IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE FOURTH DAY OF APRIL TWO THOUSAND AND EIGHT PRESENT THE HON'BLE DR JUSTICE G.YETHIRAJULU WRIT PETITION NO : 638 of 2001 Between: M/s. Vinayak Steels Ltd rep. by its Managing Director Vinod Kedia 97/E, Dharga Road, Kothur Village, Shadnagar Mandal, Mahaboobnagar District. ..... PETITIONER AND 1 Transmission Corporation of A.P. Limited rep. by its Managing Director Vidyut Soudha, Somajiguda, Hyderabad. 2 The Superintending Engineer, Operation Circle, Central Power Distribution Co. of A.P. limited Mahaboobnagar Dist, Mahaboobnagar. 3 The Senior Accounts Officer, Operation Circle, Central Power Distribution Co. of A.P. limited Mahaboobnagar Dist, Mahaboobnagar. .....RESPONDENT(S) 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 to issue a writ or order or direction more particularly one in the nature of Writ of Mandamus declaring the letter No. SE/OP/MBNR/SAO/HT/D.NO. 790/2K dated 14-12-2000 of the 2nd respondent and also the consequential letter no. SE/OP/MBNR/SAO/HT/D.NO. 29/2001 dated 11-1-2001 of the 3rd respondent as highly illegal, arbitrary, unjust and void and consequently set aside the same and further declare that the petitioner is entitled for the interest at the rate of 24% per annum on the excess consumption deposit from the due date for the refund till the amount is refunded and pass Counsel for the Petitioner:MR.D.V.NAGARJUNA BABU Counsel for the Respondent No.: MR.O.MANOHER REDDY The Court made the following : HON’BLE DR. JUSTICE G. YETHIRAJULU W.P.No.638 of 2001 ORDER: This writ petition has been filed by the petitioner-company represented by its Managing Director seeking to declare that the letter, dated 14-12-2000 of the second respondent and the consequential letter, dated 11-01-2001 of the third respondent as illegal, arbitrary, unjust and void and consequently to set aside the same and to declare that he is entitled for interest @ 24% per annum on the excess consumption deposit from the due date for the refund till the amount is refunded. 2. The petitioner contended that under Condition No.28 of the Terms and Conditions of Supply, the first respondent corporation is requiring the consumers to deposit a sum equivalent to three months consumption charges towards consumption deposit except the case of induction furnace units. Since the petitioner is an induction furnace unit, it is required to pay two months consumption charges as consumption deposit. Under Condition No.28.2.1 (b), the respondent corporation is obligated to review the adequacy on consumption deposit once in an year basing on the consumption of the consumers for the preceding 12 months period. The respondents have been reviewing the consumption deposit in terms of the above clause in the month of April every year. Under Condition No.28.2.2 (vi), after review, if the existing consumption deposit is in excess by 10% of the required consumption deposit, the respondents shall refund the excess consumption deposit to the consumers by way of adjusting the same against the further consumption bills. 3. The petitioner further contended that for the year 1999-2000, he paid consumption deposit of Rs.65,28,000/-. Under Condition No.28 of the Terms and Conditions of Supply, the respondents have to review the consumption deposit in the month of April, 2000 for the year 2000-2001 basing on the consumption recorded during the months from April, 1999 to March, 2000. On such review, the petitioner was entitled to get a refund of Rs.33,78,100/-. Though the review took place in April, 2000, the respondents deliberately delayed the matter and had not refunded the excess consumption deposit despite representations made by him seeking refund of the excess consumption deposit. Later, the petitioner filed W.P.No.12499 of 2000 for refund of the excess amount before this Court and this Court was pleased to dispose of the writ petition through the order, dated 16-08-2000 directing the first respondent to consider the issue and take appropriate decision. In the meanwhile, the petitioner had to adjust excess consumption deposit of Rs.33,78,100/- against various bills payable by him during the period from May, 2000 to November, 2000. Ultimately, the third respondent through his proceedings, dated 27-11-2000 informed the petitioner that the adjustment made by the petitioner is approved. The petitioner vide letter, dated 02-12-2000 addressed to the second respondent requested the respondents to grant 24% interest since the refund of the excess consumption deposit has been delayed by them. The petitioner had to get the refund of the excess consumption deposit in the month of April, 2000 in a lump sum. But the respondents failed to refund the same and ultimately the petitioner had to forcibly get the refund of the said amount by adjusting the same in various bills during the period from May, 2000 to November, 2000, therefore, the petitioner is entitled to interest @ 24% per annum and after calculating the interest @ 24%, he claimed interest @ Rs.2,70,377/-. 4. The petitioner further submits that since there is no representation from the respondents, he adjusted the said amount against the bill for the month of December, 2000. While so, the petitioner received a letter, dated 11-01-2000 from the third respondent, wherein it is mentioned that if the amount is not paid within 7 days, the petitioner’s service will be disconnected. The petitioner also received another letter, dated 14-12-2000 from the second respondent, wherein it is mentioned that as per the terms and conditions of supply, 3% interest will be allowed on the consumption deposit amount at the credit after the adjustment of the bills from time to time, therefore, the petitioner’s request is not feasible for compliance. Under the Rules, 3% per annum interest is payable on the required consumption deposit, but when once the consumption deposit becomes excess, the respondents are bound to refund the same on the due date, failing which it become unauthorized holding of the deposit, as such the respondents are liable to pay interest @ 24 % per annum. Hence, the petitioner filed the writ petition seeking the reliefs as mentioned above. 5. The learned counsel for the petitioner submitted that immediately after reviewing the consumption deposit on the basis of the average consumption charges, if there is any excess amount in the consumption deposit, the respondents have to refund the same forthwith and if there is any deficiency, they have to issue a notice directing the petitioner to pay the difference of the amount towards consumption deposit. Since there was excess consumption deposit to the credit of the corporation after review, they ought to have refunded the amount without delay and adjusting of the consumption deposit amount for the amounts due from the petitioner is illegal, therefore, the respondents are liable to pay interest @ 24% per annum. 6. The learned counsel further submitted that the corporation is paying interest @ 3% per annum on the consumption deposit with it, but when once any amount is found excess, they are not supposed to retain the amount and it has to be refunded forthwith, failing which they are liable to pay interest. Since the electricity department is collecting 25% interest on delayed payments from the consumers, the corporation is liable to pay interest @ 24% per annum on the excess amount. 7. The petitioner submits that though the respondents are supposed to review consumption deposit in April, 2000, it was not done, therefore, he was constrained to file the writ petition in which a direction was given by this Court in August, 2000 to the respondents to take appropriate decision as expeditiously as possible preferably within three weeks from the date of receipt of copy of the order. In pursuance of that, the respondents intimated the petitioner in November, 2000 that there is excess amount of Rs.33,78,100/- which was adjusted for the bills from April, 2000 to November, 2000. 8. It is an undisputed fact that the petitioner did not pay the consumption charges from April, 2000 to November, 2000 on the ground that the excess amount was lying with the respondent corporation and he also did not pay the consumption charges of December, 2000 by contending that the amount likely to accrue towards the interest is to be adjusted for the next month. When the respondents issued notice to pay the bill amount of December, 2000 with a threat to disconnect, the petitioner approached this Court through this writ petition. 9. It is admitted by the learned counsel for the petitioner that there is no clause in the terms and conditions of supply for payment of interest to the consumers. But there is a specific provision for payment of interest on delayed payment of consumption charges, penalties and other amounts payable to the corporation. 10. The learned counsel for the petitioner submitted that when the amount was retained by the corporation illegally, being the excess amount of the consumption deposit, it will not come under any of the terms and conditions and as the amount was retained by the respondents, they are bound to pay interest. 11. In FERRO ALLOYS CORPN. LTD v. A.P. STATE ELECTRICITY BOARD [1], the Supreme Court had the occasion to consider the scope of Section 49 of the Electricity (Supply) Act, 1948 and Section 2 (4) of the Electricity Act, 1910 and held: “There is nothing to indicate under the scheme of the Electricity Act or Schedule VI of the Electricity (Supply) Act that interest must be paid on the consumption security deposit made by the high tension consumers. Provisions of S.4(2) of Interest Act would not be applicable to deposits. S. 4(2) of Interest Act 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 S. 4(2) would disclose that it merely enlarges the category of cases mentioned in S. 4(1). Even otherwise, there is nothing to indicate that S. 4(2) could override other statutory provisions or a contract between the parties. No doubt, S. 4(2) contains a non obstante clause. But, such a clause is restricted to the provisions of Interest Act and cannot extend to other laws or a contract between the parties. The deposit made cannot be equated to a fixed deposit. In the case of daily supply of electricity, there is a consequential liability to pay for each day's consumption of electricity. To ensure that payment, the security deposit is furnished. Hence, it cannot be equated to a deposit at all. It is in the nature of a running current account. The object of the deposit is to secure the payment of consumption charges. These charges may vary depending upon the daily consumption, depending on the level of supply. The amount due by way of consumption charges would also be liable to 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 depositee. This is not even a case of a constructive trust under S. 90 of the Indian Trust Act, since no advantage is gained by the Electricity Board in derogation of the rights of the consumer. 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, there is no relationship of debtor and creditor. 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. Therefore the claim for interest cannot be legally founded either on common law or equity. 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 advanced on. It cannot also be said 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.” The Supreme Court further held that: “The clause in an agreement for supply of electricity, not providing for interest on the consumption security deposit made by high tension consumers is neither arbitrary nor palpably unreasonable, nor even unconscionable in view of the following facts: (1) The consumer made the security deposit in consideration of the performance of his obligation for obtaining the service which is essential to him. (2) The electricity supply is made to the consumers on credit. (3) The billing time taken by the Board is to the advantage of the consumer. (4) Public 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 payments made by the Board it gets no interest from the consumers. (5) The Board needs back its blocked money to carry out public service with reasonable recompense. (6) The Board is not essentially a commercial organisation to which the consumer has furnished the security to earn interest thereon. In imposing condition of non-payment of interest on consumption security deposit the Board could not be said to have acted as private trader. The plea that the Board is monopolistic in character and, therefore, the consumers have no other option but to enter into contract is misconceived.” 12. The above observations make it clear that the consumer is not entitled for interest on the consumption deposits. Condition No.28.5 indicates that the consumer has to make the consumption deposit, which shall not be less than three months monthly minimum charges. Condition No.28.6 mandates that the consumer shall pay consumption deposit within 30 days from the date of the demand notice and if there is any delay, he shall pay surcharge. There is no contract or agreement, which provides for payment of interest and clause (9) (b) (ii) of the General Conditions of Supply provides that no interest will be paid by the Board on security deposit. There is no statutory provision, which casts obligation on the corporation to pay interest on security deposit. 13. The conditions of supply provides that whenever there is any excess amount of consumption deposit, the electricity board is entitled to adjust the said amount towards consumption charges payable by the consumer. The petitioner, knowing fully well that the excess amount will be adjusted towards consumption charges, did not offer to pay the consumption charges from April, 2000 to November, 2000 and the deposit refundable to the petitioner has been adjusted towards consumption charges of the months from April, 2000 to November, 2000. 14. The petitioner requested that under the principles of equity and natural justice, the consumer shall also be paid interest on the excess deposit when the corporation was demanding interest on the delayed payments made by the consumer. 15. The Supreme Court in the above decision made a detailed discussion under what circumstances, the electricity board was made to demand interest and why no interest has been prescribed to be paid to the consumers under the terms and conditions and the amount was also permitted to be adjusted towards the amount payable to the corporation. There is a contract between the corporation and the consumer. They are bound to abide by the terms and conditions of the contract. The cases of claiming interest and damages etc. is different from the amount payable to each party out contractual obligation. In order to invoke the 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. Even though there was delay in reviewing quantum of consumption deposit, the respondents accepted the request of the petitioner to adjust the amount towards the consumption charges, therefore, at this stage, the petitioner is not expected to claim interest on the amount already adjusted and request the Court to calculate the interest and direct the respondents to pay the same to him. 16. In the absence of specific provision, the claim for interest cannot be legally founded either on common law or equity, therefore, the petitioner is not entitled for interest on the excess consumption deposit and no relief can be granted to him in this writ petition. 17. The writ petition is, accordingly, dismissed. No order as to costs. __________________ Dr. G.YETHIRAJULU, J Date: -03-2008 YCR To 1 The Managing Director, Transmission Corporation of A.P. Limited, Vidyut Soudha, Somajiguda, Hyderabad. 2 The Superintending Engineer, Operation Circle, Central Power Distribution Co. of A.P. limited, Mahaboobnagar Dist, Mahaboobnagar. 3 The Senior Accounts Officer, Operation Circle, Central Power Distribution Co. of A.P. limited, Mahaboobnagar Dist, Mahaboobnagar. 1.2CCs to 2.2CD copies Form-NIC-OGS/WP{VVS} [1] AIR 1993 SC 2005