THE HON’BLE SRI JUSTICE C.V.RAMULU W.P.Nos.4200/2000, 19175/2001, 25519/2001 & 2710 of 2002 COMMON ORDER: W.P.No.4200 of 2000 This writ petition is filed seeking a Mandamus declaring the action of the respondents in levying five times penalty on the maximum demand of 7.07 KVA and on the notional energy of 3121 units in the bill for the month of February 2000 as arbitrary, illegal, unjust and also to set aside clause XIV of Memorandum No.SE (Comml.) A1/Temp. deration/22/87-965 dated 20.9.1993 of the first respondent as arbitrary and illegal. It appears, petitioner is a limited company engaged in the manufacture of M.S. Ingots (Steel). Petitioner is a H.T (High Tension) Consumer with a CMD (Contracted Maximum Demand) of 1490 KVA which has been temporarily de-rated in the month of February 2000 to 870 KVA (Kilo Volt Ampers). The petitioner company being a H.T. consumer is subjected to two types of tariff system, namely, Maximum Demand Charges and the Energy Charges. While that being so, the first respondent vide B.P.Ms.No.62 (Commercial and Operation) dated 28.12.1998 revised the tariff structure in supercession of its earlier B.P.Ms.No.32 (Operation and Commercial) dated 29.7.1976. In the said tariff notification, petitioner unit falls under H.T. Category-I, part-A. As per the said method of billing of energy, telescopic method has to be adopted. As per the said method, the respondents have to collect maximum demand charges at Rs.165/- per KVA. If for any reason, the consumer exceeds the maximum demand, the respondents have to bill the maximum demand at Rs.165/- per KVA upto the contracted maximum demand level in respect of the excess maximum demand at the rate of Rs.330/- per KVA i.e. double the normal rate. Clause 7 of the tariff notification provides for the said billing of the maximum demand. While that being so, the third respondent has issued bill for the month of February 2000 dated 26.2.2000 for the period from 21.1.2000 to 21.2.2000. In the said period, the petitioner has exceeded maximum demand on account of disturbance in the supply system of the respondent Corporation. The recorded maximum demand for the month of February 2000 is shown as 877.07 KVA as against the CMD of 870 KVA. Though the respondent has to levy the maximum demand charges over and above the 870 KVA at double the normal rate of Rs.165/- per KVA i.e. at Rs.330/- per KVA, an amount of Rs.5,832/- has been charged on the excess maximum demand of 7.07 KVA. The said levy has been made at five times the normal rate. Apart from that, a further sum of Rs.58,228-50 ps. has been levied as penalty by computing the notional energy of 3121 units for exceeding the contracted maximum demand. It is stated that petitioner recorded energy of 6,25,076 units for the month of January 2000. The respondents have billed the petitioner for the said consumption. Apart from that, a further energy of 3121 units has been taken on notional basis and on the said notional consumption, penalty at five times the normal rate of 3.65 ps. per unit i.e. Rs.18.25 ps. per unit has been levied. After receiving the bill, petitioner enquired about the levy of penalty of Rs.64,060.50 ps. (Rs.5,832 on maximum demand and Rs.58,228.50 on the notional energy). Petitioner was informed by third respondent that the bill has been issued levying five times penalty on the excess maximum demand of 7.07 KVA and also on 3121 units of energy which has been taken on notional basis, though there is no consumption of the same, since the petitioner exceeded the maximum demand of 7.07 KVA. Hence this writ petition. A detailed counter affidavit has been filed by the respondents denying the allegations made by the petitioner and stating that as per the penal clause, penal rates of five times the normal rate are to be charged for the exceeded demand and proportionate energy i.e. energy corresponding to exceeded demand. The recorded maximum is 1416 KVA and the corresponding energy recorded is 625076 units out of the same, petitioner received a demand of 538.93 KVA and energy of 301111 units from R.C.L. The balance of 877.07 KVA and 323965 units are billed by A.P. Transco. The excess of 7.07 KVA is billed as under: 7.07 x 165 x 5 = 5832.75. The corresponding energy units are calculated as follows: 625076 x 7.07 ----------------- = 3121 units. 1416 These 3121 units are billed as 3121 x 373 x ps.14 x 5 --------------------------- = Rs.58,228.50 ps. 100 Thus, the billed exceeded demand and energy charges are in accordance with the terms and conditions in the Memo No.CE (Comml)/I/22/87-965 dated 20.9.1993. Therefore, it cannot be said that the respondents have collected anything over and above the agreed penalty on maximum contracted demand and the proportionate energy. Therefore, the Board imposed such penalty to prevent disturbances in the system and the petitioner accepted to such penalties in writing through his letter dated 19.11.1999. The energy is not notional as contended by the petitioner. Had the consumer restricted his demand to 870 KVA, instead of 877.07 KVA, the energy consumption would have been less by 3121 units. Since the petitioner exceeded 7.07 KVA, 3121 units have been consumed. The exceeded energy corresponding to exceeded demand was calculated and arrived scientifically but not notionally as contended by the petitioner. Further, there is no contravention of provisions of B.P.Ms.No.62 (Opn. Comml.) dated 28.12.1998 and it is also not contrary to clause 7 of the said B.P.Ms. The writ petition is devoid of merits and liable to be dismissed. Heard both sides. At the outset, the learned counsel for petitioner has placed before the Court an order passed by this Court in W.P.No.15149 of 1998, whereunder the very clause 7 of B.P.Ms.No.671 dated 10.6.1987 was struck down by this Court. It is necessary to notice the findings recorded in the said writ petition, which reads as under: “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, upto 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 of September 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.671 dated 10.6.1987 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 of 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 10.6.1987, 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 excess energy charges shall either be refunded to the petitioner or adjusted in the future bills.” In view of the above, I am of the opinion that the present clause 7 in B.P.Ms.No.62 dated 28.12.1998 is in para materia with clause 7 of B.P.Ms.No.671 dated 10.6.1987, which was struck down by this Court in the above writ petition. Under those circumstances, this writ petition is also liable to be allowed in terms thereof. In the guise of some contract entered between the parties, the respondents cannot take advantage of the same and it is not permissible under law to calculate penalty on the basis of notional energy consumed which is said to be proportionate to that of the excess contracted maximum demand. For the foregoing reasons, the writ petition is allowed and clause (7) of B.P.Ms.No.62 dated 28.12.1998, 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 excess energy charges shall either be refunded to the petitioner or adjusted in the future bills. There shall be no order as to costs. W.P.Nos.19175/2001, 25519/2001 & 2710 of 2002 For the principle decided in the above writ petition, all these writ petitions are also liable to be allowed and accordingly allowed. No order as to costs. ______________ C.V.RAMULU, J Date: 25.1.2010 DA THE HON’BLE SRI JUSTICE C.V.RAMULU W.P.Nos.4200/2000, 19175/2001, 25519/2001 & 2710 of 2002 25.1.2010 IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH AT HYDERABAD THE HON’BLE SRI JUSTICE C.V.RAMULU W.P.Nos.4200/2000, 19175/2001, 25519/2001 & 2710 of 2002 Date: 25th January, 2010 W.P.No.4200 of 2000 Between: M/s Sheethal Shipping and Metal Processors Ltd., .. Petitioner And Transmission Corporation of A.P. Ltd., rep. by its Managing Director, Vidyut Soudha, Hyderabad & others. .. Respondents W.P.Nos.19175, 25519 of 2001 & W.P.No.2710 of 2002 Between: M/s SDV Steels Ltd., rep. by its Executive Director B.Umamaheshwar Rao ..Petitioner And The Southern Power Distribution Company of A.P. Ltd., rep. by its Managing Director, Tirupati & others. .. Respondents