STATE ELECTRICITY BOARD AND OTHERS versus M/S RAMKRISHNA FORGING LIMITED
[2021] 4 S.C.R. 454, Supreme Court of India, 2021
Outcome: Dismissed (Dismissed)
Segment: Body
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   [2021] 4 S.C.R. 454
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JHARKHAND STATE ELECTRICITY BOARD AND OTHERS
v.
M/S RAMKRISHNA FORGING LIMITED
(Civil Appeal No. 6145 of 2010)
APRIL 30, 2021
[L. NAGESWARA RAO AND VINEET SARAN, JJ.]
Electricity: Jharkhand State Electricity Regulatory
Commission (Electriity Supply Code) Regulations, 2005 – Regns.9.1,
9.2 – On 14.04.2004, the respondent, small scale industry entered
into an agreement with Board for High Tension connection of 325
KVA load – Thereafter, on 14.03.2006, respondent applied for
enhancement of load from 325 KVA to 1325 KVA, which was
sanctioned – On 26.12.2006, respondent again applied for
enhancement of load from 1325 KVA to 3500 KVA which was also
sanctioned by Board – On a further request of respondent, on
07.07.2007, the load was again enhanced to 4000 KVA – Due to
continuous load shedding, which was affecting machineries,
respondent decided to reduce load from 4000 KVA to 1325 KVA –
However, the application to that effect was rejected treating it to be
a case of determination of agreement, and quoting the Clause 9B
of the agreement which provided that the agreement could not be
permitted to be determined prior to the completion of initial period
of three years from 07.07.2007 and that the respondent will have to
pay the minimum guarantee charges and other charges, even if the
respondent decides to terminate the agreement – Respondent
successfuly filed writ petition before High Court – Board
filed instant
appeal – Held: Chapter 9 of the Regulations of 2005 deals with the
enhancement and reduction of contract demand/sanctioned load –
Regn.9.1 deals with enhancement of contract demand/sanctioned
load, whereas Regn.9.2 deals with the reduction of contract demand/
sanctioned load – Regn.9.2.6 of the Regulations of 2005 provides
for execution of a supplementary agreement for reduction of contract
demand/sanctioned load of the consumer – If the Regulations
provide for contract load to be varied even through a written
communication, then in all fairness, though fresh agreements may
have been executed at the stage of enhancement of load of the
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same electricity connection, the same cannot be treated as anything
but an extension/amendment or modification of the initial agreement
granting the electricity connection, which in the present case would
be the agreement dated 14.04.2004 – Thus, even though the
consumer may have been required to sign fresh agreements for each
enhancement of load, but the enhancement being for the same
electricity connection which still continues, it would merely be
amendment of the initial agreement – This would also be in
consonance with the provisions of the Regulations of 2005, which
have to be liberally interpreted in favour of the consumer – The
Board was wrong in treating the application of the respondent for
reduction of load to be that for determination of the agreement under
Clause 9B of the agreement, which application, in fact, ought to
have been considered under Regn. 9.2 of the Regulations of 2005
– The agreement to be considered in the present case is the initial
agreement dated 14.04.2004 and not the subsequent agreement
dated 07.07.2007.
Dismissing the appeal, the Court
HELD : 1. After the initial agreement dated 14.04.2004,
which came into effect from 16.04.2004 whereby the contract
demand of 325 KVA was allowed in favour of the respondent, the
Jharkhand State Electricity Regulatory Commission in exercise
of power conferred by Section 181(2)(x) read with Section 50 of
the Electricity Act, 2003, framed the Jharkhand State Electricity
Regulatory Commission
(Electricity Supply Code) Regulations,
2005, which came into effect from 28.07.2005. [Para 5][459-F-H]
2.1 The communication dated 08.11.2007 of the Electrical
Superintending Engineer of the Board, refusing the prayer of the
respondent for reduction of load showed that the application of
the respondent for reduction of load was rejected in terms of
Clause 9(B) of the agreement, treating the date of commencement
of the agreement to be 7/12.07.2007 and only by considering the
provision of determination of the agreement, which could not have
been without giving notice of less than 12 calendar months. It is
clear that the said communication/order does not consider the
provisions of the Regulations of 2005 with regard to reduction of
load, but only treats the application for reduction of load to be an
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application for determination of the agreement. [Paras 9, 11]
[463-B; 464-A-C]
2.2 Chapter 9 of the Regulations of 2005 deals with the
enhancement and reduction of contract demand/sanctioned load.
Regulation 9.1 deals with enhancement of contract demand/
sanctioned load, whereas Regulation 9.2 deals with the reduction
of contract demand/sanctioned load. Just as the consumer has
the liberty of getting its load enhanced under Regulation 9.1, the
reduction of contract demand/sanctioned load can also be prayed
for and decided in terms of Regulation 9.2. The proviso to
Regulation 9.2.1, no doubt, provides that no reduction of load
shall be allowed before expiry of the initial period of agreement,
which is three years in the present case. The question would be
whether the initial agreement is to be considered for
such purpose, or the subsequent agreements. [Paras 12, 13]
[464-C-F]
3. Regulation 9.2.6 of the Regulations of 2005 provides for
execution of a supplementary agreement for reduction of contract
demand/sanctioned load of the consumer. Similarly, for
enhancement of load also, even if a fresh agreement may have
been executed between the parties, the same could be treated
as nothing but a supplementary agreement of the initial agreement
by which the electricity connection was granted for a particular
load. Clause 2(l) of the Regulations also defines “contract
demand” to be demand mutually agreed in the agreement or
agreed through other written communication, meaning thereby that
for variation of the contract demand execution of a fresh
agreement is not essential and the same can be done otherwise
also by mere written communication. [Para 14][464-F-H]
4. The Jharkhand State Electricity Board (‘the Board’) is a
monopoly supplier of electricity which has laid down its own terms
and conditions, regarding which the consumer has no say or choice
but to sign on the dotted lines, if it wants of get electricity load
varied for running its industry. The Board is an instrumentality
of the State. It has to be fair and reasonable. If the Regulations
provide for contract load to be varied even through a written
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communication, then in all fairness, though fresh agreements may
have been executed at the stage of enhancement of load of the
same electricity connection, the same cannot be treated as
anything but an extension/amendment or modification of the initial
agreement granting the electricity connection, which in the
present case would be the agreement dated 14.04.2004. On the
dictates of the Board, the consumer may have been required to
sign fresh agreements for each enhancement of load, but the
enhancement being for the same electricity connection which still
continues, it would merely be amendment of the initial agreement.
This would also be in consonance with the provisions of the
Regulations of 2005, which have to be liberally interpreted in
favour of the consumer. [Para 15][465-A-D]
5. The Board has gone wrong in treating the application
dated 20.09.2007 of the respondent for reduction of load to be
that for determination of the agreement under Clause 9B of the
agreement, which application, in fact, ought to have been
considered under Regulation 9.2 of the Regulations of 2005. The
agreement to be considered in the present case is the initial
agreement dated 14.04.2004 and not the subsequent agreement
dated 07.07.2007. [Para 16][465-D-F]
Bihar State Electricity Board, Patna and Others v. M/s.
Green Rubber Industries and Others (1990) 1 SCC 731
: [1989] 2 Suppl. SCR 275; Orissa State Electricity
Board v. Orissa Tiles Limited (1993) Supp. 3 SCC 481
: [1993]
2 SCR 860; Andhra Steel Corporation Ltd.
And Others v. Andhra Pradesh State Electricity Board
and Others (1991) 3 SCC 263 : [1991] 2 SCR 624;
Jharkhand State Electricity Board & Others v. Laxmi
Business and Cement Company Private Limited and
Another (2014) 5 SCC 236 : [2014] 3 SCR 453
– distinguished.
Case Law Reference
[1989] 2 Suppl. SCR 275
distinguished
Para 17
[1993] 2 SCR 860
distinguished
Para 17
JHARKHAND STATE ELECTRICITY BOARD v.
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[1991] 2 SCR 624
distinguished
Para 17
[2014] 3 SCR 453
distinguished
Para 17
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6145
of 2010.
From the Judgment and Order dated 23.07.2008 of the High Court
Jharkhand at Ranchi in W.P. (C) No. 6651 of 2007.
Anup Kumar, Saurabh Jain, Ms. Neha Jaiswal, Shivam Kumar,
Ms. Shruti Singh, Advs. for the Appellants.
Navniti Prasad Singh, Sr. Adv., Devashish Bharuka, Dhanjay
Pathak, Vaibhav Niti, Ms. Sarvshree, Justine George, Ms. Srishti Agarwal,
Ms. Taniya Bansal, Advs. for the Respondent.
The Judgment of the Court was delivered by
VINEET SARAN, J.
1. The respondent is a small scale industry. For running its industry,
it had a contract demand/sanctioned load of electricity of 4000 KVA
from the appellants-Jharkhand State Electricity Board (for short ‘the
Board’). The request of the respondent for reduction of such sanctioned
load to 1325 KVA having been refused, the respondent filed a writ petition
before the High Court of Jharkhand, which has been allowed. Aggrieved
by the said judgment of the High Court, this appeal has been preferred
by the Board.
2. The brief facts, relevant for the present case, are that the
respondent, which is a small scale industry, had entered into an agreement
with the Board on 14.04.2004 for High Tension (H.T.) connection of
325 KVA load. The respondent thereafter applied for enhancement of
load from 325 KVA to 1325 KVA, which was allowed by the General
Manager-cum-Chief Engineer of the Board on 14.03.2006. The
respondent again applied for enhancement of load from 1325 KVA to
3500 KVA, which was sanctioned by the Board on 26.12.2006. On a
further request of the respondent, the load was again enhanced by 500
KVA to 4000 KVA. For each enhancement of load, fresh agreements to
that effect were entered into between the respondent and the Board,
the last one being on 07.07.2007 for supply of 4000 KVA load. The
respondent alleges that after the enhancement of load, it was facing
major trippings as well as continuous load shedding which was affecting
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the costly machineries and, therefore, the respondent decided to reduce
the load from 4000 KVA to 1325 KVA. Accordingly, the respondent
filed an application, on 20.09.2007, before the authority of the appellants-
Board for such reduction. Vide its order dated 08.11.2007, the Electrical
Superintending Engineer rejected the said application of the respondent
for reduction of load from 4000 KVA to 1325 KVA informing the
respondent that from the date of enhancement of supply of load, an
agreement (dated 07.07.2007) would be enforced for a period of three
years and treating it to be a case of determination of agreement, and
quoting the Clause 9B of the agreement, it was provided that the
agreement could not be permitted to be determined prior to the completion
of initial period of three years from 07.07.2007 and that the respondent
will have to pay the minimum guarantee charges and other charges,
even if the respondent decides to terminate the agreement.
3. Challenging the said order of the Board dated 08.11.2007, the
respondent filed Writ Petition No.6651 of 2007, which has been allowed
by the High Court vide its judgment dated23.07.2008, primarily on the
ground that the proviso contained in Regulation 9.2.1 of the Jharkhand
State Electricity Regulatory Commission (Electricity Supply Code)
Regulations, 2005 (for short, ‘the Regulations of 2005’), providing for no
reduction of load to be allowed by the Distribution Licensee before expiry
of the initial period
of agreement was discriminatory, arbitrary and against
the public policy. Challenging the aforesaid judgment, this appeal has
been filed.
4. We have heard Shri Anup Kumar, learned counsel appearing
for the appellants and Shri N.P. Singh, learned Senior Counsel appearing
for the respondent, assisted by Shri Devashish Bharuka, Advocate-on-
Record for the respondent.
5. It is noteworthy that after the initial agreement dated 14.04.2004,
which came into effect from 16.04.2004 whereby the contract demand
of 325 KVA was allowed in favour of the respondent, the Jharkhand
State Electricity Regulatory Commission (for short, ‘the Commission’)
in exercise of power conferred by Section 181(2)(x) read with Section
50 of the Electricity Act, 2003, framed the Jharkhand State Electricity
Regulatory Commission (Electricity Supply Code) Regulations, 2005,
which came into effect from 28.07.2005.
6. The submission of the learned counsel for the appellants-Board,
is that in terms of Regulation 9.2.1 of the Regulations of 2005, which
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relates to the reduction of contract demand/sanctioned load, no reduction
of load could be allowed before the expiry of the period of agreement
which, according to the appellants, would be 07.07.2007 when a fresh
agreement was executed for enhanced load of 4000 KVA. Learned
counsel for the appellants has thus submitted that the application for
reduction of load filed by the respondent on 20.09.2007, which was well
within the period of three years from 07.07.2007, was rightly rejected by
the Board vide its order dated 08.11.2007, as it was in conformity with
the provisions of the Regulations of 2005.
7. Per contra, learned Senior Counsel appearing for the respondent
has submitted that the agreement was initially entered into on 14.04.2004
and thereafter even though technically fresh agreements may have been
executed for enhancement of load of the respondent, but the same were
only extension/amendment of the initial agreement dated 14.04.2004,
and the terms of each of these agreements were identical, with the only
change being that of the increased contracted load. It has been contended
by the learned Senior Counsel for the respondent that the Regulations
do not permit execution of a fresh agreement in case of enhancement of
load, and the enhancement agreements would merely be supplementary
agreements in continuation of the initial agreement dated 14.04.2004
and cannot be treated as fresh agreement because it is the
same electricity
connection, which was granted by the agreement dated 14.04.2004, in
which there have been amendments from time to time for increase of
load, and merely executing a fresh agreement for enhancement of load
cannot be termed as fresh agreement for the purpose of Regulations of
2005. It has, thus, been submitted that the application of the respondent
for reduction of load dated 20.09.2007 has to be treated as after a period
of three years from the date of initial agreement dated 14.04.2004 and
thus, the application of the respondent ought to have been allowed and/
or should be deemed to be allowed in terms of the provisions of
Regulations of 2005. In this regard, reliance has been placed on
Regulations 2(l), 9.1 and 9.2 of the Regulations of 2005.
8. For the ready reference, the relevant provisions of the
Regulations of 2005 are reproduced below:-
“2. Definitions. 2.1 In these regulations, unless the context
otherwise requires:
(a)…..
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(b)…..
(c)…..
……...
(l) “Contract Demand” means demand in Kilowatt (KW) or
Kilo Volt amperes (KVA) or H.P (Horse Power) mutually agreed
between the Distribution Licensee and the consumer as entered
into agreement or agreed through other written
communication.
(m)…..
(n)…..
9. Enhancement and Reduction of Contract Demand/
Sanctioned Load. –
9.1Enhancement of Contract Demand /Sanctioned Load
9.1.1 The application for enhancement of Contract Demand/
Sanctioned Load shall be made in the prescribed form and in
the manner as specified in new service connection in Clause
5 of these Regulations.
9.1.2 The application for enhancement of load shall be
disposed of in the manner and within the time frame as
prescribed for new service connection in Clause 6.2.11 of
these Regulations.
Provided that the application for enhancement of Contract
Demand/Sanctioned Load may be outright rejected by the
distribution licensee if the consumer is in arrears of licensee’s
dues and the same have not been stayed by a court of law or
the Commission.
9.2 Reduction of Contract Demand/Sanctioned Load. -
9.2.1 The application for reduction of Contract Demand/
Sanctioned Load shall made in the prescribed form specified
for the new service connection.
Provided that no reduction of load shall be allowed by the
Distribution Licensee before expiry of the initial period of
agreement.
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9.2.2 The application for reduction of load shall be
accompanied by-
(i) Details of modification, alteration and removal of electrical
installation with completion certificate and test report of the
Licensed Electrical contractor.
(ii) Any other reason for reduction of load
(iii) Details of generator if any installed by the consumer with
safety clearance certificate from competent authority as
applicable.
9.2.3 The Distribution Licensee shall consider the application
verify the same and communicate in writing its decision on
reduction of Contract Demand/Sanctioned Load in writing
within 30 days of the application.
Provided that if the distribution licensee rejects or refuses
the reduction of Contract Demand/Sanctioned Load it shall
do so after affording the consumer reasonable opportunity
of being heard in the matter and after communicating in
writing the reasons for such refusal.
9.2.4 If the decision of the application for reduction of
Contract Demand/Sanctioned Load is not communicated by
the licensee within 30 days of the application, the consumer
shall send a notice to the licensee requesting for disposal in
the matter and if the decision is still not communicated within
15 days of the notice. The reductions of Contract Demand/
Sanctioned Load shall be deemed to have been sanctioned,
from the 16th day after the issue of notice to the licensee by
the consumer.
9.2.5 The reduction of Contract Demand/Sanctioned Load
shall come into effect from the first day of the month following
the month in which the reduction of load has been sanctioned
or have been deemed to be sanctioned.
9.2.6 After the sanction of the reduction of Contract Demand/
Sanctioned Load the consumer shall execute a supplementary
agreement and the licensee shall recalculate the Security
Deposit excess Security Deposit if any shall be refunded by
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way of adjustment in the minimum number of succeeding bills
of the consumer.”
(emphasis supplied)
9. The communication dated 08.11.2007 of the Electrical
Superintending Engineer of the Board, refusing the prayer of the
respondent for reduction of load, is reproduced below:-
“Sub:
Regarding the reduction of load from 4000 KVA
to 1325 KVA in respect of M/s R.K. Forging Ltd.
Conn. No. HJAP-185
Ref:
Your letter No. R.K.F.L/III and IV 182/07-08 dated
05.10.2007.
With respect to the above, you have applied for reduction
of C.D from 4000KVA to 1325KVA. It is to inform you that
C/9B of agreement may kindly be seen.
‘C/9B- The consumer shall not be at liberty to determine
this agreement before the expiration of three years from
the date of commencement of the supply of energy
(4000KVA w.e.f. 12.07.2007). The consumer may determine
this agreement with effect from any date after the said
period on giving to the Board not less than twelve calendar
months’ previous notice (this has charged not less than 6
Month Notice vide Secretary, Jharkhand State Electricity
Board Notification No.5058 dated 20.08.2002) in writing
in that behalf and upon the expiration of the period of
such notice. This agreement shall cease and determine
without prejudice to any right which then have accrued to
the Board herewith provided always that the consumers
may at any time with the previous consent of the Board
transfer and assign this agreement to any other person
and upon subscription of
such transfer, this agreement shall
be binding on the transferee and Board and take effect in
all respects as if transferee had originally been party in
place of the consumer who shall henceforth be discharged
from all liabilities under or in respect thereof.’
Hence your request for reduction cannot be done as per
agreement.”
JHARKHAND STATE ELECTRICITY BOARD v.
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10. Heard learned Counsel for the parties and have carefully gone
through the record.
11. From perusal of the communication dated 08.11.2007, it is
clear that the application of the respondent for reduction of load has
been rejected in terms of Clause 9(B) of the agreement, treating the
date of commencement of the agreement to be 7/12.07.2007 and only
by considering the provision of determination of the agreement, which
could not have been without giving notice of less than 12 calendar months.
It is clear that the said communication/order does not consider the
provisions of the Regulations of 2005 with regard to reduction of load,
but only treats the application for reduction of load to be an application
for determination of the agreement.
12. Chapter 9 of the Regulations of 2005 deals with the
enhancement and reduction of contract demand/sanctioned load.
Regulation 9.1 deals with enhancement of contract demand/sanctioned
load, whereas Regulation 9.2 deals with the reduction of contract demand/
sanctioned load.
13. Just as the consumer has the liberty of getting its load enhanced
under Regulation 9.1, the reduction of contract demand/sanctioned load
can also be prayed for and decided in terms of Regulation 9.2. The
proviso to Regulation 9.2.1, no doubt, provides that no reduction of load
shall be allowed before expiry of the initial period of agreement, which is
three years in the present case. The question would be
whether the
initial agreement is to be considered for such purpose, or the subsequent
agreements.
14. Regulation 9.2.6 of the Regulations of 2005 provides for
execution of a supplementary agreement for reduction of contract
demand/sanctioned load of the consumer. Similarly, for enhancement of
load also, even if a fresh agreement may have been executed between
the parties, the same could be treated as nothing but a supplementary
agreement of the initial agreement by which the electricity connection
was granted for a particular load. Clause 2(l) of the Regulations also
defines “contract demand” to be demand mutually agreed in the
agreement or agreed through other written communication, meaning
thereby that for variation of the contract demand execution of a fresh
agreement is not essential and the same can be done otherwise also by
mere written communication.
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15. It is noteworthy that the Jharkhand State Electricity Board
(‘the Board’) is a monopoly supplier of electricity which has laid down
its own terms and conditions, regarding which the consumer has no say
or choice but to sign on the dotted lines, if it wants of get electricity load
varied for running its industry. The Board is an instrumentality of the
State. It has to be fair and reasonable. If the Regulations provide for
contract load to be varied even through a written communication, then in
our considered view, in all fairness, though fresh agreements may have
been executed at the stage of enhancement of load of the same electricity
connection, the same cannot be treated as anything but an extension/
amendment or modification of the initial agreement granting the electricity
connection, which in the present case would be the agreement dated
14.04.2004. On the dictates of the Board, the consumer may have been
required to sign fresh agreements for each enhancement of load, but the
enhancement being for the same electricity connection which still
continues, it would merely be amendment of the initial agreement. This
would also be in consonance with the provisions of the Regulations of
2005, which have to be liberally interpreted in favour of the consumer.
16. Reverting to the order dated 08.11.2007, which was impugned
in the writ petition, we are of the opinion that the Board has gone wrong
in treating the application dated 20.09.2007 of the respondent
for
reduction of load to be that for determination of the agreement under
Clause 9B of the agreement, which application, in fact, ought to have
been considered under Regulation 9.2 of the Regulations of 2005. Further,
we are unable to accept the submission of the learned Counsel for the
appellant that the application of the respondent for reduction of load was
within the period of three years, because as we have discussed
hereinabove, the agreement to be considered in the present case is the
initial agreement dated 14.04.2004 and not the subsequent agreement
dated 07.07.2007.
17. The judgments of this Court rendered in Bihar State
Electricity Board, Patna and Others v. M/s. Green Rubber
Industries and Others, (1990) 1 SCC 731, Orissa State Electricity
Board v. Orissa Tiles Limited, (1993) Supp. 3 SCC 481, Andhra
Steel Corporation Ltd. and Others v. Andhra Pradesh State
Electricity Board and Others, (1991) 3 SCC 263 and Jharkhand
State Electricity Board & Others v Laxmi Business and Cement
Company Private Limited and Another, (2014) 5 SCC 236 as have
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been relied upon by learned counsel for the parties, are distinguishable
on facts, in as much as they all relate to minimum guarantee charge, and
that too under the old Electricity Act of 1910, as is so in the first three
cases.
18. In view of the aforesaid, we are of the opinion that the
application of the respondent dated 08.11.2007 ought to have been allowed
by the Board in terms of Regulation 9.2 of the Regulations of 2005,
treating the application to be beyond the period of three years from the
date of the execution of the initial agreement dated 14.04.2004, by which
the electricity connection of the respondent had been initially granted.
19. While dismissing the appeal, we are not going into the question
as to whether the provisions of Regulation 9.2.1 are discriminatory,
arbitrary and against the public policy, as has been held by the Jharkhand
High Court vide its judgment dated 23.07.2008.
20. The appeal is, accordingly, dismissed. No order as to costs.
21. The application of the respondent dated 20.09.2007 for
reduction of contract load/sanctioned load from 4000 KVA to 1325 KVA
would be deemed to have been allowed under the provisions of Regulation
9.2 of the Regulations of 2005, and the respondent shall be entitled to all
consequential benefits.
Devika Gujral
Appeal dismissed.