IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN THURSDAY, THE 17TH SEPTEMBER 2009 / 26TH BHADRA 1931 WP(C).No. 19032 of 2005(N) -------------------------- PETITIONER(S): --------------- HOTEL SAJ LUCIA, REPRESENTED BY THE GENERAL MANAGER, MATHEW THOMAS, EAST FORT, THIRUVANANTHAPURAM. BY ADV. SRI.P.GOPALAKRISHNAN NAIR RESPONDENT(S): --------------- 1. KERALA STATE ELECTRICITY BOARD, REPRESENTED BY ITS SECRETARY, VYDYUTHI BHAVAN, PATTOM, THIRUVANANTHAPURAM. 2. SPECIAL OFFICER, (REVENUE), VYDYUTHI BHAVAN, PATTOM, THIRUVANANTHAPURAM. BY ADV. SRI. C.K. KARUNAKARAN. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17/09/2009, THE COURT, ON THE SAME DAY DELIVERED THE FOLLOWING: PETITIONER'S EXHIBITS: W.P.C.NO. 19032/2005. ------------------------------------------------------------------- EXT.P1 TRUE COPY OF LETTER DT. 17-8-2004. EXT.P2 LETTER DT. 14-9-2004. EXT.P3 MINUTES OF THE MEETING HELD ON 27-10-2004. EXT.P4 INVOICE DT. 5-5-2005. EXT.P5 OBJECTION DT. 10-5-2002. [TRUE COPY] P.S TO JUDGE. S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= W. P (C) No. 19032 of 2005 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 17th September, 2009. J U D G M E N T The petitioner is a consumer of electricity supplied by the Kerala State Electricity Board. They have filed this writ petition disputing the demand for penal charges on two counts. First is for delay in payment of electricity charges for the months of April, 2004 and June, 2004. The second is penal charges for not keeping the power factor at the minimum level prescribed for the months of April and May, 2005. According to the petitioner, these two matters are governed by condition nos. 6(a) and 13(a) of the agreement executed by them with the Kerala State Electricity Board. Condition no. 6(a), reads thus: “6(a) The reading of the said meter or meters shall be taken by the accredited representatives of both the parties hereto as near noon as practicable on the first date of each calender month and recorded. The reading so recorded shall be binding and conclusive between the parties hereto, as to the basis for computing the quantity of electrical power and energy supplied under the agreement. The recording of reading shall be in a card to be attached to such meters which shall be open to the inspection of the consumer also. Payment for power and energy supplied shall be made by the consumer for the quantity of power and energy computed as aforesaid and at the rate specified in the schedule attached hereto. Payment shall be made within fifteen days from the date of receipt of the invoice by the consumer for the power supplied in default of payment the consumer is liable to pay interest at 18% per annum or at such other percentage as fixed by the board from time to time also on this amount from the date it fell due. Part of a month for the purpose will be treated as a month. The consumer also agrees to the whole of the bill amount being raised by 3 per cent when the metering is on the L.T side to compensate for the transformer loss.” According to the petitioner, for the month of April, 2004, the invoice dated 5-5-2004 was served on the petitioner on 8-5-2004. Therefore, the petitioner has time till 23-5-2004 to pay the bill amount as per W.P.C. No. 19032/2005 -: 2 :- clause 6(a) of the agreement and the petitioner paid the same on 23-5-2004. Therefore, the petitioner is not liable to pay penal interest in respect thereof. For the month of June, 2004 also, the petitioner received the invoice on 8-7-2004 and the petitioner paid the invoice amount on 23-7-2004, two days prior to the last date. Therefore, the petitioner is not liable to pay any penal interest as demanded in the impugned order, is the contention raised. According to the petitioner, the second penal charge is governed by clause 13(a) of the agreement, which reads thus: “13 (a). The power factor of the plant and apparatus owned and operated by the consumer at individual points of supply shall not ordinarily be less than 0.85. If it tends to drop below 0.85, it must be improved by the installation of static capacitors approved by ISI failing which the supply shall be discontinued with a 15 days notice. The power factor shall be determined by the ratio of the KW and KVA demands taken monthly.” The petitioner contends that the power factor of the petitioner did not go below the minimum prescribed in the said clause and therefore no penal charges are payable by the petitioner. 2. A counter affidavit has been filed by the Kerala State Electricity Board in which the contention taken is that the bill amounts are to be paid within 15 days from the date of invoice, which the petitioner has not done and, therefore, the petitioner is liable to pay penal charges on the same. According to the Board, the second penal charge is in accordance with the orders of the Electricity Commission in the matter, which is applicable by virtue of clause 20 of the agreement, which reads thus: “The Conditions of Supply of Electrical Energy published by the board as amended from time to time shall be deemed to be part of this agreement and the provisions therein which are not contradictory to the provisions made herein, shall also be binding on the consumer.” W.P.C. No. 19032/2005 -: 3 :- The contention is that after the Electricity Act, 2003 came into force, fixed tariff and other matters, which were formally the domain of the Board, shifted to the Kerala State Electricity Regulatory Commission under Sections 61 and 62 of the said Act. Therefore, the power to fix the minimum power factor also vested with the Commission who could fix the same by executive orders as provided in the Kerala State Electricity Regulatory Commission (Conduct of Business) Regulation, 2003. The Commission has, in exercise of their power conferred under Sections 61(c), 61(d) and 62(3) of the Electricity Act, 2003 issued order dated 14-1-2005 wherein clause 4.1 thereof read thus: “4.1. Power Factor Improvement The normal power factor to be maintained by the HT & ENT consumers shall be 0.90. The following Incentives and Penalty shall be applicable to HT & EHT consumers for power factor improvement. Power Factor Range Incentives 0.90 to 1.00 0.15% of energy charges for each 0.01 unit increase in power factor from 0.9 p.f Power Factor Range Penalty For power factor below 0.90 1% energy charge for every 0.01 fall from 0.90 p.f Average monthly Power factor shall be taken as the basis for the payment of incentives/penalties.” By virtue of clause 20 of the agreement executed by the petitioner, clause 4.1 of the order of the Commission, which came into effect from 1-4-2005, became part of the agreement and therefore the petitioner is bound by that clause, which prescribes that if the High Tension and Extra High Tension consumers do not maintain the power factor at 0.9 for over 0.01 fall in the power factor from 0.96, 1% of the energy charge is payable as penalty. In the petitioner's W.P.C. No. 19032/2005 -: 4 :- case, for the months of April and the power factor was 0.84 and 0.862 respectively, which are below the minimum of 0.90 prescribed by the Commission, for which the petitioner is liable to pay penalty, is the contention raised by the Board. 3. I have considered the rival contentions in detail. 4. In respect of April, 2004, admittedly, although the invoice was dated 5-5-2004, the same was served on the petitioner on 8-5- 2004. Therefore, the last date for payment of bill amount is 23-5- 2004. In Ext. P1 letter from the petitioner to the Board, the petitioner has stated that he paid the bill on 31-5-2004. In fact, that is the case of the Board also. Although, counsel for the petitioner would contend that the date 31-5-2004 mentioned in Ext. P1 is a clerical mistake, no material has been produced in support of the averment that the petitioner paid it on 23-5-2004. In fact, in the writ petition also, the petitioner states that the invoice was paid on 31-5-2004. Therefore, the petitioner is liable to pay penal charges for the period from 24-5- 2004 to 30-5-2004 in respect of electricity charges for the month of April, 2004. 5. But, it is a different matter with regard to the invoice for June, 2004. The invoice for June, 2004 was served on the petitioner on 8-7-2004. Admittedly, the petitioner paid the bill amount on 23-7-2004, which is well within the time prescribed under clause 6(a) of the agreement. Therefore, the petitioner is not liable to pay any penal charges in respect of the invoice for June, 2004. 6. Regarding the penalty for not maintaining the minimum power factor, I find that clause 13(a) has been incorporated in the agreement on the basis of Regulation 40 of the Regulations Relating to Conditions of Supply of Electrical Energy framed by the Board under Section 79(j) of the Electricity Supply Act, 1948, which was in force prior to the coming into force of Electricity Act, 2003. The same reads thus: “40. Power Factor of Apparatus.-- The power factor of W.P.C. No. 19032/2005 -: 5 :- the plant and apparatus owned and operated by the consumer at individual points of supply shall not be less than 0.85 unless otherwise agreed to by the Board. Should the power factor be below 0.85, it must be brought up by the installation of static capacitors approved by Bureau of Indian Standards (BIS). The different categories of consumers who have not installed the necessary capacitors approved by BIS will be charged at penal rates as specified by the Board from time to time.” At that time, the minimum power factor prescribed was 0.85. Clause 20 of the agreement stipulated that the conditions of supply of electrical energy as amended from time to time shall be deemed to be part of the agreement. After the coming into force of the Electricity Act, 2003, the Board ceased to be the authority competent to prescribe the conditions of supply of electrical energy. The said power was vested with the Kerala State Electricity Regulatory Commission. The Commission had, in exercise of powers vested in it under Sections 61(c), 61(d) and 62(3) of the Electricity Act, 2003, read with the Kerala State Electricity Regulatory Commission (Conduct of Business) Regulation, 2003, issued an executive order dated 14-1-2005, a copy of which has been handed over to me by counsel for the Board, which contains clause 4.1 extracted above. By virtue of clause 20 of the agreement, this amendment to the power factor applies to the petitioner. In fact, subsequently, this modified minimum power factor has been incorporated in the Kerala State Electricity Board Terms & Conditions of Supply, 2005 as clause 48 thereof, which reads thus: “48. Power Factor of Apparatus.-- The power factor of the plant and apparatus owned and operated by the consumer at individual points of supply shall not be less than 0.9 (point Nine). In the case of HT/EHT consumers, if the average monthly power factor drops below 0.9, penalty will be charged at the rate of 1% of energy charge for every 0.01 fall from 0.9 power factor. For every 0.01 unit increase in power factor from 0.9 power factor, incentive at the rate of 0.15% of energy charges will be given. The penalty rate and incentive rate shall be subject to revision from time to time with the approval of the Commission. The power factor shall be determined by the ratio of the reading of the kWh and kVAh W.P.C. No. 19032/2005 -: 6 :- demand taken monthly, ratio being rounded off to two decimal figures. In the case of LT industrial consumers power factor correction must be made with suitable capacitors failing which penalty will be charged.” In the above circumstances, clause 6(a) of the agreement should be read in conjunction with the order of the Commission. In that view, the power factor the petitioner was expected to maintain from 1-4- 2004 was 0.90 and if the power factor goes below the same, the petitioner is liable to pay penalty on the energy charges accordingly. The petitioner's minimum power factor was 0.84 and 0.862 for the months of April, 2005 and May, 2005 for which only penalty has been demanded from the petitioner. I am of opinion that the same is perfectly in order. In the above circumstances, the writ petition is disposed of with the following directions: The petitioner is liable to pay penal interest on the delayed payment of invoice amount for April, 2004 for the period from 24-5- 2004 to 30-5-2004. The petitioner is not liable to pay any penal interest in respect of invoice for June, 2004. However, the petitioner would be liable to pay penal charges for not maintaining the minimum power factor for the months of April and May, 2005. The 2nd respondent is directed to issue revised invoices to the petitioner in accordance with the above findings expeditiously. The amount already paid by the petitioner shall be adjusted against the same. The balance amount, if any, found due to the petitioner, shall be adjusted against the future bills of the petitioner. Sd/- S. Siri Jagan, Judge. Tds/