IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.BALAKRISHNAN NAIR FRIDAY, THE 3RD OCTOBER 2008 / 11TH ASWINA 1930 WP(C).No. 5485 of 2004(C) ------------------------- PETITIONER(S): --------------- A.P.STEEL RE-ROLLING MILL LIMITED, VIII/635, PHASE I, NEW INDUTRIAL DEVELOPMENT AREA MENONPARA ROAD, KANJIKODE P.O., PALAKKAD 678 621, REPRESENTED BY ITS MANAGING DIRECTOR, K.PANKAJAKSHAN. BY ADV. SRI.N.JAMES KOSHY RESPONDENT(S): --------------- 1. KERALA STATE ELECTRICIAL BOARD, REPRESENTED BY ITS SECRETARY, VYDYUTHI BHAVANAM, PATTOM PALACE, THIRUVANANTHAPURAM 2. THE SPECIAL OFFICER (REVENUE), K.S.E.B., VYDYUTHI BHAVANAM, PATTOM PALACE, THIRUVANANTHAPURAM 3. THE ASSISTANT EXECUTIVE ENGINEER, K.S.E.B., ELECTRICAL MAJOR SECTION, KANJIKODE. ADV. SRI.P.SANTHALINGAM, SC, KSEB SRI.C.K.KARUNAKARAN, SC FOR KSEB THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC 5485/2004 APPENDIX PETITIONER'S EXTS. EXT.P1 - A TRUE PHOTO COPY OF THE INVOICE DATED 6.1.2004. EXT.P2 - A TRUE PHOTO COPY OF THE REPRESENTATION DATED 14.1.2004 WITH PAYMENT DETAILS. EXT.P3 - A TRUE PHOTO COPY OF THE COMMUNICATION DATED 20.1.2004. EXT.P4 - A TRUE PHOTO COPY OF THE COMMUNICATION DATED 4.2.2004. EXT.P5 - A TRUE PHOTO COPY OF THE CIRCULAR DATED 13.11.2002. EXT.P6 - TRUE PHOTO COPY OF THE CASH MANAGEMENT CHEQUES DEPOSIT SLIPS WITH ENDORSEMENT OF HDFC BANK EXT.P7 - A TRUE PHOTO COPY OF THE CERTIFICATE ISSUED FROM THE FEDERAL BANK LTD. EXT.P8 - A TRUE PHOTO COPY OF THE BOARD ORDER DATED 5.6.2003. /TRUE COPY/ K.BALAKRISHNAN NAIR, J. ----------------------------------------- W.P.(C) NO. 5485 OF 2004-C ----------------------------------------- JUDGMENT The petitioner is a consumer of electricity. It is a company registered under the Indian Companies Act. The petitioner is aggrieved by the interest demanded under Ext.P1 invoice dated 6.1.2004, allegedly on the ground of delay in making the payments. The petitioner points out that it has paid all the bills promptly. As per Ext.P5, the K.S.E.B permitted its consumers to remit the current charges at the branches of the H.D.F.C. Bank in Kerala before the due dates fixed in the invoices. For the said purpose, the K.S.E.B opened non-operative collection accounts in the name of Special Officer (Revenue), Kerala State Electricity Board, in the branches of the H.D.F.C. Bank. The said facility was given to the High Tension/Extra High Tension consumers. The petitioner was a High Tension consumer. It submits, it has made payments by issuing cheques drawn on the Federal Bank, Palakkad branch. The cheques were honoured and amounts were drawn from the petitioner's account before the due dates. WPC 5485/04 2 That means, the amount reached the account of the K.S.E.B in the H.D.F.C. Bank's branch before the due date. Therefore, in fact, there was no delay in paying the amount due to the Electricity Board. So, the petitioner filed Ext.P2 representation, which was supported by Ext.P2(2) statement showing the due date, the date of the cheque and the date of clearance from its account. The petitioner submits, the said representation has not, so far, been disposed of by the K.S.E.B. For a day's delay, one month's interest is claimed, relying on Ext.P8 amendment to the regulations framed by the Board. The demand of one month's interest for the delay of one or two days in making the payment is highly arbitrary and unjust, it is submitted. So, the petitioner prays for declaring that Ext.P8 amendment, to the extent to provides that part of a month will be treated as one month for the purpose of calculating interest, is ultra vires and therefore, not enforcible. 2. The K.S.E.B was directed by this Court on 16.2.2004 to file a counter affidavit/statement before 16.3.2004. The case was posted on 2.4.2004, 7.4.2004, 2.6.2006, 30.5.2008, 20.6.2008, 27.6.2008, WPC 5485/04 3 19.9.2008 and 26.9.2008. Even after the lapse of more than four years, the K.S.E .Board has chosen not to file any counter affidavit or statement. But, the learned counsel for the Board submitted that the amount paid by the petitioner should reach its account on or before the due date fixed. Then only it shall be treated that the payment is actually made. If that be so, there is delay in paying the amount. So, on the strength of Ext.P8, the Board has levied interest correctly, it is submitted. 3. When the amount was collected from the petitioner's bank account by the Electricity Board's banker and the same reached its account in the Palakkad branch of the H.D.F.C. Bank, it should be treated that the amount has been paid by the petitioner. If the Board's banker caused delay in posting the amount in its account, the petitioner is not responsible. Going by Ext.P2(2) and Ext.P7 statement given by the petitioner's banker, it would appear that there is no delay in effecting the payment. So, the K.S.E. Board is directed to consider Ext.P2 representation with notice to the petitioner and affording it an opportunity of being heard. This, the Electricity Board shall do within WPC 5485/04 4 two months from the date of receipt of a copy of this judgment. 4. The next point to be considered is the validity of Ext.P8, to the extent it permits collection of interest for one month, even if the delay is for a few days. The learned counsel for the petitioner pointed out that before the issuance of Ext.P8, the provision contained in the then prevailing Conditions of Supply of Electrical Energy by the K.S.E. Board provided that interest can be levied only for the actual period for which it was delayed. Regulation 32(e) of the Conditions of Supply Electrical Energy, as it stood before the introduction of Ext.P8 amendment, reads as follows: “If dues are not paid on or before the due date, interest will be levied at 24% per annum. The total interest till the date of remittance shall be rounded to the next higher rupee. Exact number of days delayed shall be reckoned as the number of days as such for the purpose of calculation of interest.” As per Ext.P8 amendment, the above quoted regulation was modified. For convenient reference, the amended regulation is quoted below: “If the dues are not paid on or before the due date, interest will be levied at 24% per annum. The total interest till the date of remittance shall be rounded to the next higher rupee. Part of a month will be treated as one month for the purpose of calculating interest.”(Emphasis supplied) WPC 5485/04 5 5. The petitioner points out that as per the Kerala Electricity Supply Code, 2005, which was enforced on 23.3.2005, penal interest can be levied only for the actual number of days of delay. The relevant regulation is Regulation 23, which reads as follows: “23. Interest charges for belated payment:--In case of belated payments penal interest at twice the bank rate based on actual number of days of delay from due date may be charged by the Licensee.” The K.S.E. Board has framed the Kerala State Electricity Board Terms and Conditions of Supply, 2005. There also, provision is only for collecting interest for the actual days delayed. Regulation 36(5) of the said Terms and Conditions of Supply reads as follows: “36. Payment of Electricity bill:--(1) ...................... (5) In case of belated payments interest at twice bank rate based on actual number of days of delay from due date shall be charged.” So, the petitioner points out that the unjust Regulation 32(e), as amended by Ext.P8, remained in force only for about two years. Charging of an unconscionable amount as interest for a few days' delay is highly arbitrary and discriminatory and the legislature cannot be intended to have conferred power to frame arbitrary legislations, it is WPC 5485/04 6 pointed out. 6. The grounds on which a subordinate legislation can be challenged have been succinctly stated by a Division Bench of this Court in Pankajaksy v. George Mathew [1987(2) KLT 723]. The relevant portion of the said judgment reads as follows: “12. Thus, the rule made under a statute by an authority delegated for the purpose can be challenged on the ground (1) that it is ultra vires of the Act; (2) it is opposed to the Fundamental rights; (3) it is opposed to other plenary laws. The ascertain whether a rule is ultra vires of the Act, the Court can go into the question (a) whether it contravenes expressly or impliedly any of the provisions of the statute; (b) whether it achieves the intent and object of the Act; and (c) whether it is 'unreasonable' to be manifestly arbitrary, unjust or partial implying thereby want of authority to make such rules.” If a subordinate legislation is arbitrary, oppressive or unjust, the courts will say, the legislature cannot be intended to have conferred power to frame such arbitrary regulations and therefore, it is ultra vires and unauthorised. I think, the said principle is applicable in this case. For a day's delay, a month's interest is demanded and that too, at the penal rate of 24% per annum. It is true, to prevent default and encourage prompt payment, some penal provision may be necessary. But, the WPC 5485/04 7 levy of interest for one month for a day's delay, is grossly arbitrary and unjust. It is so declared. So, the condition in Ext.P8 that for a few days' delay, a month's interest can be recovered, is ultra vires and unauthorised by the provisions of the Electricity Supply Act. The legislature cannot be intended to have conferred power to frame such arbitrary Regulations. So, the impugned provision is void ab initio. It shall not be enforced by the Electricity Board. Therefore, while reconsidering the matter as directed above, if it is found that there is some delay in making the payments, interest at 24% per annum shall be levied only for the days delayed and not for one month, as provided in Ext.P8. 7. The learned counsel for the petitioner submitted that the petitioner has already paid the amount as per the demand. So, it is ordered that the amount, if any, found due on consideration of Ext.P2, shall be adjusted towards the existing or future dues of the writ WPC 5485/04 8 petitioner. The Writ Petition is allowed as above. 3rd October, 2008. K.BALAKRISHNAN NAIR, JUDGE. Nm/