24 September 1996
Supreme Court


Case number: C.A. No.-000921-000921 / 1980
Diary number: 62888 / 1980






DATE OF JUDGMENT:       24/09/1996




JUDGMENT:               THE 24TH DAY OF SEPTEMBER, 1996 Present :           Hon’ble Mr.Justice K. Ramaswamy           Hon’ble Mr.Justice G.B.Pattanaik Pramod Swarup and Praveen Swarup, Advs. for the appellant S.B.Sanyal, Sr.Adv.  Adn P.P.  Singh, Adv.  with him for the respondents.                       J U D G M E N T The following Judgment of the Court was delivered: Bihar State Electricity Board V. Hotel Satkar Pvt. Ltd. & Ors.                       J U D G M E N T PATTANAIK, J.      This appeal  is directed  against the  judgment of  the Division Bench  of the Patna High Court dated 7th September, 1979 in Civil Writ Jurisdiction Case No. 1710 of 1978.      The respondent  filed the writ petition challenging the legality of  the notice  served by  the appellant  issued in exercise  of   power  under  Section  24(1)  of  the  Indian Electricity Act,  1910  (hereinafter  referred  to  as  ’the Act.’) inter  alia on  the ground  that a  bona fide dispute exists between  the licensee  and the  consumer of  electric energy and  as such  the provisions of Section 24 (1) of the Act will  not apply.  The case of the respondent consumer is that  the   appellant  has  been  supplying  energy  to  the respondent hotel  but the  said respondent  has not  entered into any  agreement. and therefore the appellant is entitled to be charged on the basis of the actual consumption and not on the basis of any contract demand. The appellant, however, submitted bills  in respect  of the  energy consumed  on the basis of  the contract  demand which  the respondent did not pay and  for such  default in  payment of the amount charged under   the   bills   the   appellant   issued   notice   of discontinuance under Section 24 of the Act. According to the respondent’s case the bills submitted by the appellant being disputed, no  notice could have been issued by the appellant



under sub-section  (1) of Section 24 and the matter can only be referred  to the  Electrical Inspector  for a decision as provided under  sub-section (2) of Section 24. The appellant disputed the aforesaid stand of the respondent and submitted that the respondent having failed to pay the bills raised by the  appellant  in  respect  of  the  energy  consumed,  the appellant  was  fully  justified  in  issuing  notice  under Section 24(1)  of the  Act and there is no illegality in the same. The  High Court  by the  impugned judgment came to the conclusion that  no agreement  had been entered into between the licensee,  namely, the Bihar State Electricity Board and the  consumer,  the  respondent.  It  further  came  to  the conclusion that  in the absence of any agreement between the parties the  Board seas  not entitled  to raise the bills on the basis  of the contract demand and can only charge on the basis of the actual consumption o; energy. Finally, the High Court came  to the conclusion that there existed a bona fide dispute  between   the  licensee   and  the   consumer,  and therefore, until  that dispute is resolve by a determination made by  the Electrical  Inspector under  sub-section (2) of Section 24, the licensee was not entitled to issue notice of disconnection in  exercise of power under sub-section (1) of Section 24  of the  Act. The  High Court, therefore, quashed the notice  of demand  and the  threat of  disconnection and issued a  mandamus to  the licensee  not to  disconnect  the supply line  so long  as the  dispute  is  not  resolved  in accordance with  law. The  High Court also further held that until the dispute is finally resolved, the consumer would be liable to  be charged  on the basis of actual consumption of energy. The amount of accumulated arrear which was indicated in the  notice of  disconnection to  the  licensee  was  Rs. 3,01,449.30 upto March, 1979 which demand was quashed by the High Court  by the impugned judgment. This Court on 1st May, 1581 directed  that the respondents shall pay the amount due on the  bills submitted  to them  by the  appellant for  the actual consumption  and future  bills will  be paid  by  The respondents from  time to  time on  the basis  of actual and such submission  of  bills  and  payments  will  be  without prejudice to  the rights  and contentions of the parties. By another  Order  dated  5th  may,  1982  this  Court  further indicated that for the time being the Board will not collect any energy  charges by  the application of the multiplier of the two.  Thereafter, as  the respondent  failed to  pay the bills issued  by the Board, the supply of electricity to the respondent  was  disconnected  on  9th  of  May,  1984.  The respondent, therefore,  approached this  Court by  filing an application for  necessary direction to the Board to restore the connection  of electricity  supply and  to  injunct  the Board from  disconnecting the  supply without  permission of this Court  during the  pendency of  the appeal,  which  was registered  as  C.M.P.  No.  23405  of  1984.  In  the  said application it  was alleged  that the  appellant Board  went giving inflated  bills based  on erroneous conclusion on the basis of  315 KVA  of  maximum  contract  demand  which  has already been  quashed by  the Patna  High Court and which is contrary to  the interim  orders issued  by  this  Court  as stated earlier.  This application  was disposed  of by  this Court with the following direction:      "Counsel for  both the parties have      jointly submitted  before  me  that      the parties  are agreeable that the      correct  amount   payable  by   the      respondent in  the appeal by way of      charges for  actual consumption  of      electric energy as per tariff rates



    applicable may be determined by any      officer  not  bellow  the  rank  of      Chief  Engineer  nominated  by  the      Secretary, Department,  of  Energy,      Govt.  of  India.  This  suggestion      appears to  me, just and fair which      is  accordingly  accepted  and  the      Secretary,  Department   of  Energy      will  forthwith  nominate  any  one      officer  under   him  of  the  rank      indicated  above  to  go  into  the      question as to what amount, if any,      remains payable  upto date  by  the      Hotel Satkar  (P) Ltd. to the Bihar      State Electricity  Board, Patna  by      way of  consumption charges  taking      into  account  actual  consumption.      Such  determination  will  be  made      after hearing  both the  parties of      their representatives  at Delhi  or      at Patna  as will  be convenient to      the  officer   nominated   by   the      Secretary,  Department  of  Energy.      The entire process of determination      of the  amount should  be completed      within four  weeks from  today. The      Respondent    shall     file     an      undertaking during  the  course  of      the day  today to  pay to the Bihar      Electricity Board  within one  week      from the date of such determination      of the  exact amount by the Officer      nominated   by    the    Secretary,      Department of  Energy.  Subject  to      the fulfillment  of this  condition      the Bihar  State Electricity  Board      is  hereby   directed  to   restore      forthwith the  electric  connection      to the  respondent Hotel Satkar (P)      Ltd. If the respondent Hotel Satkar      fails or  defaults in  the  payment      within one week of determination of      the amount  due, it will be open to      the Bihar  State Electricity  Board      to disconnect electric connections.      The  payment  to  be  made  by  the      respondent  in  pursuance  of  this      order will  be without prejudice to      the rights  and contentions  raised      in the  appeal pending  before this      Court."      Pursuant to the aforesaid order of this court the Chief Engineer, Central Electricity Authority was nominated by the Secretary, Department  of Power,  Ministry of  Energy to  go into the question as to what amount, if any, remains payable upto date  by the  respondent. The said Chief Engineer heard the parties and gave opportunity to present their respective case  and  after  analyzing  all  the  relevant  papers  and documents produced  before him,  came to the conclusion that for  the  period  from  April  1977  to  February  1984  the respondent  is   liable  to  pay  the  appellant  a  sum  of Rs.9,68,335.67 for  the energy  consumed  on  the  basis  of actual consumption  and out  of the said amount the consumer has  paid   a  total  of  Rs.  5,83,776.34  and,  therefore, outstanding  dues   till  February  1984  work  out  to  Rs.



3,84,559.33. On behalf of the respondent an objection to the aforesaid report  of the  Chief Engineer has also been filed in this Court.      Mr. Pramod  Swarup, learned  counsel appearing  for the appellant contended  that in  view of  the agreement between the parties  this Court  having passed the order on 28th May 1984 requiring  an officer  not  below  the  rank  of  Chief Engineer be  nominated by  the Secretary, Department Energy, Govt. of  India to  go into  entire controversy and the said Chief Engineer  having gone  into the controversy and having determined the  liability of the respondent, the parties are bound by  the same  and it is no longer necessary to examine the legality  of the conclusion arrived at by the Patna High Court. Mr.  Sanyal, learned senior counsel appearing for the respondent on  the other  hand  contended  that  the  report submitted by  the said Chief Engineer is patently erroneous, and therefore could not bind the respondent for liability as found and  further the  judgment of  the Patna High Court is unassailable. The learned counsel further contended that the very order of this Court dated 28th May, 1984 indicates that payment to  be  made  by  the  respondent  will  be  without prejudice to  the rights  and contentions  raised in  appeal pending before  this Court.  Mr. Sanyal,  further  contended that the  aforesaid  order  passed  by  this  Court  was  in relation to  a fresh  demand having been raised by the Board during the  pendency of  the appeal and disconnection of the electric supply for non-payment of the same and it would not cover the demand for the period which was the subject matter in the  writ petition before the High Court and which is the subject matter of appeal in this Court.      Having  considered  the  rival  submission  and  having applied our  mind to  the  relevant  documents  and  several orders passed by this Court we are of the considered opinion that this  Court was  persuaded to  pass tile  order of 28th May, 1984  on the  agreement  of  the  parties  to  get  the controversy examined  by an  officer not  below the  rank of Chief Engineer  to be  nominated by the Secretary Department of Energy,  Govt. of  India. The  said Chief Engineer having examined the  documents produced  before him  by the parties concerned and  having determined  the entire  liability upto February, 1984 the respondent cannot wriggle out of the said order  on  the  ground  that  the  said  order  was  without prejudice to  the contentions to be raised in the appeal. As it appears, the controversy between the parties was, whether the Board  was justified  in raising demands on the basis of the contract  demand in the absence of any agreement between the parties  and the  High Court had ordered that demand can be raised  only as  per the actual consumption of energy. It further appears from the materials on record that the meters which had been installed to record the consumption of energy were only  suitable to  for  5  Amp.  and  had  their  dials calibrated to register consumption corresponding to loads of 100  Amp.  200  Amp.,  300  Amp.  or  400  Amp.  It  further transpires that  though initially the dispute related to the bills which  had been,  submitted upto  the  year  1979  but during the  pendency of  the appeal in this Court when fresh bills were  also submitted  by the  Board and the respondent did  not   pay  the  same,  the  appellant  took  action  of disconnection and  respondent,  therefore,  approached  this Court for  necessary direction  for reconnection.  It is  on consideration of  all these  materials and  on the agreement between the parties this Court passed the order on 28th May, 1984 requiring  the entire  controversy to he re-examined by any officer  not below  the rank  of Chief  Engineer  to  be nominated by  the Secretary,  Department of Energy, Govt. of



India. Thus  on The date this Court passed the order on 28th May, 1984 the controversy between the parties was in respect of amount  charged till  February, 1984 and not the original amount which  was the  subject matter  of the writ petition. This being  the position  and the  matter having  been  duly scrutinized by  an officer  of the  Government of  India and amount having  been arrived at and the parties having agreed the controversy  to be re-examined by such officer it is not permissible for the respondents to contend that they are not bound by  the decision thus arrived at. So far as the merits of the  objections to  the report  of the  Chief Engineer is concerned we  find that  the said  Chief  Engineer  has  Act determined the liability on the basis of contract demand but on the  basis of  the  actual  consumption  of  energy.  Mr. Sanyal’s argument, however, was that in terms of sub-section (2) of  Section 24  of the  Act when  the  matter  has  been referred to the Electrical Inspector and the said Electrical Inspector has  determined  the  dispute  in  favour  of  the respondent, such  statutory determination  cannot be given a go-bye unless  and until  it is  annulled  by  any  superior authority. He  further contended  that multiplying factor as applied by  the Chief  Engineer is  not at all applicable to the facts  and circumstances  of the present case when there was no  defect with  the meter at any point of time. We find ourselves unable  to accept  these objections  raised by Mr. Sanyal appearing  for the  respondent.  In  respect  of  the dispute with  regard to  the liability  of the respondent to make the  payment as per the bills raised upto 1979 no doubt had been  referred to  the Electrical  Inspector under  sub- section (2)  of Section  24  of  the  Act.  But  during  the pendency of the appeal in this Court when further hills were raised by  the appellant and for non-payment of the same the electrical  connection   was  disconnected   and  respondent challenged the  same and ultimately agreed before this Court to get  the entire  controversy examined  by an  independent officer of the Government of India and this Court ultimately passed the  order on  28th May, 1984, the entire controversy with regard  to the  liability of  the respondent to pay for the energy  consumed  was  before  the  Chief  Engineer  and consequently any  order passed  by the  Electrical Inspector under sub-section  (2) of  Section 24  cannot  override  the ultimate decision taken by the Chief Engineer in determining the liability  of the  respondent.  The  objections  of  Mr. Sanyal, therefore, cannot be sustained.      In the  aforesaid premises the impugned judgment of the Patna High  Court stands  reversed and  the liability of the respondent as  determined by  the  Chief  Engineer  for  the energy consumed  upto February 1984 becomes enforceable. The respondent would  be liable  to pay  in accordance  with the said determination  after adjusting the amount already paid. The appeal  is disposed  of with  the aforesaid  directions. There will be no order as to costs.