Case: BIHAR STATE ELECTRICITY BOARD ETC Vs. M/S ICEBERG INDUSTRIES LTD. AND OTHERS ETC.

The appellant was the Board. The complaint of the first respondent, Iceberg Industries Ltd. (the company) over disconnection of their supply which they argued to be illegal was sustained by the Single Judge and it was also held by the First Court that the said company was not liable to pay AMG and certain other charges as per Boards computation. The judgment of the Division Bench was delivered on 7 th February 2013. The company had entered into an agreement for supply of electricity with the appellant Board for contract demand of 1,000 KVA on 16 th April 2004. This was for supply of high-tension electricity connection for setting up of a brewery. Supply to the company was energised on 06.05.2005. The dispute involved in the three writ petitions giving rise to these appeals originated from a bill for Rs. 27,11,814/- dated 17 th April 2006. This was raised by the appellant towards AMG and was payable by 06.05.2006. The company did not make payment thereof within the prescribed date. Three disconnection notices, dated 15 th May, and 26 th May and 29 th June 2006 on account of default in payment of AMG as also energy charges were issued by the Board. The company on 29 th July 2006 made a representation for liquidating their dues on account of AMG in ten monthly instalments citing certain business related difficulties. Part payment of the dues to the extent of Rs. 14,71,952/- was made. Next disconnection notice under Section 56 of the Electricity Act, 2003 (the Act) was sent to the company dated 23 rd August 2006 for a sum of Rs. 33,38,572/- for non-payment of AMG as also on account of Delayed Payment Surcharge (DPS). Another bill was raised on 1 st September 2006, the due date for which was 20 th September 2006. The bill amount was Rs. 37,00,923/- and the bill heads were AMG, DPS as also energy charges. Supply to the company, however, was disconnected on 6 th September 2006. There is some doubt as to whether such disconnection took place on 6 th September or 8 th September, but this variation is of little significance so far these appeals are concerned2. The factual background of the three petitions would appear from the recordal made in the following passages of the judgment under appeal:Subsequently a fresh bill was raised on 1.9.2006 which included arrears of AMG and DPS under the bill dated 17.4.2006 also for a total of Rs.37,00,923/- along with current charges. The due date for payment was 20.9.2006. The Board disconnected supply on 6.9.2006 pursuant to the notice for disconnection dated 23.8.2006. The Board thereafter acted on the representation dated 26.8.2006 and granted facility of instalments. An agreement was signed between the parties on 11.4.2007 for payment of AMG and DPS in instalments. The connection was restored 7 months later on 16.4.2007. It is not in dispute that payments under the bill dated 17.4.2006 has then been made as agreedA fresh bill was thereafter raised by the Board on 4.5.2007 for Rs.70,23,149/- as the minimum guarantee charge/base charge for the disconnected period of 1.11.2006 to 30.4.2007, along with AMG charge for the financial year 2006-07 (which also included charges for the disconnected periods of August, September, October 2006) of Rs.18,02,582/-. The total bills thus raised was for Rs.88,389,528/-. A fresh disconnection notice for non-payment of the same was issued on 22.5.2007. The industry moved the Forum under the Act. By order dated 12.2.2008 the Forum held the industry liable to pay minimum charges up to November 2006. The minimum charges from December 2006 to April 2007 were held to be bad. The Industry, to the extent it was aggrieved by the order, questioned it in CWJC 4637 of 2008. The latter part of the order was not challenged by the BoardOn 19.3.2008, a fresh disconnection notice was served for non-payment of Rs.1.33 Crores inclusive of AMG and DPS for the period December 2006 to April 2007 disallowed by the Forum. The Board also refused to accept current consumption charges. Based on a demand contrary to the order of the Forum, the Board disconnected electric supply for the second time on 2.4.2008After it had disobeyed the order dated 12.2.2008 of the Forum CWJC 7314 of 2008 was filed by the Board on 5.5.2008 questioning the same. The writ petition did not disclose that the Board had already disobeyed the order and disconnected supply without raising fresh revised bills. No prayer for interim stay of the order of the Forum was made in the Writ PetitionPursuant to an interim deposit of 35 Lacs directed on 15.5.2008 in CWJC 4637 of 2008, electric supply was restored on 24.5.2008. A fresh bill was again raised on 22.5.2009 for Rs.1.47 Crores along with notice for disconnection. It included AMG and DPS for the period disallowed by the Forum. It also included AMG and DPS charges for the subsequent disconnection from 2.4.2008 to 23.5.08. The industry challenged the same again before the Forum. The demand was stayed by the Forum on 12.6.2009. Without challenging the order of the Forum, the Board in complete disregard refused to accept even current payments, showed arrears of Rs.1.82 crores and disconnected supply of the Industry again on 7.8.2009. CWJC 9742 of 2009 was preferred against the same by the Industry. Rs.80 Lacs was deposited pursuant to the order of the Court, and electric supply was restored on 1.12.2009. The industry therefore also questioned AMG and DPS charge for the disconnection period from 7.8.2009 to 30.11.2009. Further payment of Rs.40 Lacs has been made pursuant to interim directions in the present Appeals3. The Single Judge found the act of disconnection without considering the request for instalments was unwarranted. It was held that such default on the part of the company did not constitute neglect to pay as contemplated in Section 56 of the 2003 Act. The fresh bill, which was raised on 1 st September 2006 showed the due date of payment to be 20 th September 2006. Disconnection was however made on 6 th September 2006 on the basis of earlier notice of 23 rd August 2006. This was held to be unjustified. The demands raised thereafter contrary to the order of the Forum constituted under Section 42(5) of the Act was also held to be illegal by the Single Judge4. The Appeal Bench, inter, alia, found:-The bill dated 19.3.2008 which included the AMG and DPS for the period 1.11.2006 to 3.4.2007 contrary to the order of the Forum being illegal, the Industry was under no obligation to pay the same. The subsequent disconnection on 2.4.2008 automatically becomes illegal. Surprisingly, the officials of the Board persisted in defying the order of the Forum in the bill dated 22.5 2009 by again including AMG and DPS for the period of disconnection disallowed by the Forum and reiterating the subsequent illegal bill also for the period of illegal disconnection from 2.4.2008 to 23.5.2008. The petitioner challenged this bill before the Forum again which stayed disconnection on 12.6.2009. The authoritarianism of the Board persisted in flagrant disobedience and supply again disconnected on 7.8.2009 leading to institution of CWJC 9742 of 2009. The supply was restored on 1.12.2009 upon payment of Rs.80 Lacs under orders of the Court. The disconnection from 7.8.2009 to 30.11.2009, needs no further discussion to be held illegal. We are constrained to observe that this second occasion when the officials of the Board acted in gross defiance of the orders of the statutory authority is indicated of dangerous executive thinking. We expect the officials of the Board to understand their folly and act prudently, take action against the officers concerned so that in future such administrative adventurism is not attemptedIn fairness to the Board, we must deal with CWJC 7314 of 2008 filed by it against the order of the Forum. It does not appear from the impugned Judgement that any substantive challenge was laid out to it except that the Board did not agree with the same. Even before us no substantive challenge has been laid out why the order of the Forum was wrong. The only ground urged before us was that the order of the Forum was contrary to the agreement signed between the parties for an H.T. connection. It was the foremost duty of the Board to either comply the order of the Forum and then challenge it or alternately challenge the order immediately and seek stay of the order. Its conduct has been found grossly wanting on both aspects. An evasive and purposefully vague statement was made in paragraph 9 of disconnection. No details of the date was stated or that it had already disobeyed the order before filing the Writ petition. If the Board was seeking the protection of the law against the statutory quasi-judicial order, it had to first respect the law. A person falling foul of the law cannot seek the shelter of the law to perpetuate disobedience. The writ petition filed by the Board was therefore fit to be dismissed on this ground alsoThe case of (Southco) (supra) relied upon by the Board has no application to the present case. The words revenue focus was used in context of unauthorised use of electricity. Similarly Kesoram Industries (supra) related to construction of a taxing statute. Likewise Raymond (supra) and Green Industries (supra) did not relate to the obligation for payment of Minimum Guarantee Charges for the period of illegal disconnection by the BoardAffirming the reasoning and findings of the Writ Court, we hold that the initial disconnection itself being illegal, the Board does not have the authority to charge any AMG and DPS not only for that period but also for each and every subsequent period of illegal disconnection also, because it failed to revise the bills. The directions given by the Writ Court in the penultimate paragraph of the judgment calls for no interference6. The companys request for grant of instalments to liquidate their dues was ultimately accepted by the Board and to that effect an agreement was executed between Company and the Board for liquidation of the outstanding dues of Rs. 37,09,027/- in ten instalments. This agreement is dated 11 th April 2007. A copy of this agreement has been made Annexure R11 to the counter-affidavit of the Company. On payment of the first instalment, supply line of the company was energised on 16 th April, 2007. Another bill dated 04.05.2007 was sent to the company for Minimum Monthly Base charges for the period between 1 st December 2006 and 30 th April 2007, AMG charges for the year 2006-2007 and total amount demanded under this bill was for Rs. 88,389,528/-. The next notice under Section 56 of the Act was issued on 22.05.2007 as the company did not make payment of the bill dated 4 th May, 2007. The Company thereafter approached the Consumer Grievances Redressal Forum questioning legality of the notice dated 4 th May 2007. Their application was registered as Case no. 108 of 2007 and initially the demand was stayed by the Forum. In the final order dated 12 th February 2008, the Forum gave its finding in the following terms:-1. The disconnection of the electric line of the Petitioner on 08.09.2006 is being held legal2. The date of disconnection of 08.09.2006 has been found as notice for determination of the agreement3. The Petitioner/consumer is liable for payment of Energy Bill of AMG Charge for September 2006 & October 2006 and monthly Minimum Base Charge of November 2006 i.e. for three months from the month of disconnection of the line4. As per Boards Notification no-477 dated 29.10.2002 and letter No. 793 dated 22.10.2013-both issued in the signature of Secretary, Bihar State Electricity Board, Patna; the reconnection done on 16.04.2007 by accepting of amount of 1 st instalment with disconnection & Reconnection Charge has been decided as clear violation of the Boards directives, as the electric line of the Petitioner remained disconnected from 08.09.2006 to 15.04.2007 i.e. more than six months period5. Any request made by the Petitioner for availing/providing electric power should have been treated, as the case of New Applicant and reconnection done is found as improper6. The charging of Monthly Minimum Base charge from December 2006 to March2007 is decided as illegal and liable for withdrawal, as the connection was given in the Month of April 20077. If the Petitioner is found fit to avail the benefit of exemption, necessary suitable and appropriate action may be taken to allow the benefit of exemption from payment of Monthly Minimum Base Charge as per Industrial Policy Resolution 20067. Supply to the Company was disconnected again on 2 nd April 2008. Both the appellant and the respondent company had assailed the order of the forum invoking the Constitutional Writ jurisdiction of the Patna High Court. The companys writ petition, registered as CWJC 4637 of 2008 challenged that part of the order in which disconnection of electricity on 8 th September 2006 was held to be legal. The Boards writ petition was registered as CWJC 7314 of 2018. In this writ petition, the Board questioned the jurisdiction of the Redressal Forum to adjudicate the dispute on the ground that the company was not using the electricity for their own use. They also wanted invalidation of the Forums order by which the energy bill dated 4 th May 2007 was quashedIn the first writ petition filed by the company (CWJC 4637 of 2008), by an interim order, the High Court had directed deposit of sum of Rs.35 lacs for the purpose of reenergising supply and this amount, we are apprised, was deposited by them. The supply line was also restored on 24.5.2008. But between 2 nd April 2008 and 24 th May 2008, the companys electricity stood disconnected. Thereafter, demands were made on different dates under several heads including arrears, DPS and a fresh notice of disconnection under Section 56 of the 2003 Act was issued on 22 nd May 2009. The company again approached the Forum against a bill dated 5 th June 2009 for a sum of Rs.1,63,15,452/-. The Forum had stayed the demand and passed an order restraining the Board from disconnecting supply of the respondent no.1. But on 7 th August, 2009, again supply to the company was disconnected, which prompted filing of the third writ petition by the company, which was registered as CWJC 9742 of 2009. An interim order was issued in that writ petition requiring them to deposit a sum of Rs.40 lacs within a week after which the power supply was to be restored to be followed by further deposit of a sum of Rs.40 lacs by 6 th November 2009. This interim order was passed on 15 th October 2009. The said sum was deposited and supply was restored. Ultimately, the learned Single Judge disposed of all the three writ petitions by a common judgment and order passed on 29.4.2010 with the following directions and observations: -(1) The Board would have to delete from the demands being made as against the petitioner amounts in relation to the period of disconnections, because, as shown above, each disconnection was illegal, wrongful and the petitioner cannot be made to pay for the period of such wrongful disconnections(2) The bills and the liability of the petitioner would have to be re-caste from the very initial period, deleting charges aforesaid, giving due credit to payment made in between & then final amount has to be worked out(3) The final amount being worked out for which the period of one month is granted to the Board, the Board would serve the bill giving the full details in respect thereof, deleting the charges as indicated above(4) As this Court has found that the amounts as claimed were incorrectly claimed, then the bills being revised would not contain delayed payment charges for balance due in view of Division Bench judgment of this Court in the case of M/s Gaya Roller Flour Mills Private Ltd. Vs. Bihar State Electricity Board since reported in 1995(2) PLJR 715(5) Petitioner by one of the interlocutory applications has prayed that he is entitled to exemption under the Industrial Policy 2006 of the Government. That dispute is pending before the Industries Development Commissioner. The petitioner would have liberty to pursue the matter before that authority.

Reasoning:
9. But even if we proceed on the basis that concession on law made before a judicial forum against whose decision we are hearing these appeals would not bind a party to such concession, we do not find anything in law which barred the Redressal Forum from adjudicating the disputeBut we do not find any reason to denude the company of its locus to approach the forum. The object of use of electricity may be to produce items for sale, but use or consumption of electricity by them was for their own factoryWe have reproduced the passage from the judgment of the Division Bench dealing with that aspect of the controversy. We accept the finding of the Division Bench on that count. Board could not have had ignored the directive of a statutory forum and imported their own perception of what was legal to proceed against a consumer16. We thus find that the statutory Forum has come to a finding in dealing with certain circular issued by the Board. We do not think we ought to interfere at this stage with such finding so far the same related to applicability and interpretation of the said circular17. As regards the provisions of clauses 9 (a) and (b) of the agreement, the first provision curb the right of a consumer to determine the agreement unless certain conditions are fulfilled. The circular relied upon by the Forum however has wider application and its applicability has not been disputed by the BoardWe do not accept this argument, particularly in the factual perspective of these appeals. The Board had agreed to instalments for clearing the dues and restored the supply. On that basis, an independent arrangement came into existence vis-a-vis the companys terms of supply in the given case19. Under the aforesaid provision, disconnection of supply is special power given to the supplier in addition to the normal mode of recovery by instituting a suit. Both the Single Judge and the Appellate Bench of the High Court have held that the respondent company did not neglect to pay their dues, for which reason the supplier could have effected the harsher mode by disconnection supply. The Single Judge referred to two authorities, Corporation of the City of Nagpur Vs. Nagpur Electric Light and Power Company Limited – (AIR 1958 Bom. 498 ) and Amalgamated Commercial Traders Vs. A.C.K. Krishnaswami – (1995)(XXV) CC 454 in which it has been held that in the event there is bona fide dispute between the parties on the quantum of dues, non-payment of such sum would not amount to negligence to pay. The first authority relates to Section 24(1) of the Indian Electricity Act, 1910 having provision similar to that of Section 56 of the 2003 Act. The second case related to initiation of winding-up proceeding under the Companies Act, 1956. The other authority referred to was the case of Laxmikant Revchand Bhojwani and another Vs. Pratapsing Mohansingh Pardeshi – (1995) 6 SCC 576.  In this case, one of the issues involved was default in payment of dues on account of rent, for which eviction could be asked for. The court found that the rent in that case was sought to be paid through money order within the specified period. It was held that it was not a case default to pay simpliciter and hence the rigours of the default provision leading to eviction under the applicable rent law stood diluted20. So far as the subject controversy is concerned, there is no dispute on obligation of the respondent company to pay the AMG charges, at least so far as first bill is concerned. Its representation for instalment was in the nature of a mercy plea. Going by that factor alone, we might not have had accepted the finding of the High Court that the consumer did not neglect to pay so as to warrant the disconnection provision contained in Section 56 of the Act. But in respect of respondent company, eventually instalment was granted subsequent to the period of disconnection. Once that plea for instalment payment was accepted and agreement was entered into for clearing the dues, it demonstrated willingness to pay on the part of the company of the dues in a manner acceptable to the appellant Board. Such plea of the company was accepted after keeping the matter pending for a long time. In such circumstances, in our opinion the High Court was right in giving its finding that the act of disconnection on 8 th September 2006 was arbitrary. Because of these reasons we do not want to disturb the finding of the Courts below.