IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE FIFTEENTH DAY OF APRIL TWO THOUSAND AND TEN PRESENT: THE HON'BLE SRI JUSTICE P.S. NARAYANA APPEAL SUIT No.928 of 1993 Between: M/s.Krishiwalli Khandasari Sugar Industry (P) Limited, Astham, Parvatipuram Taluk, Vizianagaram District with administrative Office at 64 Dhabo Street, Bombay rep. by the Director Sri Nooruddin Sefruddin Alli Bhoy and another ..... APPELLANTS AND The Andhra Pradesh State Electricity Board, rep. by its Superintending Engineer, Operation Srikakulam now at Visakhapatnam. ..... RESPONDENT JUDGMENT: This appeal is filed by the unsuccessful defendants being aggrieved by the decree and judgment in O.S.No.16 of 1986 on the file of the Subordinate Judge, Parvatipuram. The plaintiff in the said suit is the respondent. 2. The learned counsel representing for the appellants had pointed out that Ex.A-2 agreement is the continuation of Ex.A-1 agreement and the learned counsel also pointed out to the sub- clause at the end of Ex.A-2 agreement. The counsel also further pointed out to the findings recorded in relation to minimum guarantee charges and would maintain that in the light of the clauses in these agreement and in the light of the evidence available on record the findings recorded by the trial court being totally unsustainable and the same are liable to be set aside and the appeal to be allowed. 3. On the contrary the Sri O. Manohar Reddy, the learned counsel representing the respondent would maintain that in the light of the findings recorded by the trial court in detail it is not a fit matter to be interfered with. 4. Heard the learned counsel, perused the oral and documentary evidence available on record and also the findings recorded by the trial court as well. 5. The Andhra Pradesh State Electricity Board represented by the Superintending Engineer (Operation), Srikakularm now at Visakhapatnam filed O.S.No.16 of 1986 for recovery of Rs.73,600- 45 paise being the amount due towards consumption charges and subsequent surcharges. The trial court on appreciation of the evidence available on record recorded findings in detail and ultimately came to the conclusion that the plaintiff is entitled to the relief as prayed for in the suit and accordingly decreed the suit with costs. 6. In the light of the submissions made the following pints arises for consideration in this appeal: 1. Whether the findings recorded by the trial court while granting decree to be confirmed or to be set aside in the facts and circumstances of the case ? 2. If so, to what relief the parties would be entitled to ? 7. Point No.1:- The parties in this Appeal Suit hereinafter would be referred to as plaintiff and defendant as shown in O.S.No.16 of 1986. It was pleaded in the plaint that the plaintiff is a body-corporate constituted under Section 5 of the Electricity Supply Act, 1948 with its Head Office at Hyderabad and Superintending Engineer’s Office and Divisional Engineers Office at present at Visakhapatnam and at Bobbili respectively, among other places. The first defendant is a private limited company incorporated under the Indian Companies Act with its Head Office originally at Artham in Parvatipuram Taluk and the Administrative Officer at 64 Dhaboo Street, Bombay 400003. The 2nd defendant was the director and later became the Managing Director of the First defendant company and is responsible for the administration and management of the said company. He has been in possession and management of the assets and affairs of the company and is also liable to discharge the liabilities of the said company. 8. A factory to manufacture Khandasari Sugar with sugar cane was established at Artham originally by Sri Ram Nivas Agrawal who has subsequently transferred the same to the first defendant company which originally had its head office at Artham and the Administrative Office at Bombay. The above mentioned Khandasari Factory availed H.T. Supply Electrical Power from the plaintiff Board originally for a demand not exceeding 200 K.V.A. in the name of Sri Rama Nivas Agrawal, Proprietor M/s.Krishivalli Khandasari Sugar Industry, Artham under an agreement dated 12- 10-1974 executed in favour of the plaintiff board and after complying with the statutory requirement. Consequent on the transfer of the unit in favour of the first defendant company by the original owners, the transfer of service connection in favour of the first defendant company was requested under their joint application for transfer and change of name made by Sri.Ram Nivas Agrawal and the defendants. Accordingly, the defendants executed a fresh agreement and revised test reports dated 07-10- 1978 for a contracted maximum H.T. Load not exceeding 160 K.V.A. Among other things, the defendants agreed and undertook to comply with and not to dispute the terms and conditions of supply prescribed by the plaintiff Board from time to time. The maximum period of agreement was agreed to be five years from the date of the agreement comes into force. The defendants further agrees interalia, that the Board shall have the unilateral right to vary from time to time the tariffs a scale of general and miscellaneous charges and the terms and conditions of supply under the said agreement by special or general proceedings and that the Board shall have, in particular the right to enhance the rates chargeable for supply of electricity according to exigencies. The defendants further undertook that they shall pay minimum charges every month as prescribed in tariffs and the terms and conditions of supply, even if no electricity is consumed for any reason what so ever and also in the event of the charges where the electricity actually consumed are less than the minimum charges. The minimum charges shall also be payable even if electricity could not be consumed because of the disconnection of the service by the Board for payment of consumption charges or for any other valid reason. After transfer of service and charge of the name as afore mentioned the defendants availed the H.T. Supply from 07-10-1978 as per the terms and conditions of afore mentioned agreement. On account of default in payment of the consumption charges due for the month February 1981, the H.T. Supply of the above service of the defendants was disconnected on 10-04-1981. The defendants after protracted correspondence turned up to take reconnection of supply and requested for grant of instalment for the payment of the out standing arrears of Rs.30,194-06 paise and consumption deposit of Rs.18,644/- vide their letter dated 20-12-1982. The plaintiff in compliance of the request of the defendants granted three monthly installments under their proceedings dated 23-12-1982. The defendants got reconnection of the supply on 30-12-1982 payment of the first instalment. They have again committed default in payment of the 2nd instalment leading again to the disconnection of the supply on 31-01-1983. Thereafter, the defendants have not obtained the reconnection of the service and availed the supply till the date of the suit. They have only been stating admitting their liability to pay the arrears that they would avail the supply. Since the period of agreement as expired by 06-10-1983 the plaintiff served one month’s notice to the defendants in terms of clause 26-11- of the terms and conditions of supply notified by the Board putting them on notice of the Boards right to terminate the agreement and to recover from the amount due upto the date of termination in the event of their failure to avail supply within 30 days time allowed. Thereafter the defendants got a notice issued on 13-05-1985 through their advocates admitting their liability and stating that they have no objection to pay the amount due up to October, 1983, and requesting for the facility of payment in installments. The plaintiff in view of the previous conduct of the defendant did not agree to grant further installments. They limited their claim as desired by the defendants themselves upto October, 1983, and demanded minimum payment of a sum of Rs.44,816-21 paise together with surcharge thereon. The defendants by their letter dated 08-08-1985 admitted their liability to pay the said sum but contended that some substantial amount is in their C.D. amount with the plaintiff Board and therefore the same may be adjusted and the balance due may be informed. In fact there was no amount in their C.D. account by then. The plaintiff in their letter dated 18-08-1985 informed the defendants that the CD amount of Rs.18,634/- was adjusted long back and that if the defendants should pay immediately the sum of Rs.44,816-21 paise together with surcharge at 2% per month. As per the terms and conditions referred to above the defendants are liable to pay surcharge at 2% per month on delayed payments from the date of default till the date of payments. The defendants, in spite of repeated demands failed to make any payments, towards the total sum of Rs.73,600- 45 paise. 9. The second defendant filed written statement which was adopted by the first defendant wherein it was pleaded that while Sri Ramanivas Agrawal was the Proprietor of the first defendant company, the company was converted into a private limited company with the said Agrawal as the Managing Director besides his own brother as another Director. While so, in or about 1977 the 2nd defendant and four others purchased the total share of Ramnivas Agrawal and his brother and became the absolute owners of the first defendant. After the 2nd defendant obtained the control of the company for the due running of the factory, an application was made in the year 1978 for supply of power to a tune of 200 K.V. and later on, an application was made for supply of 160 K.V. This agreement was dated 07-10-1978. While the factory was being run, on 10-04-1981 there was disconnection and after complying with the necessary requirements, the connection of power supply was restored. It is true that the 2nd defendant got issued a registered notice dated 13-05-1985 to the plaintiff, but the undertaking to pay the amount in installments cannot be taken advantage of by the plaintiff and that the 2nd defendant admitted for payment, whatever demanded by the plaintiff. On the other hand, the admission to pay is only what is legitimately due to/the plaintiff from the defendants. It is obvious that the plaintiff claimed amounts even for the period whom the sugar factory was not actually running and also exhorbitant rates of surcharge appeared to have been included for which the plaintiff is not at all entitled. In fact, as mentioned in the plaint, there was disconnection of supply on 31-01-1983 and atleast from 31-01-1983 until the date of expiry of the agreement by 06-10-1988, during which period the defendants did not at all consume any power. The plaintiff, under law, is not entitled to claim anything by way of minimum guarantee charges. Even if the plaintiff is entitled to claim any amounts from the defendants, the plaintiff ought to have given credit to the amounts covered by compulsory deposit amount, voluntary loan account and electrical bond. The plaintiff got Rs.18,634/- under compulsory deposit which ought to have been adjusted in lump sum but appears to have been adjusted piecemeal which is not in conformity with the terms and conditions of the agreement. On account of such procedural irregularity, the plaintiff is liable to account for interest on the piecemeal amounts which have also to be given credit. Another amount of Rs.16,100/- is now with the plaintiff towards voluntary loan amount which ought to have been returned to the second defendant with interest up to date as it was not paid so far. Another amount of Rs.2,000/- which is in deposit in the plaintiff board towards Electrical Bond also is to be given credit to with interest. The plaintiff is, therefore, not at all entitled to the amount claimed in the plaint. The terms and conditions of the agreement dated 07-10-1978 are too onerous and illegal to be imposed and as such they are in executable besides being arbitrary and unconscionable. The agreement in question, therefore, cannot be the basis for any claim by the plaintiff and the plaintiff’s claim, therefore, on this ground is liable to be rejected. 10. The defendants filed additional written statement contending that the agreement dated 07-10-1978 is in continuation of the agreement dated 12-10-1974 entered into by Ramanivas Agrawal. It is not an independent contract as such. Therefore, as per the terms of the agreement dated 12-10-1974, the period of operation expires by 12-10-1979. Thereafter, it is only the actual consumption of power that alone has got to be charged and collected from the defendants and no minimum guarantee charges can be levied during the period from 12-10-1979 until 31-01-1983, the date of disconnection. The plaintiff has wrongly laid the claim on the assumption that 07-10- 1978 agreement is an independent agreement coming into operation for a fresh period of five years from that date. The plaintiff is, therefore, not at all entitled to the amount claimed in the suit and the calculations shown in the plaint are, therefore, untenable. 11. On the strength of these pleadings following issues and additional issues were settled: 1. Whether the plaintiff is entitled to charge or alter the rates of tariff unilaterally ? 2. Whether the statement of amounts alleged to be due is true ? 3. Whether the plaintiff is entitled to claim any amount by way of minimum guarantee charges even though no power was consumed ? 4. Whether the defendants are entitled to adjustment of Rs.18,634/- which is a compulsory deposit ? 5. Whether the voluntary loan account and the electrical bond amounts are liable for adjustment ? 6. Whether the terms and conditions of the agreement dated 07-10-1978 are too onerous and illegal to be imposed and as such inexecutable and unenforceable ? 7. Whether the plaintiff is entitled to the reliefs asked for ? Additional issues framed on 24-12-1991: Whether the agreement dated 07-10-1978 is in continuation of agreement dated 12-12-1974 ? 12. The learned Judge appreciated the evidence available on record and ultimately came to the conclusion that the liability of the consumer to pay minimum guarantee charges would continue till the termination of the contract and till the contract was not terminated as on date the defendants are liable to pay the minimum guarantee charges. The learned Judge also appreciated the conditions on Exs.A-1 and A-2 further in detail and recorded findings and ultimately decreed the suit. 13. This court had carefully gone through the reasons recorded by the trial court commenting from para Nos.10 to 13 and this court is thoroughly satisfied that the said findings recorded in detail had not warrant any interference whatsoever and accordingly, the said findings are hereby confirmed. 14. Point No.2:- In the result, the appeal being devoid of merits and the same shall stand dismissed. But, however, in the facts and circumstances let the parties bear their own costs. ___________________ P.S. NARAYANA, J April 15, 2010. Pn THE HON'BLE SRI JUSTICE P.S. NARAYANA APPEAL SUIT No.928 of 1993 April 15, 2010