Letters Patent Appeal No.891 OF 2000 (Against the Judgment and Order dated 1st March, 2000 passed in C.W.J.C. No. 3702 of 1998) M/S SONE VANASPATI LTD. --------------(Appellant) Versus BIHAR STATE ELECTRICITY BOARD---(Respondents) ----- For the Appellant : Mr. Yaduvansh Giri, Sr.Adv., Mr. Gajendra Pratap Singh. For the Respondent : Mr. Vinay Kirti Singh. ---- P R E S E N T THE HON'BLE MR. JUSTICE BARIN GHOSH THE HON'BLE MR. JUSTICE C. M. PRASAD Barin Ghosh & C.M. Prasad, J.J. Inasmuch substantial questions have been raised in the instant appeal and inasmuch as the application for condonation of delay is not being seriously opposed, we condone a few days’ delay in preferring the appeal and accordingly, allow the application for condoning the delay in preferring the appeal. At the relevant time supply of electrical energy by the respondent Bihar State Electricity Board to the appellant was governed by the Electricity (Supply) Act, 1948. By Section 49 thereof, the Board was directed to frame uniform tariff upon such terms and conditions as the 2 Board may think fit and proper. The said Section indicated what factors should be taken note of by the Board for fixing such uniform tariff. On 26th March, 1993, an agreement was made in between the Board and the appellant whereby and under the Board agreed to supply contract demand of 1200 KVA to the appellant and in consideration thereof, the appellant agreed to pay charges leviable for effecting supply of 33 KVA under High-tension Supply-II. In terms of the provisions contained in Section 49 of the Act, on 21st June, 1993 the Board made uniform tariff and by Clause 3(b) thereof provided that where the terms and conditions of the agreement entered between the Board and its consumers are at variance with the terms and conditions contained in the notification notifying the said uniform tariff published on 23rd June, 1993, the latter shall prevail and such agreement will be deemed to have amended accordingly. Clause 16.4 of the said tariff specifically provided that the transformer capacity of HT and EHT consumers shall not be more than 150% of the contract 3 demand and if any consumer is found violating the said provision, his service connection will be disconnected. By reason of introduction of the said tariff, it became obligatory on the part of the appellant to have the supply continued provided the transformer installed by him was of 1800 KVA, for his agreed contract demand was 1200 KVA. The fact remains that the appellant had then a transformer of 2000 KVA. The appellant admittedly did not replace his 2000 KV transformer by a 1800 KVA transformer. The supply to the appellant was also not disrupted, for he retained a transformer of a capacity in excess 150% of his contract demand. Be that as it may, on 27th September, 1993 the appellant applied to the Board for reduction of his contract demand from 1200 KVA to 500 KVA. The reasons for making such request had been furnished in the said letter, when it was also indicated that as and when demand of the appellant would increase, it will again intimate the Board for enhancement of load as required from time to time. This request was not required to be considered by the 4 Board in view of Clause-8 of the agreement dated 26th March, 1993. In Clause-8 of the said agreement, it was mentioned that the agreement shall be ordinarily in force for a period of not less than three years in the first instance, except in exceptional cases in which written consent of the Board will be taken, from the date of commencement of supply, i.e. 10th April, 1993, and thereafter shall continue from year to year until the agreement is determined. However, the fact remains that on 17th January, 1994, the Board in its resolution no. 6681/93-94 agreed to prematurely reduce the contract demand of the appellant from 1200 KVA to 500 KVA subject to the following conditions :- (i) “11 KVA tariff of B.S.E.B., revised from time to time shall be applicable to the consumer for the load of 500 KVA. (ii) The existing 33/0.4 KVA, 2000 KVA transformer will be allowed for the purpose of availing power supply at 33 KV. But since the maximum permissible limit of transformer is 150% of the contract demand as per the Board and the Tariff, hence the appellant has to give a 5 written undertaking to pay a surcharge for higher installed capacity of transformer if the Board so decides, at a later date. (iii) The reduction of contract demand from 1200 KVA at 33KV tariff of the Board to 500 KVA at 11 KV tariff of the Board shall be effective from the date of the consumer executing a fresh agreement for 500 KVA after observing necessary formalities, including liquidation of all the outstanding dues as per the old agreement”. On 17th January, 1994, the Board, therefore, agreed to reduce the contract demand from 1200 KVA to 500 KVA and to charge for supply at 11 KVA tariff. At the same time, being alive of the fact that in view of the tariff then in force, the appellant could not continue to use 2000 KVA transformer for obtaining a contract demand of 500 KVA, the capacity of the transformer being more than 150% of the contract demand, agreed to permit the appellant to retain the 2000 KVA transformer upon a written undertaking by the appellant to pay a surcharge for higher installed capacity of transformer, if the Board so decides at a later date. 6 On 31st January, 1994, the appellant gave in writing an undertaking that it will pay any surcharge as fixed by the Board at a later date for keeping higher capacity of transformer, i.e. 2000 KVA. Subsequent thereto, on 31st January, 1994, a new agreement was made between the parties. The said agreement specifically mentioned in Clause 11 thereof that the said agreement is subject to, amongst others, the tariffs and terms and conditions for supply of electricity framed and issued by the Board from time to time, but lastly refers to reduction of contract demand from 1200 KVA to 500 KVA and the resolution of the Board bearing no. 6681/93-94 and the letter of the Board dated 17th January, 1994 for communicating the terms noted above to the appellant. The logical conclusion of the above facts would be that the agreement dated 26th March, 1993 was put to an end before expiry of the period of three years from the date thereof, proceeding on the basis that an exceptional case has been made out by the appellant and to that, a written consent was given by the Board. The next agreement which was made after the aforementioned tariff 7 was brought into force took care of continuation of installation of a higher capacity transformer by the appellant, which was beyond the maximum permissible limit, as mentioned in the tariff. There is no dispute that on the basis of the agreement dated 31st January, 1994 supply of electricity was effected. Price for supply was charged on the basis of 11 KVA tariff, i.e. high-tension tariff-I, as was mentioned in the said letter dated 17th January, 1994 and repeated in the Schedule to the said agreement. Two years later, by a letter dated 18th April, 1996 the Board asked the appellant to replace its transformer by a transformer within the permissible limit as prescribed in the said uniform tariff according to the contract demand of the appellant by 31st May, 1996. In the said letter, it was mentioned that if the transformer is not replaced by 31st May, 1996, bills would be raised as per 33 KVA with effect from 1st June, 1996. It was further stated in the said letter that in terms of the aforementioned decision of the Board, as communicated by the letter dated 17th January, 1994, the Board has decided to levy surcharge equal to the difference of demand charges, 8 as applicable to 33 KVA and 11 KVA tariff from the date of reduction of load. In other words, the Board made it clear by the said letter dated 18th April, 1996 that from the date of reduction of the load, charges applicable to 33 KVA supply would be charged up to 31st May, 1996 less charges demanded on 11 KVA tariff until that date, which would be the surcharge in terms of the letter of the Board dated 17th January, 1994 and if the transformer is not replaced by 31st May, 1996, the Board would charge at 33 KVA tariff from 1st June, 1994. By a letter dated 30th April, 1996, the appellant disputed the contentions of the Board as contained in its letter dated 8th April, 1996 and held out that the stand taken therein is in the breach of the contract between the parties and that the demands raised therein are unilateral. There is no dispute that the appellant did not replace the transformer by a transformer having capacity within 150% of its contract demand of 500 KVA. As a result, on the basis of the letter dated 18th April, 1996 bills were raised. While representations were made to Officers of the Board as regards such demands, a writ petition was 9 filed challenging the action of the Board on the basis on the said letter dated 18th April, 1996. In view of pendency of the representations, the Court did not pass any positive order on the said writ petition and left the matter to be decided by the Board, but in the meantime, prevented eminent disconnection of supply of electricity by the Board until such decision is taken. In relation to the demands made on the basis of the letter dated 18th April, 1996, the appellant asked for installments and paid a few of them. The said representations, however, were ultimately decided by rejecting the same. The Board held out that the contract inter se the parties authorized the Board to levy surcharge and accordingly, the Board was entitle to levy surcharge and it having had levied such surcharge, the appellant is stopped by contract from contending otherwise. The said decision was buttressed by holding out that the appellant, being aware of its contractual obligation, applied for installments to discharge its liabilities flowing therefrom and even paid some of them. The said decision of the Board resulted in 10 filing of a writ petition which having been dismissed by the Judgment and Order under appeal, the appellants are before us. The learned Judge, who dealt with the writ petition, in no uncertain terms held that it was a bilateral agreement between the parties and accordingly, the parties were bound thereby. The learned Judge held that inasmuch as in terms of the agreement, the Board was entitle to levy surcharge for allowing the appellant to retain 2000 KVA transformer, the appellant is estopped from contending that the Board was not entitle to levy the same. We feel that while however holding correctly that the parties were bound by the contract made by them, the learned Judge did not make an effort to ascertain what the contract was. The principal terms of the contract as set out above, which are not in dispute, if authorized the Board to go back to the agreement dated 26th March, 1993, which was scuttled in view of the written consent of the Board contained in the letter dated 17th January, 1994 and its follow up actions, referred above, including the undertaking and the agreement dated 31st January, 1994, what the learned Judge has held cannot be interfered with. 11 Though Section 49 of the Act required framing by Board of uniform tariff upon consideration of factors prescribed therein, Sub section (3) thereof specifically authorized the Board to fix different tariffs for supply of electricity to any person having regard to, amongst others, the nature of supply and purpose for which supply is required and any other relevant factors. In the instant case, the tariff in question came into force on 21st June, 1993, which mandated the consumer to install a transformer not exceeding 150% of his contract demand, with a further mandate that in the event the transformer installed by the consumer is more than that limit, supply to the consumer shall be immediately stopped. The Board on 17th January, 1994 expressly agreed to permit the appellant to retain its 2000 KVA transformer while agreeing to supply electricity of a contract demand of 500 KVA, subject to the undertaking by the appellant to pay a surcharge for higher installed capacity of transformer, if the Board so decides at a later date, and thereby expressly and consciously exercised power under Sub Section 3 of Section 49 of the Act. The said decision was accepted by 12 the appellant. The decision and follow up actions made it amply clear that the charges would be paid by the appellant at 11 KVA tariff, as depicted in HTS-I. The contract authorized the Board to levy a surcharge for higher installed capacity of transformer. In the instant case, it is the contention of the Board that it had only levied a surcharge for installing a higher capacity transformer, and that is, charging the appellant for supply of 500 KVA contract demand at 33 KVA tariff at HTS-II less the tariff already charged at 11 KVA tariff, as provided in HTS-I, from the date of reduction of the contract demand from 1200 KVA to 500 KVA until 31st May, 1996 and to charge as per 33 KVA tariff with effect from 1st June, 1996 in the event, the transformer is not replaced by the appellant. Such demand may or may not be reasonable, but the question in the instance case is not whether the demand was or is at all reasonable. The question is whether in the name of charging surcharge, the Board could put the clock back and thereby seek to enforce the agreement dated 26th March, 1993, which was even a go by by the consent of the Board 13 given in writing on 7th January, 1994 and followed up by actions which resulted in making of the agreement dated 31st January, 1994. A reading of the contract between the parties, as depicted in the Board’s decision communicated on 17th January, 1994 would only indicate that the Board was contemplating of charging a surcharge for permitting the appellant to keep installed a transformer of higher capacity, but the Board by the said resolution did not reserve to it the liberty to charge the appellant on the basis of 33 KVA tariff, which was applicable in terms of the earlier agreement. Further more, the letter dated 18th April, 1996 made it absolutely clear that despite the said decision dated 17th January, 1994 and the agreement dated 31st January, 1994 the Board would continue to charge the appellant at 33 KVA tariff for the appellant had not replaced the 2000 KVA transformer by a transformer within 150% of its the then contract demand of 500 KVA. The said contention is expressly contrary to the decision dated 17th January, 1994, as reflected in the agreement dated 31st January, 1994. It may be possible that the Board was made 14 to believe that the appellant would increase its demand at a later point of the time, when the appellant had asked for reduction of its contract demand and in expectation thereof, the Board had permitted the appellant to retain the 2000 KVA transformer. But the same having not been expressed in the contract, as noted by the learned Single Judge, Section 91 of the Evidence Act would come into play and prevent the Board to superimpose the said understanding in the agreement between the parties. Similarly, it may be possible that the 2000 KVA transformer was burnt and the same was replaced by a 1500 KVA transformer, but the fact remains that in terms of the agreement between the parties upon payment of a surcharge for higher installed capacity transformer, the appellant was authorized by the Board to retain a transformer up to the capacity of 2000 KVA. Then again it may be possible that the appellant, though was not entitle to draw electricity beyond the maximum demand of 500 KVA, it drew in excess thereof, but if so, it was well within the competence of the Board to take such penal action as the Board could take against the appellant for having had exceeded the contract demand. Those instances 15 could not be taken note of for the purpose of construing the agreement inter se the parties. The agreement to obtain supply of a maximum demand of 1200 KVA stood reduced to 500 KVA by a subsequent agreement. Being aware of the fact that in order to obtain such reduced supply of electricity, the appellant was not entitle to retain a transformer as big as 2000 KVA, the appellant was permitted to retain the same upon the appellant agreeing to pay surcharge for keeping installed a higher capacity transformer. Later agreement provided that the charges for supply of electricity shall be paid at 11 KVA tariff and not at 33 KVA tariff. By exercising the power to fix surcharge for higher installed capacity transformer, the Board could not scuttled the agreement flowing from its decision bearing no. 6681/93-94, as communicated by its letter dated 17th January, 1994 and the follow up action thereon, which resulted in the agreement dated 31st January, 1994 and to go back to the agreement dated 26th March, 1993, which had been expressly avoided by the parties. In the result, the appeal succeeds. The Judgment and Order under the appeal is set aside and the 16 writ petition is allowed by quashing all demands raised proceeding on the basis of the letter of the Board dated 18th April, 1996. This Judgment and Order would not prevent the Board to fix surcharge for higher installed capacity of transformer as and when it so decides. Patna High Court, 4th August, 2008, S.B.P./N.A.F.R. (Barin Ghosh, J.) (C.M. Prasad, J.)