Reportable

  IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO  1879 OF 2003

Karnataka Power Transmission Corpn. & Anr.     …  Appellants

Versus

Ashok Iron Works Pvt. Ltd.               … Respondents

CIVIL APPEAL NO  7784 OF 2002

H.V. Balachandra Rao           …  Appellant

Versus

Karnataka Power Transmission Corpn. & Anr.   … Respondents

J U D G E M E N T

R.M. Lodha, J.

These  two  appeals  by  special  leave,  involving  common

questions, were  heard together  and are being disposed of by this

judgment.

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2.    As   the  principal  arguments  have  been   advanced  in  Civil

Appeal No. 1879/2003,  we take up the facts of that appeal which

are thus,  briefly put.   M/s Ashok Iron Works Private Limited (for

short, ‘the company’)  is a Private Limited Company and engaged in

the activity  of manufacture of iron products.  The company applied

for  the supply of  electrical   energy (2500 KVA) to the Karnataka

Electricity Board (now Karnataka Power Transmission Corporation

and hereinafter referred to as ‘KPTC’).  The application made by the

Company  was cleared  by the  Single Window agency and supply

of electric energy 1500 KVA was sanctioned.  The company is said

to have  deposited an amount of Rs. 8,40,000/-  on 1st February,

1991  as  per  demand.     KPTC  did  not   commence  supply  of

electricity as agreed upon and that  necessitated the company  to

approach Karnataka  High Court  for a direction  to KPTC to supply

the  sanctioned  energy.    On  16th April,  1992,   the  High  Court

directed KPTC to supply electrical energy  as per sanction forthwith

and subsequently,  time for  supply of  electricity  was extended by

the  High  Court  upto  21st July,  1992.  KPTC raised  an  additional

demand of  Rs. 8,38,000/- from the company and further demand in

the sum of Rs, 1,34,000/-. The company is said to have deposited

the  said  amount.   However,   the  actual  supply  of   the  power

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commenced   in  the  month  of  November,  1992.    The  company

accordingly filed a complaint  under the Consumer Protection Act,

1986  (for short,  ‘the Act,  1986’) before the  Consumer Disputes

Redressal Forum,   Belgaum claiming damages in the sum of Rs.

99,900/-   for  delay  in  supply  of  electricity.   The  complaint  was

contested  by   KPTC,  and,   inter  alia,  preliminary  objection  was

raised that complaint was not maintainable as the complainant was

engaged in  commercial activity and electricity being goods; sale of

goods to a commercial consumer  for a commercial  purpose was

outside the scope of  the Act, 1986.     

3.      As there were several complaints wherein identical objection

pertaining to the maintainability of such complaints was involved, all

these complaints were taken up  and disposed of together by the

District  Forum by a  common order  dated  10th September,  1993.

The District Forum was persuaded  by the  objection raised by the

KPTC and  it held that the complaints were not maintainable.   

4.      The company challenged the order of the District Forum in

appeal  before  Karnataka  State  Consumer  Disputes  Redressal

Commission  (for  short,  ‘State  Commission’).   Few other  appeals

from  the  common  judgment  dated   10th September,  1993  also

came  to  be  filed  before  the  State  Commission.  The  State

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Commission vide  its  order dated June 15, 1995 set aside the order

of the District Forum and held that  complaints were maintainable

being covered by the  definition of “Consumer” under the provisions

of the Act, 1986.

5.  KPTC challenged the order of the State Commission by  filing

a  revision  petition  before  the   National  Consumer  Disputes

Redressal  Commission (for  short,  “‘National  Commission”).      It

appears that  initially revision petition was dismissed in  default but

later  on,   on the application  of  restoration  made by KPTC,   the

revision petition was restored but  it  was dismissed in view of  its

decision dated 23rd November, 2001, in the case of  M/s  Welmelt

Steel Cast Pvt. Ltd. v.  Karnataka State Electricity Board.    It is

from this  order   that  appeal  1879/2003  by special leave arises.

6. Mr.  S.K.  Kulkarni,  learned  counsel  for   KPTC  made  the

following submissions  before us:

(i) The complaint  by  the  company before  the  Consumer Forum  against  KPTC  was  incompetent  and  not maintainable because the complainant is not a ‘person’ under Section 2(1)(m) of the Act, 1986 and as such the complainant  is  not  the  ‘consumer’  within  the  opening limb of the definition of that expression in Section 2(1) (d).

(ii)     The  complainant  is  not  a  ‘consumer’   within  the definition     of  Section 2(1)(d)(i) of the Act, 1986 since

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it  purchased  electrical   energy  from  the  KPTC  for commercial production.

(iii) The complainant’s case does not fall within the scope of Section  2(1)(d)(ii)  of  the  Act,  1986.   The  expression “service” in Section 2(1)(o)  cannot  be read in a wider sense  as  it  is  circumscribed  by  the  word  “facilities”, thereby limiting the service only to the  consumers of facilities in connection with supply of electrical  energy. In other words, the dispute relating to sale and supply of electricity  does not  come within the ambit  of  “service” under  Section  2(1)(o)  of  the  Act,  1986.    If  for  the arguments’  sake,  it  is treated “service”, since it  is for commercial purpose, it is excluded from the purview of sub-clause (1)(d)(ii).

7. At this stage, it would be  appropriate  to refer to some of the

provisions of the Act, 1986  as were existing at the relevant time in

the  year  1992  which  are  relevant  for  the  consideration  of  the

submissions of the learned counsel for KPTC.   

8. Section 2(1)(d) defines “consumer” as follows:-

“Consumer”  means any person who, -  

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of  such  goods  other  than the  person  who buys such goods for consideration paid or promised or partly paid or  partly  promised,  or  under  any  system  of  deferred payment when such use is made with the approval  of such person, but does not include a person who obtain such goods for resale or for any commercial purpose; or

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(ii) hires any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment,  when such services  are availed of with the approval of the first mentioned person.”

 9. According to Section2(1)(m),  “person” includes :-

“(i)      a firm whether registered or not;  (ii)  a Hindu undivided family;  (iii)  a co-operative society; (iv) every other association of  persons whether registered

under the societies Registration Act, 1860 (21 of 1860) or not.”

 10.  Section 2(1)(o) defines “service” thus:

“Service’ means service of any description which is made available  to  potential  users  and  includes  the  provision  of facilities  in  connection  with  banking,  financing,  insurance, transport,  processing,  supply  of  electrical  or  other  energy, board or  lodging or both,  entertainment,  amusement  or  the purveying a news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.”  

re : contention –(i)

11. The question that falls for our determination is:  is a  private

limited company  a ‘person’ as contemplated under Section 2(1)(d).

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The contention of the learned counsel for the KPTC is that persons

specified  and   enumerated  in  Section  2(1)(m)  are  the   only

categories  of  persons  covered  by   that  clause  and  a  company

incorporated  under the Companies Act is not covered thereunder.

The learned counsel would submit that a company is excluded from

the definition of ‘person’ since  the object of the Act, 1986  is  to

provide an affordable remedy to individuals or  four categories of

collectivities   or  associations  of  individuals  which  may constitute

legal  entities  for   suing  or  being  sued.   According  to  learned

counsel,  the  companies incorporated were never  intended to be

covered by Act,  1986 as they could  always pursue the ordinary

remedy provided in law.  The learned counsel also submitted  that

the word “includes” must be read as “means”.    In this regard, the

learned counsel placed reliance upon  two decisions of this Court

namely;  (1)  The  South  Gujarat  Roofing  Tiles  Manufacturers

Association and Anr.  v. The State of Gujarat and Anr.  [(1976) 4

SCC 601]    (2)  Reserve Bank of  India   v.   Peerless  General

Finance and Investment Co. Ltd. and Ors.  [(1987) 1 SCC 424)]

12.   Lord  Watson  in   Dilworth  v.  Commissioner  of  Stamps

(1899)  AC 99 made the following classic statement:

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“The word “include”  is very generally used  in  interpretation clauses  in  order  to  enlarge  the  meaning  of  words  or  phrases occurring in the body of the statute; and when it is so used these words or phrases must be  construed as comprehending, not only such things  as they signify according to  their  natural  import,  but also those things which the interpretation clause declares that they shall  include.   But  the  word  “include”  is  susceptible  of  another construction,  which may become imperative, if  the context of  the Act is sufficient  to show that  it  was not merely employed for the purpose  of  adding  to  the  natural  significance  of  the  words  or expressions defined.  It may be equivalent to “mean and include”, and  in  that  case  it  may afford  an  exhaustive  explanation  of  the meaning  which,  for  the  purposes  of  the  Act,  must  invariably  be attached to these words or expressions.”

13.   Dilworth  (supra)  and  few  other  decisions  came  up  for

consideration in Peerless General Finance and  Investment Co.Ltd.

and  this   Court  summarized   the  legal  position  that   inclusive

definition by the Legislature is used;  (one)  to enlarge the meaning

of  words  or  phrases  so  as  to  take  in  the  ordinary,  popular  and

natural sense of the words and also the sense which the statute

wishes to attribute to it; (two) to include meaning about which there

might be some dispute;  (three) to bring under one nomenclature all

transactions  possessing  certain  similar  features  but  going  under

different names.

14. It   goes  without  saying  that  interpretation  of   a  word  or

expression must depend on the text and the context.  The resort of

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the word ‘includes’  by the Legislature often shows the intention of

the  Legislature  that  it  wanted  to  give  extensive  and  enlarged

meaning to such expression. Sometimes,  however,  the  context

may suggest that word ‘includes’ may have been designed to mean

“means”.    The  setting, context and object of an enactment may

provide sufficient guidance for interpretation of word ‘includes’ for

the purposes of such enactment.   

15. Section 2(1)(m) which  enumerates four  categories  namely,

(i) a firm whether registered or not; (ii) a Hindu undivided family; (iii)

a co-operative society; and (iv) every other association of persons

whether registered under the Societies Registration Act, 1860 (21

of  1860)  or  not  while  defining   ‘person’  cannot  be  held  to  be

restrictive and confined to these four categories  as it is not said in

terms that ‘person’ shall mean one or other of the things which are

enumerated, but that it shall ‘include’ them.

16. The  General  Clauses  Act,  1897  in  Section  3(42)  defines

‘person’:   

“Person shall include any company or association or body of individuals whether incorporated or not.”

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17. Section 3 of the Act, 1986 upon which reliance is placed by

learned counsel  for KPTC provides that the  provisions of the Act

are in addition  to and  not in derogation of any other law for the

time  being  in  force.   This  provision  instead  of  helping  the

contention of KPTC would rather suggest that the  access to the

remedy provided  to the Act of 1986 is an addition to the provisions

of any  other law for the time being in force.  It does not in any way

give any clue to restrict the definition of the ‘person’.

18. Section  2(1)(m),   is  beyond all  questions,  an  interpretation

clause, and must have been intended by the Legislature to be taken

into account  in construing the expression ‘person’ as it occurs in

Section  2(1)(d).   While  defining  ‘person’  in  Section  2(1)(m),  the

Legislature  never  intended  to  exclude  a  juristic   person  like

company.   As  a  matter  of  fact,   the  four  categories  by  way  of

enumeration mentioned therein is indicative, categories (i), (ii) & (iv)

being unincorporate and  category (iii) corporate, of its intention to

include  body   corporate  as  well  as  body   un-incorporate.   The

definition  of   ‘person’  in  Section  2(1)(m)  is  inclusive  and   not

exhaustive.  It  does not  appear  to  us  to  admit  of  any doubt  that

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company is a person within the meaning of Section 2(1)(d)  read

with Section 2(1)(m) and  we hold accordingly.

re: contention - (ii) and (iii)

19. In  CST v.   M.P. Electricity Board, Jabalpur; case 1969 (2)

SCR 939, this Court held that electricity is ‘goods’.   In the case of

State  of  Andhra  Pradesh v.  National  Thermal  Power

Corporation; (2002) 5 SCC 203,  the Constitution Bench approved

the observations made in M.P. Electricity Board to the extent that

electrical  energy  can  be   transmitted,  transferred,  delivered,

possessed,  etc.,  but  did  not  agree  with  the  observation   that

electrical energy can be stored.     The Constitution Bench held that

significant characteristic of electrical  energy is that its generation or

production coincides almost instantaneously  with its consumption.

In the case of Indian Aluminium Co. v. State of Kerala; (1996) 7

SCC 637,  the characteristics  of electrical energy were  noticed by

this  Court  thus,  “…..continuity of  supply and consumption starts

from the moment the electrical energy passes through the meters

and sale simultaneously takes place as soon as meter reading is

recorded.   All  the  three  steps  or  phases  (i.e.  sale,  supply  and

consumption) take place without any hiatus.   It is true that from the

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place of generating electricity, the electricity is supplied to  the sub-

station installed at the units of the consumers through  electrical

high-tension transformers and from there electricity is supplied to

the meter….”

20. Recently, this Court in the case of  Southern Petrochemical

Industries Co. Ltd.  v. Electricity Inspector & ETIO and Others  ;

(2007) 5 SCC 447,  made following  pertinent observations:

“149.  It  may be  that  electricity  has  been considered  to  be “goods”  but the same has to be considered having regard to the definition of “goods” contained in clause (12) of the Article 366  of  the  Constitution  of  India.   When  this  Court  held electricity to be “goods” for the purpose of application of sales tax laws and other tax laws, in our opinion, the same would have nothing to do with the construction of Entry 53 of List II of the Seventh Schedule of the Constitution of India.”

21. Section 49 of  The Electricity  (Supply)  Act,  1948 makes the

following provision:

[49.  Provision for the sale of electricity by the Board to persons  other  than  licensees.  – (1)  Subject  to  the provisions of this Act and of regulations, if any made in this behalf,  the  Board  may supply electricity  to  any person  not being  a  licensee  upon  such  terms  and  conditions  as  the Board  thinks  fit  and  may for  the  purposes  of  such  supply frame uniform tariffs.

(2)  In fixing the uniform tariffs, the Board shall have regard to all or any of the following factors, namely:-

(a) the  nature  of  the  supply  and  the  purposes  for which it is required;

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(b) the  co-ordinated  development  of  the  supply  and  distribution  of electricity  within  the  State  in  the  most  efficient  and  economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensee;

(c) the simplification and standardization of methods and rates of charges for such supplies;

(d) the  extension  and  cheapening  of  supplies  of electricity to sparsely developed areas.

                       (3) Nothing in the foregoing provisions of this section shall derogate  from  the  power  of  the  Board,  if  it  considers  it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee, having regard to the geographical position of any area, the nature of the supply and  purpose  for  which  supply  is  required  and  any  other relevant factors.

(4) In  fixing  the  tariff  and  terms  and  conditions  for  the supply  of  electricity,  the  Board  shall  not  show  undue preference to any person.]

22. Whether  the supply of electricity by KPTC to a consumer

is sale and purchase of goods within the meaning of Section 2(1)(d)

(i) of the Act, 1986?   We do not think so.  Although title of Section

or  marginal note speaks of  “the sale of electricity by the Board to

persons other than licensees”  but the marginal note or title of the

Section  cannot  afford  any  legitimate  aid  to  the  construction  of

Section.  Section 49 speaks of supply of electricity to any person

not being a licensee upon said terms and conditions as a Board

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thinks fit  and for the purpose of such supply free uniform  tariffs.

This  Court  has  already  held  in  Southern  Petrochemical

Industries (supra)  that supply does not mean sale.    As a matter

of fact, the company has brought its case to  be covered by Section

2(1)(d)(ii)  and not  2(1)(d)(i) as the dispute raised by the company

is with regard to non-performance of the services for consideration

within time frame.  For the purposes of  the maintainability of  the

complaint, therefore,  what is important to be seen is whether there

is  deficiency in service  within the meaning of  Section 2(1)(d)(ii).

Under Section 2(1)(o) of the Act, 1986,  ‘service’ means service of

any  description  which  is  made  available  to  potential  users  and

includes  the  provision  of  facilities  in  connection  with  supply  of

electrical  or  other  energy.  “Deficiency”  under  Section  2(1)(g)

means  any fault,  imperfection, shortcoming or inadequacy in the

quality, nature and manner of performance  which is required to be

maintained by or under any law for the time being in force or has

been undertaken to be performed by a person in pursuance of a

contract or otherwise in relation to any service. As indicated in the

definition of ‘service’,  the provision of facilities in connection with

supply of electrical energy is a service.  Supply of electricity by the

Board or for  that matter KPTC to a consumer would be covered

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under Section 2(1)(o) being ‘service’ and if the supply of electrical

energy  to a consumer is not provided in time as is agreed upon,

then under Section (2)(1)(g),  there may be a case for deficiency in

service.     

23. Learned counsel for KPTC relied upon an order of this Court

in the case of SDO, Electricity and Anr. v.  B.S. Lobana;  (2005) 6

SCC 280 in support of his  contention that in the matter such as

present one, the Consumer Forum is not an appropriate forum.  We

are  afraid  no  such  absolute  proposition  as  canvassed  by   the

learned counsel is discernible  from the said  order.   The said order

is confined  to its own facts which is clear from  paragraph 3 that

reads thus:

“  The respondent  has  filed  written  submissions.   We have perused  the  same.   In  the  facts  and  circumstances  of  the case, we are of the view that instead of moving the District Forum,  the  respondent  should  have  moved  an  application under section 26(6) of the Electricity Act, 1910 (for short “ the Act”) for referring the matter to the Electrical Inspector.”

24.  Learned  counsel  urged  that  the  definition  ‘service’  is  of

limited nature and is limited to the providing facilities in connection

with electricity.  According to him, the facility is an expression which

facilitates the supply of electricity to an installation and the definition

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of service does not cover supply of electricity. This contention  of

the  learned  counsel  is  founded  on   erroneous  assumption  that

supply of  electricity is a sale of electricity and the use of expression

‘supply’ is synonym for ‘sale’.    We have already noticed above,

which we need not repreat, that supply of electricity to a consumer

by KPTC is not  sale of electricity.  The expression ‘supply’ is not

synonym for ‘sale’.    We  reiterate what has been stated by this

Court  in  Southern  Petrochemical  Industries  Co.  Ltd.  (supra)  that

supply does not mean sale.  The expression ‘but does  not include

a person who avails of such services for any commercial purpose’

inserted  in  Section  2(1)(d)(ii)   by  the  Act  62  of  2002  is  not

applicable in the facts and circumstances of the present case since

the controversy relates to the period prior to amendment.

25. In what  we have discussed above,  the complaint made by

the  company before the District Forum cannot be said to be not

maintainable  and  we  hold,  as  we  must,  that  complaint  is

maintainable.

26. In so far as Civil  Appeal No. 7784/2002 is concerned,   the

complainant  (appellant  herein)   is  a  sole  proprietor  of   Techno

Batteries  which  is  a  battery  charging  unit.   According  to  the

complainant,  for the power supplied  by Karnataka Electricity Board

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(now ‘KPTC’ ) charges payable are   under “Power-Tariff,  L.T.-5”

but in the Bill dated 6th March, 1990, a sum of Rs. 22,628.40 was

demanded as “Audit  Short Claim”  on the ground that the charges

payable for the consumption of electricity by the  complainant are

under Tariff-Schedule L.T.-3 and not L.T.  -5.    The  complainant

moved the District   Forum at Bangalore challenging the demand.

The District Forum allowed the complaint vide  its order dated 22nd

February,  1994.   KPTC  preferred  an  appeal  before   the  State

Commission.  The State Commission by its Order dated 19th June,

1997 allowed the appeal on the ground that the complainant was

not a consumer within the  meaning of Section 2(1)(d) of the Act,

1986 and consequently, it set aside the order of the District Forum.

Aggrieved by the order of the State Commission,  the complainant

preferred Revision  before the National Commission.  The Revision

Application  came  to  be  dismissed  as  the  complainant  was  not

present and also because  the National Commission was satisfied

with  the  order  passed  by  the  State  Commission.    This  appeal

arises from the Order dated 1st December, 2000,  passed by the

National Commission.

27. In view of the discussion already made by us above  while

dealing with contentions (ii) and (iii) in Civil Appeal No. 1879/2003,

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it  has  to  be  held  that  the  complaint  by  H.V.  Balchandra  Rao is

covered  under Section 2(1)(d)(i)(ii) of the Act, 1986.

28. For the foregoing reasons:

(1) Civil  Appeal  No.  1879/2003   is  dismissed;  the

order dated 7th October, 2002 passed by National

Consumer  Disputes  Redressal  Commission  and

the  Order  of   Karnataka  State  Consumer

Redressal Commission passed on 15th June, 1995

are  affirmed   and,   accordingly,   the  complaint

stands remitted to District Forum for its disposal in

accordance with law.

(2) Civil  Appeal  No.  7748/2002  is  allowed  and  the

Order  dated  1st December,  2000  passed  by

National  Consumer  Disputes  Redressal

Commission  and the  Order dated 19th June, 1997

passed  by  Karnataka  State  Consumer  Disputes

Redressal Commission  are set aside.  Appeal No.

168/1994 is restored to the file of  Karnataka State

Consumer Disputes Redressal Commission for its

disposal in accordance with law.   

(3) The parties  shall bear their own costs.

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…………………………..J. (MARKANDEY KATJU)

...…………………………J. (R.M. LODHA)

New Delhi February 9, 2009

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