*THE HON’BLE MR JUSTICE L.NARASIMHA REDDY WRIT PETITION NO : 15149 of 1988 % 02.12.2008 Between: # Sri Vishnu Cements Limited. …Petitioner And $ The A.P. State Electricity Board and another. … Respondents ! COUNSEL FOR PETITIONER: Sri D.Nagarjuna Babu ^ COUNSEL FOR RESPONDENTS: Sri O.Manohar Reddy < Gist: > Head Note: ? CITATIONS: THE HON'BLE SRI JUSTICE L.NARASIMHA REDDY Writ Petition No.15149 of 1988 ORDER: The petitioner is a cement factory and bulk consumer of electricity. Its Contracted Maximum Demand (CMD) is 15000 KVA. It is stated that the respondents imposed power cuts till August 1988. Thereafter, orders were issued, lifting of the power cuts. A bill was served for the month of September, indicating that the recorded maximum demand was 16320 KVA. In addition to levying penalty for exceeding the CMD, the respondents have charged a sum of Rs.9,92,466-91 ps., in terms of Clause (7) of B.P.Ms.No.671, dated 10.06.1987. The grievance of the petitioner is that though the respondents are entitled to levy double the charges in terms of Clause (7) on demand in excess of CMD, there is no basis for levy of double the charges on the energy, since there is no agreement in that context. The petitioner states that the respondents themselves treated demand and energy as separate and independent components, in the context of levying penalties, particularly when power cuts were imposed, and there is no basis for treating them as inter-dependant, when there is no separate contract, in respect of energy. They challenge the validity of the said clause, insofar as it enables the respondents to levy penal charges on the energy consumption. A counter affidavit is filed justifying the levy of penalty on excess energy also. The respondents contend that they are conferred with the statutory power to stipulate or alter the conditions of supply and that the amounts were charged in terms of clause (7) of B.P.Ms.No.671. Sri D.Nagarjuna Babu, learned counsel for the petitioner submits that it is only in respect of demand, that limits are stipulated and in case of the petitioner, it is fixed at 15000 KVA and that there is no stipulation as to consumption of energy. He also submits that there may be instances, where the penalty contemplated under clause (7) may be imposed, on consumption of energy, in case the limits of energy consumption are also prescribed. Learned counsel submits that the clause brings about a semblance of double penalty for one and the same use of consumption of power. He points out that the respondents are not put to any loss, and are paid for every unit of supply, that is availed by the petitioner, through proper and legal means. Sri O.Manohar Reddy, learned counsel for the respondents, on the other hand, submits that the clause was incorporated in exercise of the statutory powers by the erstwhile Board and that the same does not suffer from any illegality or infirmity. He contends that the demand, on the one hand, and energy, on the other, are two different concepts. Learned counsel submits that the clause is legal and proper and no exception can be taken to the levy of amount against the petitioner. This Court allowed the writ petition, though its judgment, dated 27.11.1998. Thereupon, the respondents filed W.A.No.2183 of 1998. It was allowed by a Division Bench of this Court on 14.10.2008, on the ground that the writ petition was allowed, even without expressing any view as regards the validity of clause (7), which was specifically challenged in the writ petition. Accordingly, the writ petition was directed to be heard afresh. The petitioner reeled under restrictions in terms of consumption of power, due to the power cuts imposed by the respondents, up to August 1988. It was only in September 1988, that the power cut was lifted. Obviously in its anxiety to make up the loss, for the previous months, due to power cuts, the petitioner went into production in a large scale, after the cuts were withdrawn. This in turn resulted in crossing the limits of CMD of 15000 KVA. In the Bill issued for the month September of 1988, it was mentioned that the maximum demand for the month of September was recorded at 16320 KVA. Therefore, the petitioner was liable to pay the amount for the excess demand of 1320 KVA. In fact, the petitioner does not make any grievance out of it. Clause (7) of B.P.Ms.No.61, dated 10.06.1987 reads as under: 7. Additional charges for Maximum Demand in excess of the Contracted Demand: If in any month the recorded maximum demand of the consumer exceeds his contracted demand by more than 5%, that portion of the demand in excess of the contracted demand and that portion of the proportionate energy will be billed as follows:- Demand, Energy and Fuel cost adjustment charges will be billed at twice the normal charges.” A reading of this clause discloses that whenever a consumer exceeds the contracted demand by more than 5%, the charges would be levied, at double the tariff. Such levy is not only on the excess of contracted demand but also on the energy. During the elaborate hearing of the writ petition, it has come to light that in the agreement between the petitioner and the respondents, only limits of maximum demand are mentioned and no restriction is placed as to the consumption of energy. These two operate in different fields. The maximum demand obligates the supplier of energy, to maintain the supply, at a specified intensity. It has nothing to do with the volume of energy that can be utilized by the consumer. Energy, on the other hand, represents the volume of electricity in terms of units, that is utilized by the consumer. By and large, the charges levied towards KVA is either standard or fixed. Energy charges, on the other hand, vary, depending upon the consumption. Clause (7) starts with the instances of the consumer exceeding the maximum demand. The first portion of the clause does not make any mention to the limits of energy. It is only in the concluding portion dealing with the levy of penal charges that the energy is also mentioned along with the demand. There is a clear incongruity or inconsistency in this regard. Obviously, realizing this, the Board had deleted the word ‘energy’ from the clause, through B.P.Ms.No.225, dated 16.10.1990. Though it may be true that the Board is conferred with the jurisdiction to stipulate the conditions of power supply, it is supposed to act reasonably and in accordance with law. It has already been pointed out that no limits as such were placed upon the petitioner in the context of consumption of energy. On the other hand, the limits were only on the maximum demand. In the name of penalizing the petitioner for crossing the limits of maximum demand, the respondents cannot derive the double benefit by levying the penal tariff on the energy also. Therefore, clause (7) insofar as it permitted levy of penal tariff on the energy, proportionate to the demand in excess of contracted limits is unreasonable, illegal and irrational. Hence, the writ petition is allowed and clause (7) of B.P.Ms.No.671, dated 10.06.1987, as it existed at the relevant point of time, insofar as it empowered the respondents to levy penal tariff on the energy proportionate to the demand in excess of the contracted limits, is set aside. The amount received from the petitioner towards the excessive energy charges shall either be refunded to the petitioner or adjusted in the future bills. There shall be no order as to costs. _________ 02.12.2008 Note: L.R.Copy to be marked. (B/o) JSU THE HON'BLE SRI JUSTICE L.NARASIMHA REDDY Writ Petition No.15149 of 1988 Date: 02.12.2008 JSU