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PETITIONER: BIHAR STATE ELECTRICITY BOARD & ANR.

       Vs.

RESPONDENT: UMI SPECIAL STEEL LIMITED

DATE OF JUDGMENT:       08/11/2000

BENCH: V N Khare, & S.N. Variava.

JUDGMENT:

S. N. VARIAVA, J.

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   This  Appeal is against an Order dated 14th August, 1991 passed  in  Letters Patent Appeal No.  69 of 1990, by  which the Appeal has been dismissed in limine.  The Letters Patent Appeal  was  against an Order dated 20th January, 1989  read with  an Order dated 2nd May, 1990, wherein an Appeal  filed by the Respondent had been allowed.

   Briefly  stated  the  facts  are as  follows:   On  12th January, 1972 the Appellants and the Respondent entered into an Agreement whereunder the Appellants were to supply to the Respondent   High  Tension  electricity   for   a   contract demand/load  of  1500  KVA  at 11000  volts.   The  relevant Clauses  of  the Agreement are 4(a), 8 and 9.  They read  as under:   "4(a)  The consumer shall pay to the Board for  the energy  so supplied and registered as aforesaid at the rates given  in the Schedule, provided that the minimum charge  as specified  in  the  schedule appended hereto shall  be  paid irrespective  of  whether  energy to that  extent  has  been consumed or not.

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   8.   The  Agreement shall be ordinarily in force  for  a period of not less than 3 years in the first instance except in  exceptional cases in which written consent of the  Board will  be taken, from the date of commencement of supply i.e. _______  and  thereafter  shall continue from year  to  year until the Agreement is determined hereinafter provided.

   9.   The  consumer shall not be at liberty to  determine this  Agreement  before the expiration of 3 years  from  the date  of commencement of the supply of energy.  The consumer may  determine  this  Agreement at any time after  the  said period  on giving to the Board not less than twelve calender month’s  previous notice in writing in that behalf and  upon the  expiration of the period of such notice this  agreement shall  cease  and determined without prejudice to any  right which  may then have accrued to the Board hereunder provided always  that the consumer may at any time with the  previous consent  of the Board transfer and assign this Agreement  to

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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  the  transferee  had originally  been a party hereto in place of the consumer who shall  thenceforth be discharged from all liability under or in  respect  thereof.   If a consumer, whose line  has  been disconnected  does not apply for reconnection, in accordance with the law within the remainder period of the compulsorily availing of supply or that of notice whichever be longer, he will  be  deemed  to  have given a notice  on  the  date  of disconnection  in  terms  of  the  aforesaid  clause  9  for determination of the agreement."

   Thus it is to be seen that even though energy may not be consumed  minimum charges had to be paid.  The Agreement was to  be  for a period of 3 years and thereafter  to  continue from  year to year until it was determined.  Under Clause  9 the  consumer could not determine before the expiration of 3 years  but could determine, after the expiry of 3 years,  on giving a 12 months’ previous notice in writing.  Also if the line  has been disconnected, and the consumer did not  apply for  reconnection within the remainder period of  compulsory availing   of  supply  or  of   notice  then  the  date   of disconnection  shall be deemed to be the date of notice  for determination of Agreement.

   In  1973-74 the Respondent addressed several Letters  to the  Appellants to reduce the contract demand from 1500  KVA to  1000 KVA.  The Respondent also requested the  Appellants to  reduce  the  period of the Agreement from 3 years  to  2 years.   Ultimately,  by a letter dated 12th February,  1974 the  Respondent  requested that the Agreement be  determined with effect from 1st March, 1974 and that thereafter they be given a temporary supply of 500 KVA.  The Appellants did not agree to this.  It is an admitted position that, in spite of Respondent’  letters, the Agreement subsisted till February, 1975.   On  24th February, 1975 the Respondent  addressed  a Letter to the Appellants, which reads as follows:

   "  This is for your kind information that from 1.3.75 we shall  stop availing construction power being supplied to us at  33  KV  3 phase 50 c/s A.C.  from  your  sub-station  at Bhurkunda.   Please  therefore  arrange  to  disconnect  the supply  from  1.3.75  and  take   charge  of  your  metering equipment installed at our end."

   Pursuant to this request the Appellants disconnected the electricity.   In May, 1975 the Appellants submitted to  the Respondent  a  Bill which, inter alia, contained  an  amount towards  the minimum charges for the period 1st March,  1975 to 28th February, 1976.  As the amounts of the Bill were not paid  a  Notice  dated 18th May, 1976 was addressed  by  the Appellants  to the Respondent.  As the payment was still not made a Recovery Certificate was issued on 2nd August, 1978.

   The  Respondent  then  filed a suit claiming  that  with effect   from  24th  February,   1975  the  Agreement  stood terminated.   The  Respondent  claimed that  they  were  not liable  to  pay the minimum charges for the period from  1st March,  1975  to 28th February, 1976.  The Suit came  to  be dismissed by the trial Court on 31st March, 1980.

   The  Respondent  then  filed an Appeal.  By  a  Judgment dated  28th  January,  1989, the High Court  held  that  the parties  had agreed that a period of 3 years be reduced to 2

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years  and that such a novatio was permissible in law.   The High  Court  held that it was always open to the parties  to change  the  Contract  by  mutual   consent  and  that   the Appellants’  act  in disconnecting the electric  supply  and stopping  supply  of  electricity amounted to  bringing  the Agreement  to an end by mutual consent.  The High Court held that  the Appellants had, therefore, terminated the Contract and  could  not have any legal right thereafter to  ask  for performance  of the Agreement.  The High Court held that, in this  view of the matter, Clause 9 of the Agreement was  not of  much  importance as it was merely an enabling  provision which perished along with the Contract.  The High Court then referred  the  matter  back to the trial Court  for  leading additional  evidence and for calculating the amounts payable by the Respondent to the Appellants for the period up to 1st March, 1975.

   The  trial Court merely held that Respondent were  bound to pay all charges prior to 24th February, 1975 and send the case  back to the High Court.  The High Court by a  Judgment dated  2nd May, 1990 directed the Respondent to pay  amounts payable  up to 1st March, 1975 and directed the  Certificate Officer to refund the balance amount to the Respondent.

   Against  this Order the Appellants filed Letters  Patent Appeal  which was dismissed by the impugned Order dated 14th August, 1991.  Hence this Appeal before this Court.

   As has been seen the Agreement was to be for a period of 3  years  and  was  to  continue  from  year  to  year  till determined  in  the  manner provided  under  the  Agreement. During  the subsistence of the Agreement the minimum charges had  to be paid.  Clause 9 of the Agreement clearly provided that  during  the first 3 years the Agreement could  not  be determined.   Thereafter  the Agreement could be  determined only  by giving a notice in writing of 12 months.  Clause  9 also  provided  that  though   there  was  disconnection  of electricity,  still the Agreement would subsist for a period of  12 months from the date of disconnection.  Before us  it is admitted that the Agreement subsisted till February 1975. Therefore  the  finding  of the High Court  that  there  was novatio  by mutual consent and the period was reduced to two years  is  clearly  erroneous.   The  High  Court  has  also seriously   erred  in  not   noting  that  disconnection  of electricity  is  different  from termination  of  Agreement. Even  during the subsistence of the Agreement there could be disconnection  of electricity.  The Agreement envisaged that the  consumer may not consume electricity during the  period of  the  Agreement.   Such  non-consumption may  be  due  to disconnection or for any other reason.  It is because of the possibility  of  consumer not consuming electricity  that  a provision  for  an  annual  minimum charge  has  been  made. Disconnection  of electricity does not amount to termination of  the  Agreement.   This  elementary  principle  has  been completely lost sight of by the High Court.

   We  have  set out above the letter dated 24th  February, 1975.   As  seen there is no request for termination of  the Agreement  as contemplated by Clause 9 of the Agreement.  In fact,  there is no request for termination at all.  By  this letter  all that the Respondent are asking the Appellants to do is to disconnect the supply.  The Appellants, pursuant to this  request,  had disconnected the supply.  But this  does not mean that the Agreement stood terminated.  The Agreement would  continue until it was determined by the parties.  The

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only  method  of termination was Clause 9 of the  Agreement. As  admittedly no notice in writing of 12 months was  given, the  Agreement  would  terminate, as per Clause 9,  after  a period  of  12 months after disconnection.   Therefore,  the Agreement  subsisted  till  28th  February,  1976.   As  the Agreement  subsisted  till  this date  the  Appellants  were entitled  to claim the annual minimum charges for the period from 1st March, 1975 to 28th February, 1976.  The High Court has seriously erred in holding otherwise.

   In  this  view of the matter the Judgments of  the  High Court  dated  14th August, 1991, 20th January, 1989 and  2nd May,  1990  require to be and hereby set aside.  It is  held that  the Respondent are bound to pay to the Appellants  the annual  minimum  charges for the period 1st March,  1975  to 28th February, 1976.

   It  must be mentioned that this Court had by an  interim Order  dated  28th January, 1992, as clarified by  an  Order dated  5th  February,  1992   permitted  the  Respondent  to withdraw  the amount of the annual minimum charges which had been  recovered from them.  The Respondent were directed  to furnish a Bank Guarantee of a Nationalised Bank to repay the amount  with interest at the rate of 12 per cent per  annum. The  Respondent have since recovered the amount.  They  are, therefore,  bound  to repay the amount with interest at  the rate  of 12 per cent per annum, from the date of recovery of amount from the Recovery Officer, till payment.

   Mr.  Chowdhary requests that the Respondent be permitted to  repay  the amount in six installments.   We,  therefore, direct  that  the annual minimum charges for the period  1st March,  1975 to 28th February, 1976 with interest thereon at the  rate of 12 per cent per annum from the date the  amount was  recovered  by the Respondent from the Recovery  Officer till  payment  shall  be  paid  by  the  Respondent  to  the Appellants  in  six equal monthly installments.   The  first installment  to  start with effect from 1st  January,  2001. Each  and every subsequent installment to be paid by the 1st day  of  each  succeeding  month.   In  the  event  of   any installment  not being paid within time, the entire  balance amount, then remaining due and payable, shall become payable forthwith.   The  Appeal  stands  disposed  of  accordingly. There will be no Order as to costs.