Case ID: 1932

Judgment:
Appeal No. 69 of 1964. Appeal by special leave from the judgment and decree dated October 10	 1961	 of the Andhra Pradesh High Court in Second Appeal No. 872 of 1958. A.V. Viswanatha Sastri	 K. Rajendra Chaudhuri and K. R. Chaudhuri	 for the appellants. S.V. Gupte	 Solicitor General	 and T. Satyanarayana. for respondent No. 1. T.V.R. Tatachari and B.R.G.K. Achar	 for respondent No. 2. The Judgment of the Court was delivered by Subba Rao	 J. On November 22	 1927	 the Government of Madras	 in exercise of its powers under section 3(1) of the (IX of 1910)	 hereinafter called the Act	 issued a licence to the Bezwada (now Vijayawada) Municipal Council for the supply of electric energy within the municipal limits of Bezwada at rates not exceeding the maximum charges given in 'the third annexure to the said licence. The appellants	 who are some of the consumers of electric energy for domestic and industrial purposes	 entered into agreements with the licensee for the supply of electric energy to them for domestic	 industrial and other purposes	 agreeing to pay the current official scale of rates. On December 13	 1940	 the Municipality passed a resolution bringing into force new rates for the supply of electric energy from April 1	 1940. The consumers paid the rates so fixed ' till the year 1956. On April 30	 1956	 the Municipal Council passed another resolution enhancing the rates from 1 4 1956. The appellants filed a representative suit against the Vijayawada Municipality in the Court of the District Munsif	 Vijayawada	 for a declaration that the said resolution dated April 30	 1956	 passed by the Municipal Council was illegal	 invalid and unenforceable and for an injunction restraining the said Municipality from collecting charges from the consumers of electric energy in the licensee 's area at the new revised rates in pursuance of the impugned ' resolution. The learned District Munsif held that the demand of enhanced rate was legal and valid and dismissed the suit. On appeal	 the learned Subordinate Judge held that the levy from the date of the said resolution was good	 but it could ' not be given retrospective operation. He further held that the claim for duty at half an anna per unit was invalid. In the result he modified the decree of the District Munsif. On a further appeal	 a Division Bench of the Andhra Pradesh High Court confirmed the decree of the Subordinate Judge. By special leave the present appeal has been filed in this Court. Mr. A.V. Viswanatha Sastri	 learned counsel for the appellants raised before us the following two contentions: (1) The rates agreed upon between the consumers and the Municipality cannot be unilaterally altered and increased by the Municipality to the prejudice of the consumers and	 therefore	 the said resolution dated 278 April 30	 1956	 was invalid and unenforceable; and (2) as the said resolution was passed without obtaining the previous sanction of the State Government under section 21(2) of the Act	 it was void for that reason also. The first contention turns upon the relevant clauses of the agreement entered into between the Municipal Council and the consumers. exhibit B 4 is one such agreement dated May 27	 1932	 between the Municipality and one of the appellants herein. The material clauses of the agreement read: Para	 IV. The consumer shall pay to the licensee for all electrical energy so supplied at the rates and in accordance with the terms	 given in the licensee 's Current Official Scale of rates and ' the signing of this Agreement is held to imply concurrence in the terms of the said Scales of rates. Provided that the minimum rates as specified therein shall be paid irrespective of whether energy to the extent has been consumed or not. Para	 V. A consumer under this Agreement is required to state (see Schedule) under which of the rates set out in the licensee 's Official Scale of energy Rates	 he desires to be charged. Para	 X. This Agreement shall be read and construed as subject in all respects to the provisions of the Bezwada Municipal Electric Licence	 1927	 and to the provisions of the 	 and of any modification or re enactment thereof for the time being in force thereunder so far as the same respectively may be applicable. The supply of electrical energy under this agreement is subject to following among other provisions of law	 namely: The schedule above referred to. (2) Purposes to which the supply is to be given	 and in the case of domestic supply under which rate to be charged	 as referred to in paragraph V: (a) (Supply) Domestic Purposes. (b) (Rate) Rs. 0 6 0 per unit. (3) Maximum electrical power required by the consumer:0 54 K.W. (4) Minimum monthly charge: Rs. 2 8 0 in accordance with (a) class rate in the Schedule of Rates. The Schedule of Rates mentioned in this agreement presumably refers to scale of rates fixed by the resolution of the Municipality. The conflicting arguments centre on the question whether the words "current official scale of rates" in para. IV relate to the scale of rates current on the date when the agreement was entered into 279 or refer to the scale of rates current from time to time in accordance with the resolution passed by the Municipality. The expression "current" means "vogue or prevalent"; and "current rate" may mean the rate obtaining at a particular time or at a future time or from time to time. The term goes well with the present	 future and recurrent. It is capable of different meanings depending upon the context or setting in which it appears. As the meaning of the word is ambiguous	 it is legitimate	 in order to ascertain its true meaning	 not only to study the document as a whole but also to ascertain its meaning from the circumstances whereunder the said agreement came into existence. Under para. X of the agreement the said agreement shall be subject to the provisions of the licensee and the provision of the Indian Electricity Act	 1940	 that is to say the said provisions are incorporated by reference into this agreement. Under the licence the licensee is precluded from charging rates higher than those prescribed thereunder. On April 1	 1940	 the Electricity Department of the Vijayawada Municipality prepared a document styled as "Conditions and Rates of Supply". It does not contain any statutory rules	 but only administrative directions in regard to providing	 inter alia. for the method of entering into agreements and for charging rates for the energy supplied. This embodies the administrative practice of the Municipality in the matter of charging rates for the energy supplied. Paragraph is thereof	 under the heading "Method of charging for current". reads: "The price and method of charging for current supplied shall be such as may from time to time be fixed by the licensee in accordance with the provisions of the Act and of his licence	 or such as may be made subject of Special agreement between the consumers and the licensee. " This makes a distinction between the official rate and the contractual rate. The official rate is that fixed by the licensee from time to time and the contractual rate is that fixed by special agreement between the parties. It may be assumed that this dual method is followed by the Municipality in the matter of entering into agreements. The form of application prescribed for the supply of electric energy contains the following clause: "I agree to pay for the said ' energy	 service connection and other dues including the deposit of such security as may be demanded in accordance with the scale of rates and the rules of the licence. " The scale of rates in the context means the official scale of rates that may be fixed by the Municipality. When an application is filed an obligation is imposed trader s.22 of the Act on the licensee to supply energy	 except in so far as is otherwise provided by the terms and ' conditions of the licence	 on the same terms as those on which any other person i.n the same area is entitled in similar 280 circumstances to corresponding supply. Section 23 of the Act says that a licensee shall not	 in making any agreement for the supply of energy	 show undue preference to any person. The combined operation of these provisions is that the licensee cannot discriminate between the applicants in the matter	 among others	 of rates chargeable for the energy supplied. Unless the Municipality enters into an agreement with a consumer enabling it to charge him at a rate fixed by it from time to time	 it would be very difficult for the Municipality to maintain equality of treatment between the consumers in the matter of rates. To illustrate	 if under certain agreement a rate obtaining at a particular date is agreed upon and the rate is binding on the Municipality even if it is raised later on	 the Municipality may be guilty of discrimination which it is asked to avoid by statute if it charges other consumers at a higher rate. 'this difficulty can be avoided if there is a term in the agreement executed by every consumer that he will pay the official rate fixed by the Municipality from time to time subject to the maximum fixed by the licence. That apart	 a public body like the Municipality in supplying energy to different consumers cannot run the risk of incurring loss by agreeing to fixed rates	 for the Government may increase the licence fee	 as it has done in the present case	 or there may be a rise in the cost of distribution. On the other hand	 if the term in the agreement is flexible to meet the said ' eventualities	 'the maintenance of continuous supply of electric energy may be assured without any loss to the public body. The circumstances obtaining at the time when the agreements between the consumers and the Municipality were entered into were these: The licensee had power to fix the rates subject to the maximum prescribed by the Government. The administrative directions provided for charging for the current supplied at rates that may be fixed from time to time. The Municipality was in practice fixing the rates from time to time having regard to the relevant circumstances. The said rates fixed by the Municipality from time to time were the "Official Scale of Rates". The consumers applied to the Municipality for supply of energy	 agreeing to pay for the energy supplied at the scale of rates fixed by the Municipality. With this background if we look at paragraphs IV and V of Ex. B 4 the meaning of the expression "current official scale of rates" will be clear. Paragraph IV speaks of "current official scale of rates" whereas para. V mentions "official scale of energy rates". These two paragraphs bring out the distinction between the official scale of rates and the official scale of energy rates: the former refers to the scale of rates maintained by the Municipality as modified from time to t;me by appropriate resolutions	 and the latter refers to the different rates payable in respect of energy supplied for different purposes. Under para. IV the consumer specifically agreed to abide by the official scale of rates. If the intention of the parties is that the consumer shall pay only the scale of energy rates obtaining at the time the agreement is entered into	 there is no necessity for this 281 specific agreement	 for para. V serves that purpose. On the other hand	 the said express condition and the use of the word "current" make it clear that the consumer agrees to pay at the official scale of rates current from time to time. The adjective "current" will become a surplusage	 if the intention is to pay the rates obtaining at the time the agreement is entered into	 for the agreement itself gives the existing rates. The use of the adjective "current" emphasizes the fact that the official scale of rates is not the existing rates	 but the scale of rates current from time to time. We have. therefore	 on a reasonable construction of the ambiguous expression "current" having regard to the entire document and the surrounding circumstances	 come to the conclusion that the words "current official scale of rates" in para. IV of the agreement mean the official scale of rates current or prevalent from time to time during the currency of the agreement. If so	 it follows that the appellants were under a contractual liability to pay the enhanced rates covered by the impugned resolution. The next question turns upon section 21(2) of the Act	 which	 as it then stood read: "Subject to the provisions of sub section (1)	 a licensee may	 with the previous sanction of the State Government given after consulting the local authority	 make conditions not inconsistent with this Act or with his licenee or with any rules made under this Act	 to regulate his .relations with persons who are or intend to become consumers	 and may with the like sanction given after the like consultation add to or alter or amend any such conditions; and any conditions made by a licensee without such sanction shall be null and void." Under this sub section the licensee cannot make conditions to regulate his relations with the consumers or amend any such conditions without the sanction of the State Government. Mr. Viswanatha Sastri argued that to enhance the rates was to alter a condition within the meaning of sub section (2) of section 21 of the Act and as admittedly the sanction of the State Government was not obtained before such alteration	 the said resolution was void. The learned Solicitor General contended that section 21 (2) of the Act was a general provision relating to conditions	 whereas section 23 thereof was a specific provision in regard to fixing of rates and that section 23 would	 therefore	 prevail over section 21 and that section 23 did not prescribe the sanction of the Government as a condition precedent for fixing the rates	 Mr. Tatachari	 while supporting this argument	 added that on the interpretation of para. IV of the agreement suggested by the respondents there was no alteration in the conditions at a11 and '	 therefore	 there was no scope for invoking section 21 of the Act. It is not necessary to express our opinion in this case on the question whether section 23 excludes the operation of section 21(2) of the Act in the matter of fixation of rates	 for we are satisfied that there is no alteration of any condition of 282 the agreement within the meaning of section 21(2) thereof. We have held that under para. IV of the agreement that was entered into between the consumers and the licensee	 the consumers agreed to pay the rates that were fixed by the Municipality from time to time. If the said term was a condition within the meaning of section 21(2) of the Act	 there was no change at all in that condition	 for the change in the rates was not in derogation of the condition but in terms of it. To state it differently	 the same condition embodied in para. IV of the agreement continued to operate between the parties even after the rates were enhanced under the impugned resolution. Therefore	 no sanction of the State Government was necessary for enhancing the rates. No other point was raised before us. In the result	 the appeal fails and is dismissed with one set of costs. Appeal dismissed.

Summary:
The Government of Madras issued a licence to the respondentMunicipality	 under s.3(1) of the 	 for the supply of electric energy within its municipal limits at rates not exceeding the maximum charges given in the licence. The appellants	 some consumers of the electric energy	 entered into agreements with the Municipality for the supply and agreed to pay the "current official scale of rates". The rates were increased by resolutions of the Municipality twice and on the second occasion the appellants filed a representative suit for a declaration that the later resolution was illegal	 and for an injunction restraining the Municipality from collecting charges at the new rates. The trial court dismissed the suit and the dismissal was confirmed on appeal by the High Court. In appeal by special leave the appellants contended that (i) the rates agreed between the consumers and the Municipality could not be unilaterally altered and increased by the Municipality to the prejudice of the consumers and	 therefore	 the impugned resolution was invalid and unenforceable; and (ii) as the impugned resolution was passed without obtaining the previous sanction of the State Government under section 21(2) of the Act	 it was void. HELD: (i) The consumers were under a contractual liability to pay the enhanced rates covered by the impugned resolution. Under sections 22 and 23 of the Act the Municipality cannot discriminate between consumers in the matter of rates chargeable for the energy supplied. Unless the Municipality enters into agreement with the consumer enabling it to charge him at a rate fixed from time to time	 it would be difficult for the Municipality to maintain equality of treatment between the consumers. That difficulty can be avoided if there is a term in the agreement executed by every consumer that he will pay the official rate fixed by the Municipality from time to time subject to the maximum fixed by the licence. Further	 a public body in supplying electric energy to different consumers cannot run the risk of incurring loss by agreeing to fixed rates	 for the Government may increase the licence fee as had been done in the instant case	 or there may be a rise in the cost of distribution. [280 A D] Therefore	 having regard to the entire document and the surrounding circumstances	 the words "current official scale of rates" in the agreement mean the official scale of rates current or prevalent from time to time during the currency of the agreement. [281 C] (ii) No sanction of the State Government was necessary for enhancing the rates. There was no alteration of any condition of the agreement within the meaning of section 21(2) of the Act. The consumers had agreed to .pay the rates that would be fixed from time to time. and if that term was a condition within the meaning of that section	 there was no change at all in that condition	 for the change in the rates was not in derogation of the condition but in terms of it. [282 A B] 277