for the Month of April 1999, dated 26.04.1999, for the purpose of levy on electricity charges, CMD was shown as 1000 KVA and tariﬀ was charged accordingly. The petitioner was asked to pay a sum of Rs.9,76,602/- towards additional 570 KVA, though admittedly, the electricity was not supplied in the second phase. The petitioner ﬁled W.P.No.10105 of 1999 challenging the action of the respondents in levying electricity charges for 570 KVA in April bill. The said writ petition was disposed of on 19.09.2001 giving liberty to the petitioner to ﬁle objections to the respondents, who were directed to dispose of the same. In furtherance thereto, the petitioner submitted representation on 22.10.2001. The second respondent passed orders on 29.01.2002 concluding that the demand raised by the third respondent for 1000 KVA from 01.10.1996 is in order, and that the petitioner has to pay a sum of Rs.9,76,602/-. Assailing this order, the petitioner ﬁled the present writ petition, which was admitted, and interim orders were passed by this Court staying disconnection on condition of the petitioner depositing a sum of Rs.2,00,000/-. The third respondent ﬁled counter aﬃdavit denying the contentions raised by the petitioner. The third respondent, however, admits the factual aspects of the matter, and therefore, it is not necessary to summarize the contents thereof. However, it has to be noticed that according to the respondents as per the agreement dated 22.02.1996 whether or not power supply is availed by the petitioner, it has to pay CMD, because within six months as stipulated under the agreement APSEB was ready by providing infrastructure and other development. The main argument by the learned Counsel for the petitioner is that unless and until a consumer obtains the consent from PCB and approval from CEIG, electricity cannot be released, even if the agreement stipulates six months period for release of additional CMD of 570 KVA within such period. Secondly, he submits that as per condition No.26.4 of terms and conditions and clause No.6 of HT agreement, APSEB is bound to issue a notice that the Board is ready to give supply and it is only when consumer fails to avail the supply within three months from the date of the notice electricity charges can be levied. Per contra, learned Standing Counsel submits that as per the agreement the Board is required to release additional CMD of 570 KVA within six months after release of ﬁrst phase, that the Board has provided all infrastructure and was ready to release. Therefore, immediately after expiry of six months from 30.03.1996 (date of release of ﬁrst phase of 430 KVA) the petitioner is liable to pay the demand with eﬀect from 01.10.1996. The short question is whether requirement of three months notice by the Board under condition No.26.4 of terms and conditions is mandatory. The said condition reads as under. 26.4. Commencement of Agreement:- The Board shall after the consumer completing all the pre-requisite formalities in respect of execution of agreement and consumption deposit, payment of service connection charges etc., make arrangements to supply electricity in the manner prescribed and issue a notice after making necessary arrangements that the Board is ready to give supply and that such supply should be availed by the applicant within a period of three months from the date of issue of the notice. Every consumer shall pay to the Board from the date of commencement of supply of energy or from the date of expiry of three months’ notice whichever is earlier, maximum demand charges, energy, charges, surcharges, meter rents and other charges, if any, as provided in the Tariﬀs and the terms and conditions of supply prescribed by the Board from time to time for the particular class of consumers to which he belongs or the amount of special guarantee wherever it is applicable. In case the consumer fails to avail supply within the three months’ notice period, he shall have to pay monthly minimum charges or special minimum guarantee as the case may be, from the date of expiry of period of above said notice. The above clause/condition essentially deals with “commencement of agreement”. The importance of commencement of agreement lies in the fact that every consumer shall pay to the Board from the date of commencement of supply of energy. Commencement of supply of energy for reckoning the date of commencement of agreement does not furnish any diﬃculty. There is yet another method of reckoning commencement of agreement which throws up some difficulty. This method is, the Board issuing a notice to the consumer after making necessary arrangements that the Board is ready to give supply. If within three months from the date of notice by the Board, the consumer fails to avail the supply, he shall have to pay the monthly minimum charges or special minimum guarantee from the date of expiry of period of such notice. This deemed commencement of agreement does not become eﬀective unless certain things are completed. Condition No.26.4 of terms and conditions itself enumerates these with reference to the consumer as well as the Board. The consumer before seeking supply of electricity has to complete all prerequisite formalities like execution of agreement, payment of consumption deposit, payment of service connection charges etc. Unless and until a consumer completes these formalities and also the requirements as per clause No.5 of HT agreement, there is no obligation for the Board to make arrangements for supply of electricity. After the consumer completes these formalities the Board shall have to make arrangements for supply of electricity and when it is ready to do so, issue three months notice informing that the Board is ready to supply electricity. This is also reﬂected in clause No.6 of the agreement, which is also referred to hereinabove. Indeed, under clause No.6 of the agreement, if a consumer undertakes to avail electricity supply within three months from the date of issue of notice by the Board that supply of electricity is available, then only as per clause No.6 the provisions of the agreement shall be deemed to come into force from the date of commencement of energy or the date of three months notice, whichever is earlier. In view of this, any reliance on clause No.3 of the agreement, which provides that additional CMD of 570 KVA shall be released after a period of six months, is totally misconceived. Indeed, HT agreement is executed by the petitioner, and it never covenanted that immediately after completion of six months from the date of release of ﬁrst phase, the agreement with regard to second phase shall commence. The agreement is pursuant to condition No.26.1 of terms and conditions, and while interpreting the clauses in the agreement, one cannot ignore condition No.26, especially, condition No.26.4 of terms and conditions. Interpreted in the light of condition No.26.4 of terms and conditions, the HT agreement does not enable the Board to collect the electricity charges prior to a period before the actual commencement of supply of electricity or from the date of expiry of period of three months notice contemplated under condition No.26.4 of terms and conditions. There is no dispute or denial that after 01.10.1996 (expiry of period of six months) respondents did not issue any notice as contemplated in clause No.6 of HT agreement read with condition No.26.4 of terms and conditions. The petitioner raised a ground before the third respondent that the Board was not ready to release second phase demand until 26.03.1998 and that the Board has to serve three months notice before starting billing for additional demand, without which, there cannot be such demand. Dealing with this aspect, the second respondent in the impugned order erroneously concludes that the consumer availed supply on 30.03.1996 duly signing Test Report in which it was mentioned that second phase demand will be released six months thereafter, which itself is an intimation to the consumer as the entire line and infrastructure is completed and ﬁrst phase demand of 430 KVA was availed. Why there was no physical release of second phase demand? The second respondent himself stated the reasons as under. …In fact the Board was ready on 30.03.1996 itself to release 1000 KVA demand. The consumer himself was not ready with load, which is evident from the admission in his letter dt.4.8.1997, addressed to Divisional Engineer/ Operation/Kukatpally, where in he has clearly stated, “The work of installation is nearly completed and he is arranging for additional installation shortly.” In fact the 33 KVA line laid to release Ist phase demand of 430 KVA cater a load up to 4999 KVA. So the question of Board not ready to release 2nd phase demand of 570 KVA making the ultimate demand of 1000 KVA does not arise at all. The physical releasing of II phase demand of 570 KVA could not be done because of non-fulﬁllment of statutory obligations by the consumer in getting clearances from CEIG and APPCB. Several reminders were issued by Divisional Engineer/Operation/Kukatpally, & Superintending Engineer/ Operation/Ranga Reddy Circle to get the clearances. Of late the consumer produced clearance letter from CEIG, which was incomplete. The consumer got clearance of CEIG for a connected load of 1558.46 KW instead of 1987 KW ultimate connected load. From the above it clearly follows that the consumer was not ready to avail supply of 570 KVA in II phase. The above observations of the second respondent in the impugned order would show that the second phase demand of 570 KVA was not released because the petitioner could not fulﬁll the statutory obligations like clearance from CEIG and PCB. There is satisfactory explanation given by the petitioner in its aﬃdavit as to why these two clearances could not be obtained within a period of six months. In the fact of such explanation any surmise by the second respondent that the Test Report or the agreement itself would amount to three months notice as per condition No.26.4 of terms and conditions is erroneous. Indeed, the requirement of three months notice before release of power supply or additional power supply is in the interests of the Board itself. The reasonable reading of clause No.3, which provides for release of energy within six months, would be the completion of laying of pipelines and other infrastructure within six months and then issuing notice within three months, that is to say, in a case of this nature, from the date of release of electricity supply in the ﬁrst phase, Electricity Board has nine months time for making available the additional demand of electricity. Therefore, the impugned order cannot be sustained as it is contrary to condition No.26.4 of terms and conditions and clause No.6 of the HT agreement dated 22.02.1996. The Writ Petition must succeed. Accordingly, the Writ Petition is allowed with costs. A mandamus shall issue to the respondents in addition to the declaration as prayed for to adjust the amounts paid by the petitioner during the pendency of this Writ Petition as well W.P.No.10105 of 1999 in the future bills of the petitioner. ____________ (V.V.S.RAO, J) 09.09.2008 vs To 1 Chief Managing Director, (A.P.TRANSCO), Transmission Corporation of Andhra Pradesh Limited, Vidyuth Soudha, Kahairatabad, Hyderabad. 2 The Director (Commercial & Cordination), A.P.TRANSCO, Vidyuth Soudha, Kahairatabad, Hyderabad. 3 The Superintending Engineer, Operation R.R.Circle, Central Power Distribution Company Ltd A.P.TRANSCO, Kukatpally, Hyderabad. 4 The Divisional Engineer, Operation R.R.Circle, Central Power Distribution Company Ltd A.P.TRANSCO, Kukatpally, Hyderabad. 5 2CCs to 6 2CD copies Form-NIC-OGS/WP{MN}