Case: M/s. Hyderabad Vanaspathi Limited Vs. Andhra Pradesh State Electricity Board and Others

The appellant in the earlier appeal of 1988 is a public limited company engaged in the manufacture of Vanaspathi. It entered into two agreements with Andhra Pradesh State Electricity Board hereinafter referred to as `Board on 1.9.1970 and 27.8.1973 for supply of High tension power. In January, 1976 the officers of the Board inspected the factory premises and noticed pilferage of energy. The power supply was immediately disconnected and a provisional assessment of the loss was made at Rs. 61, 28, 535/-. A prosecution was launched under Section 379 I.P.C. read with Section 39 ofthe Indian Electricity Act, 1910, hereinafter referred to as the Electricity Act in the court of the Chief Metropolitan Magistrate, Hyderabad. The Board also initiated proceedings calling upon the appellant to file its objections to the provisional assessment. The appellant denied the allegations made by the Board. After enquiry, the final assessment was made fixing the lost at Rs. 55, 511.81 Ps. The order was challenged by the appellant in appeal but in vain. The appellant filed a suit in the court of Additional Chief Judge, City Civil Court (Temp), Hyderabad for a declaration that it was not liable to pay any amount as penal damages and prayed for a direction for refund of the amount of Rs. 22.50 lakhs collected by the Board during the pendency of the assessment proceedings and for perpetual injunction restraining the defendants therein from disconnecting the power supply.2. The suit was contested by the Board. Several issues were raised including one relating to the jurisdiction of the civil court. The trial court held that it had jurisdiction to try the suit but negatived all the contentions of the plaintiff and dismissed the suit. On appeal, a Division Bench of Andhra Pradesh High Court rejected the pleas of the appellant and dismissed the same. The High Court held that the terms and conditions of supply on the basis of which the agreements were entered between the appellant and the Board did not in any way contravene the provisions of either the " Electricity Act or the Electricity (Supply) Act. It was also found that ample opportunity was given to the appellant before the final order of assessment was made and that t he enquiry held by the officers of the Board was in no way vitiated. Aggrieved by the said decision of the High Court the appellant preferred the said appeal on obtaining Special Leave of this court.3. The questions which were decided by the High Court in the aforesaid proceedings were raised again in Writ Petitions under Article 226 of the Constitution of India by some industrial undertakings which had also entered into agreements with the Board for supply of electricity. When proceedings were initiated by the Board against those industrial undertakings on the ground of pilferage of electrical energy and supply was disconnected pending enquiry, those undertakings filed Writ Petitions challenging the validity of such proceedings. In one of the writ petitions, an appeal was filed against an Interlocutory Order refusing to grant interim relief to the petitioner therein. When that appeal was admitted by a Division Bench the matter was placed before a Full Bench for disposal as the Division Bench opined that the view taken by the Division Bench in the Civil Appeal referred to earlier was likely to be in conflict with the "possible view that the contractual obligation upon the consumer of electricity that in case of a dispute as to the consumption, the adjudication shall be by the officers of the Board shall be deviative of Article 14 of the Constitution of India". Thus all the writ petitions and the writ appeals against interlocutory orders were heard by a Full Bench of three Judges and disposed of by a common judgment dated 12.9.1997.4. The Full Bench opined that the creation of the adjudicatory process by a contractual obligation in condition no. 39 of the `Terms and Conditions of Supply of electricity was wholly vitiated" The Full Bench observed that though there is no bar against the Board to recover compensation for the loss caused to it even when a consumer is prosecuted for the same of fence under the Act, the enquiry into the estimate of the loss should be made by an independent and properly constituted body. Ultimately the Full Bench concluded its order as follows:"In view of the above discussion, we have no hesitation to hold that condition 39 of the conditions framed by the Board, to the extent it prescribes the procedure for adjudication of the dispute relating to pilferage or malpractice of energy and for final assessment of the additional charges, is ultravires of Section 24, 26 (6) and C1.IV(3) of schedule of the Act of 1910 and Sect. 49 of Act of 1948, and is wholly vitiated as being arbitrary and violative of Article 14 of the Constitution and is accordingly struck down. However, the contention of the learned Advocate General that the Board is empowered to regulate the supply of energy including the power of disconnection, on a prima facie satisfaction or suspicion of a conduct amounting to malpractice or energy on ground of including malpractice of pilferage of energy. The conditions in the agreements in Appendix III &IV also contain stipulation of disconnection of supply on suspicion of violation of conditions. Thus, if an allegation is made of malpractice or pilferage against the consumer an d if the consumer denied the allegation and makes an application to the Electrical Inspector, holds on preliminary facts, that he has no jurisdiction in the matter, then the Board is empowered to take such step as it may deem proper and appropriate including disconnection of supply on certain conditions. This action of the Board, is however, subject to the scrutiny by a court of law".5. It is against the said judgment of the Full Bench the Board ha s filed the Civil Appeals Nos. 7139-7144 of 1997. All the appeals have been heard together as the contentions are common. For the sake of convenience, the parties will be hereafter referred to as the Board on the one hand and the consumers on the other.

Reasoning:
23. Learned counsel for the consumers has referred to Shri Vidya Ram Misra Versus Managing Committee, Shri Jai Narain College. In that case Statute 151 framed under the Lucknow University Act, 1920 provided that the terms and conditions of service of a teacher must be incorporated in the contract to be entered into between the teacher concerned and t he college. Hence the court held that the terms and conditions mentioned in Statute 151 had proprio vigore no force of law. That decision has no relevance here.24. The ruling in Executive Committee of Vaish Degree College. Shamli and others Versus Lakshmi Narain and others cited by learned counsel has no applicability as the court found on the facts that the Executive Committee was not a statutory body.25. We are unable to uphold the view expressed by the Full Bench in the judgment under appeal that the terms and conditions of supply are purely contractual. In our opinion the Terms and Conditions of Supply are statutory in character.It is contended that Clause 39 of the Terms and Conditions of Supply falls outside the power confer red on the Board in Sec. 49 of the Supply Act. According to learned counsel the power of the Board to impose such terms and conditions as it thinks fit, is expressly made subject to the other provisions of the Act which means that the Board can impose only such conditions as may be found in an agreement between other ordinary licensees and consumers. The contention is that the Board can neither define `malpractices nor prescribe an adjudicatory machinery for assessing and le vying penal damages. Such matters are, according to counsel, essential legislative functions. Which cannot be delegated to the Board.27. We are unable to accept the contention. Section 49 empowers the Board to supply electricity on `such terms and conditions as it thinks fit. It may also frame uniform tariffs. We have found that the terms and conditions of supply are statutory in character. They can be invalidated only if they are in conflict with any provision of the Act or the Constitution. Learned counsel have not shown to us any provision in the Supply Act with which Clause 39 is in conflict. In so far as the Supply Act is concerned, argument hovers around Section 49 only. The only limitation in that Section is that the terms and conditions of supply should b e subject to the provisions of the Act. Clause 39 does not violate any provision in the Supply Act. It is the statutory duty of the Board to arrange for the supply of electricity throughout the State and for transmission and distribution of the same in the most efficient and economical manner. For that purpose it has necessarily got to prevent unauthorised user, pilferage or malpractices by the consumers. Hence the necessary safeguards have to be provided as part of the conditions of supply so that the consumers will be bound by them. While on the one hand, the Board has to recoup the loss suffered by such pilferage or other malpractices., it has also on the other got to stop immediately the continuation thereof. Hence the terms and conditions of supply have to provide for compensation as well as immediate disconnection. For ascertaining the loss and fixing the compensation, uniform procedure has to be framed and a machinery constituted. Clause 39 is only doing that. Every consumer is made fully aware of the said terms and he signs the contract only on that basis. He gives an undertaking in that contract that if he is found indulging in any malpractice etc. he shall pay additional charges as may be levied by the Board and that t he Board have the right to disconnect supply of electricity to his premises for such period as may be decided by the Board.It is vehemently argued that provisions in Clause 39 run counter to the relevant pro visions of the Electricity Act. In particular, it is said that Clause 39.1 covers the same field as that of ss.21 (4) and 26 (6)(b) and Clause VI(3) of the Schedule in the said Act. According to learned counsel malpractice and pilferage defined in CI.39 would be covered by the aforesaid provisions of that Act and the authority to decide the same is the Electrical Inspector appointed by the Government and not he officers of the Board. It is also argued that Clause 39.2 and 39.3 are contrary to Sec.20 of the Act and Clause 39.4 is contrary to Sec. 36 of the Act read with Rules 4 to 6 of the Indian Electricity Rules. According to learned counsel, the entire clause 39 is violative of the provisions of Clause VI(I) in the Schedule to the Electricity Act as the latter enjoins on the Board to continue the supply of electricity `save in so far as prevented by cyclone, floods, storms and other occurrences beyond its control. In short, the contention of the learned counsel for the consumers is that the procedure prescribed in the Electricity Act and the Rules would apply to all situations arising between he Board and the consumer and the same should be followed. According to him Clause 39 is invalid and unenforceable in as much as it deviated from the provisions of the Electricity Act and the Rules.35. We are unable to accept any of the aforesaid contentions. We have carefully perused the provisions of the Electricity Act and we find that those provisions pro vide for a different situation. Clause 39 will come into play whenever there is malpractice or pilferage on the part of the consumer or a fraud played by the consumer. The Electrical Inspector has no jurisdiction to deal with those matters. He can be approached only w hen there is a defective meter or any defect in wries, fittings, works or apparatus. As regards, CI. (VI) of the Schedule to the Electricity Act, it is not applicable unless distribution mains have bee n laid down under the provisions of Clause (IV) or Clause (V) and the supply of energy through those mains of any of them has commenced. The provisions of Section 26 of the Supply Act exclude the applicability of Clauses (1) to (V) of the schedule tot he Board. Hence CI. (VI) of the schedule cannot by itself apply and that is why the second proviso to Section 26 clarifies the position that the provisions of Clause (VI) of the Schedule shall apply to the Board in respect of that area on ly where distribution mains have been laid by the Board and the supply of energy through any of them has commenced. The records before us do not disclose any pleading on the part of the consumers that the requirement of the second proviso to Section 26 have been satisfied. No question has been raised in that regard before the trial court. No doubt, the Full Bench of the High Court has placed reliance on Clause (VI) of the Schedule and the grounds raised in the Special Leave Petition filed by th e Board do not refer to the same. But in the absence of a specific pleading to t hat effect it cannot be presumed that Clause (VI) of the Schedule would apply. Even assuming that clause applied, it will not alter the situation. The difference or dispute referred to in sub-cl.(3) of CI.(VI) will not cover fraudulent malpractice or pilferage. A perusal of the said sub/clause makes it evident that the matter shall be referred to an Electrical Inspector only in cases of defects mentioned therein and not otherwise. We have no hesitation to reject the contention of learned counsel for the consumers and hold t hat he provisions in clause 39 do not contravene the provisions of the Electricity Act.The principle `Nemo Judex in Cause Sua will not apply in this case as the officers have no personal its with the consumers. A s pointed out by learned senior counsel for the Board, they are similar to Income Tax or Sales Tax Officials. There is nothing wrong in their adjudicating the matter especially when the consumers many be represented by an advocate and the formula for making provisional assessment is fixed in the clause itself. As argument has been advanced that the Board has recently deleted the provision enabling the consumer to be represented by a power of attorney agent. it is contended that the consumer is thereby deprived of the assistance of an expect which may be required in technical matters. We do not agree. When the consumer is represented by a lawyer, he can certainly get such assistance as may be needed from a technical expert. It is stated by the Boards learned counsel that the provision was deleted as there was frequent misuse of the same. Whatever may be the reason for deleting the provision, the existing part of the clause enables the consumer to be represented by an advocate. That is sufficient safeguard for the consumer.44. Learned counsel for the consumer contends that the agreement with the Board is in the standard form and signing of the same by the consumer will not prevent him from questioning it. He places reliance on certain observations in Pawan Alloys &Casting Pvt. Ltd., Meerut versus U.P. State Electricity Board and Others. The question in that case arose on the withdrawal of development rebate to the new industries for a period of three years. The court held that the principle of promissory estoppel applied on the facts and circumstances of the case and by entering into the standard agreement containing provision for revision of "rate schedule" from time to time, the consumer had not given up his claim for the rebate for a period of three years as per the promise held out by the Board. That case has no bearing here.