THE HON’BLE Dr. JUSTICE G.YETHIRAJULU W.P.No.22915 of 1999 ORDER: This writ petition has been ﬁled by the petitioner against the respondents praying to declare that the action of the respondents in levying ﬁve times penalty on the maximum demand of 7.13 KVA and on the notional energy of 2612 units in the bill for the month of August, 1999 as highly illegal, arbitrary, unjust and void and to set aside clause XIV of the memorandum dated 20th September, 1993 of the first respondent as illegal and arbitrary. 2. The petitioner is an industry engaged in manufacturing of ingots. The petitioner is a H.T. consumer under an agreement with the ﬁrst respondent corporation for the supply of power with the contracted maximum demand of 2300 KVA. The petitioner was using power supply with maximum demand of 3400 KVA, which has been temporarily de-rated in the month of June, 1999 to 2300 KVA. The petitioner, being a High Tension consumer, is subjected to two parts of tariﬀ system, namely, Maximum Demand Charges and the Energy Charges. 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 dated 29-07- 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 up to 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. The third respondent issued a bill for the month of August, 1999, dated 26-08-1999 for the period from 21-07-1999 to 21-08-1999. In the said period the petitioner has exceeded maximum demand on account of disturbance in the supply system of the respondent corporation. In the recorded maximum demand in the month of August, 1999, it is shown as 2307.13 KVA as against CMD of 2300 KVA. As a measure of punishment for exceeding maximum demand, the respondents are justiﬁed in levying the penalty at double the normal rate. It is highly arbitrary on the part of the respondents to levy maximum demand charges at ﬁve times the normal rate i.e., at Rs.825/- per KVA, which is contrary to clause (7) of B.P.M.S. No.62 (Commercial & Operation) dated 28-12-1998. The petitioner submitted a representation on 03-09-1999 and on subsequent dates requesting the respondents to delete ﬁve times penalty levied in the bill for August, 1999, but the respondents have not taken any decision in the matter. The bill for the month of August, 1999 was for Rs.36,41,718/-. Out of the said amount, the disputed penalty comes to Rs.53,551/-. The undisputed amount of Rs.35,90,520/- was already paid by the petitioner. There is no rationality in collecting ﬁve times penalty on the excess maximum demand, therefore the present writ petition requesting the Court to grant the reliefs as mentioned above. 3. The respondents did not ﬁle any counter to oppose the application. The learned counsel for the respondents contended that ﬁve times penalty is leviable against the petitioner as per the tariﬀ orders and there is no illegality committed by the respondents, therefore they requested to dismiss the writ petition as devoid of merits. 4. The learned counsel for the petitioner submitted that under clause (7) of B.P.M.S. No.62 (Operation & Commercial) dated 28-12-1998 the corporation is entitled to bill twice the normal charges when the consumer exceeds the maximum contracted demand, but the respondents have resorted to impose ﬁve times penalty, which is contrary to the tariﬀ order. Levying such huge amount as a penalty is illegal and arbitrary, therefore it is liable to be set aside. The learned counsel for the petitioner further submitted that when similar levies have been made by the respondents in respect of other consumers, those consumers approached this Court through W.P. Nos.12162 of 1999 and 19675 of 1999. This Court disposed of those writ petitions directing the ﬁrst respondent to look into the matter and take appropriate decision and this Court also granted stay of the penalty, which is under dispute. 5. The learned counsel for the petitioner also submitted that in SRI VISHNU CEMENTS LTD., SEETHAPURAM, NALGONDA DIST. v. A.P.S.E.B., HYD [1], this Court, while considering Section 49 of the Electricity (Supply) Act, 1948, held as follows: “Merely because there is a general clause in the form of H.T. agreement that there is an obligation on the part of the consumer to pay all the charges levied by the Board, it does not mean that the Board can levy and collect penalty without any basis whatsoever. Further, it is not shown that any loss has accrued to the Board by the consumption of so much energy by the petitioner. In the absence of any breach of contract and in the absence of any loss or damage caused to the Board thereby, the question of levying any penalty does not arise. Even in the case of breach of contract, Section 74 of the Indian Contract Act entitles a person complaining of breach of contract to get reasonable compensation and it does not entitle him to realize anything by way of penalty.” The Court further held as follows: “The respondents are not entitled to collect any penalty from the petitioner on the so-called excess energy consumed by the petitioner proportionate to the demand exceeded. This conclusion is also fortiﬁed by the fact that the Board itself made the position clear in B.P.Ms.No.225, dated 16-10-1990 by removing the impugned clause in B.P.Ms.No.671, dated 10-6- 1987. The respondents are not entitled to levy or collect any penalty on the energy consumed by the petitioner proportionate to the demand exceeded.” 6. Clause (7) of B.P.M.S. No.62 (Operation & Commercial) dated 28-12-1998 reads as follows: “7 . Additional charges for the maximum demand in excess of the contracted demand: If in any month the recorded maximum demand of the consumer exceeds his contracted demand, that portion of the demand in excess of the contracted demand will be billed at twice the normal charges.” As per this clause, the portion of the demand in excess of the contracted demand has to be billed at twice the normal charges. 7. The learned counsel for the respondents did not place any material to show that the respondents are authorized to collect ﬁve times penalty on the portion of the demand in excess of the contracted demand. In the absence of such material, clause (7) of B.P.Ms.No.62 (Operation & Commercial), dated 28-12-1998 has to be followed and if we apply the said clause, the petitioner is liable to penalty of twice the normal charges against the portion of the demand in excess of the contracted demand. 8. The Writ Petition is, accordingly, allowed. The impugned bill for the month of August, 1999 issued by the ﬁrst respondent is held illegal and arbitrary and is set aside. The respondents are at liberty to issue fresh bill to the petitioner imposing two times penalty of the normal charges on the portion of the demand in excess of the contracted demand for the relevant period and recover the amount, if any, remained unpaid. No order as to costs. _____________________ (Dr.G.YETHIRAJULU, J) Date: 02-09-2008 SKMR/YCR [1] 1999 (1) ALD 269