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PETITIONER: BISRA STONE LIME COMPANY LTD. & ANR. ETC.

       Vs.

RESPONDENT: ORISSA STATE ELECTRICITY BOARD & ANR.

DATE OF JUDGMENT21/10/1975

BENCH: GOSWAMI, P.K. BENCH: GOSWAMI, P.K. UNTWALIA, N.L.

CITATION:  1976 AIR  127            1976 SCR  (2) 307  1976 SCC  (2) 167  CITATOR INFO :  F          1983 SC1296  (7,8)  RF         1986 SC1126  (45)  RF         1988 SC 985  (8)  R          1988 SC1989  (22)  R          1992 SC1264  (10)

ACT:      Electricity  (Supply)   Act,  1948-S.  49-Surcharge  on electricity-Whether Electricity Board could levy.      Dispute between parties referred to arbitrator-If court could withdraw and deal with it.

HEADNOTE:      Under cl.  13 of  the agreement between the parties the tariff and  conditions of supply of electricity were subject to any  revision that  may be made by the supplier from time to time.  Clause 23  states that  any dispute  or difference arising between  the consumer  and  the  supplier  shall  be referred to  an arbitrator.  The respondent  issued a  press note deciding  to levy  a surchage of 10 per cent on certain categories of  customers, which included the appellants. The appellants challenged  the levy but the High Court dismissed their writ petitions.      On appeal  to this  Court it was contended that (1) the Board had  no power  under the  Act to levy a surcharge, (2) cl. 13  of the  Agreement could  not take  in  the  levy  of surcharge and  as such  it is  not a matter for reference to arbitration under  cl.  23  of  the  agreement  and  (3)  in exempting certain categories and imposing surcharge upon the appellants the  Board was guilty of discrimination, which is impermissible under s. 49 of the Act and cl. 2 of Schedule I to the Agreement.      Dismissing the appeals, ^      HELD: (1)  Enhancement of the rates by way of surcharge is well  within the  power of the Board to fix or revise the rates of  tariff under  the provisions  of the Act. The word "surcharge" is  not defined  in the  Act. Etymologically  it stands for  an additional or extra charge or payment, and in the present  case it  is in  substance an  addition  to  the stipulated rate of tariff. [311 A-B; 310H]      (2) (i)  It is only where there is nothing in a special

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agreement with  regard  to  revision  of  rates  during  the subsistence of  the agreement  that  the  existence  of  the special  agreements  prevents  any  increase  of  the  rates stipulated  in   the  special   agreements  by   adding  the surcharge. In  the present  case cl.  13  of  the  agreement provides for  revision of  rates and  the surcharge  is  not absolutely different from rates of tariff because the effect of the  levy of  surcharge would  be to  enhance the rate of supply of  electricity stipulated  under the agreement. [312 A-B]      M/s.  Titagarh   Paper  Mills   Ltd.  v.  Orissa  State Electricity  Board   and  Another,   [1975]  2  S.C.C.  436, followed.      Indian Aluminium  Company v.  Kerala State  Electricity Board, [1975] 2 S.C.C. 414, explained.      Therefore, the  matter in  dispute is  covered  by  the arbitration clause of the Agreement. [313 B]      (ii)  Although  the  press  note  did  not  recite  any provision of  the Act,  mere  omission  to  do  so  did  not disentitle the  Board to  rely upon clause 13 for a claim to revision of the rates. [314 C]      (iii) This  is not  a fit  case for  the Court  in  its discretion, to  withhold the  matter  from  arbitration  and itself deal  with it merely because the Court has discretion to do  so under  s. 34  of the Arbitration Act or under Art. 226 of the 308 Constitution and  that the  Court is better posted to decide such questions. The arbitration clause is of wide amplitude, taking in its sweep even interpretation of the agreement and necessarily, therefore, of cl. 13. [314 F]      (3) The totality of the provisions under s. 49 does not give any scope for the plea of discrimination raised in this case and  in view  of cl.  13 of  the agreement  itself.  As regards the various industries which have not been subjected to the  charge, it  is not  known whether there is a similar provision like cl. 13 in the agreements. [313 G-H]      When the  law makes  it obligatory  for certain special agreements to  continue in  full force during their currency stultifying the  power of  the Board  to  revise  the  rates during the  period, no  ground of discrimination can be made out on  the  score  of  exempting  such  industries  as  are governed by special agreements.                                                      [314 B]      M/s.  Titagarh   Paper  Mills   Ltd.  v.  Orissa  State Electricity Board and Another, [1975] 2 S.C.C. 436, applied.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeals Nos.  106 and 107 of 1975.      Appeals by  Special Leave  from the  Judgment and Order dated 18-10-74  of the  Orissa High Court in O.J.C. Nos. 851 and 850 of 1972 respectively.      S. V.  Gupte (In  CA 107/75)  and Vinoo  Bhagat for the Appellant.      G. Rath,  Advocate General,  and  B.  Parthasarthi  for Respondent No. 1 (In CA 106/75 and Respondent in CA 107/75).      The Judgment of the Court was delivered by      GOSWAMI, J.  This judgment  will govern  both the above mentioned appeals.      We may take the facts briefly from Civil Appeal No. 107 of 1975.      The Orissa  Textile Mills  Limited is  a public limited

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company (briefly  the company) and is engaged in manufacture of textile  articles. It  is  located  at  Choudwar  in  the District of  Cuttack (Orissa).  On May 12, 1960, the company (described in  the agreement  as Consumer)  entered into  an agreement  with  the  State  of  Orissa  (described  in  the agreement as the Supplier) for supply of electric power. The contract was  for a  period of  five years  from the date of supply of  electric power,  namely, February  1, 1963 and it was thereafter  to so continue unless and until the same was determined by  either party giving to the other six calendar months’ notice  in writing of the intention to terminate the agreement. It  is common  ground that  the agreement has not been terminated.      It may  be appropriate  at this stage to refer to a few clauses in  the agreement. Clause 12 provides for charges to be paid  by the  consumer as  well as  about maximum demand. Clause 13 reads as follows:-           "The tariff  and conditions of supply mentioned in      this Agreement  shall be  subject to  any revision that      may be made by the Supplier from time to time". 309 Clause  22   deals  with  extra  charge  regarding  domestic lighting, fans,  domestic power and street lighting, etc. in the colony of the Mills. Clause 23 reads as follows:-           "Any dispute  or difference  arising  between  the      Consumer  and   the  Supplier   or   their   respective      Electrical Engineers  as to  the supply  of  electrical      energy hereunder  or the  pressure thereof or as to the      interpretation of  this Agreement  or the  right of the      Supplier or  the consumer respectively to determine the      same or  any other  question, matter  or thing  arising      hereunder shall  be referred to a single arbitrator who      shall be  mutually agreed  upon by  both  parties.  The      arbitrator’s decision  thereon shall  be final  and the      provisions of  the Arbitration  Act of 1940 (X of 1940)      or of  any other statutory modification thereof for the      time being in force shall apply to any such reference".      On April  1, 1962,  the Orissa  State Electricty  Board (briefly the  Board) was constituted by the State Government under section  5  of  the  Electricity  (Supply)  Act,  1948 (briefly the Act). Under section 60(1) of the Act "all debts and obligations incurred, all contracts entered into and all matters and  things engaged  to be  done by, with or for the State Government  for any of the purposes of this Act before the first  constitution of the Board shall be deemed to have been incurred,  entered into  or engaged to be done by, with or for  the Board...." By this section, therefore, the Board assumed all  obligations of  the State Government in respect of matters  to which  the Act  applied. It  is common ground that the  contract entered between the company and the State Government is binding on both.      The Board decided to levy a surcharge of 10 per cent on the power  tariff then  in force  with effect  from July  1, 1972, and  a Press Note was issued accordingly. The material portion of the Press Note may be extracted:           "The Orissa State Electricity Board has decided to      levy a  general and uniform surcharge of 10 per cent on      the power  tariff now  in force except on the following      categories of  consumers  who  will  pay  the  existing      tariff:-           (1)  Power Intensive Industries which are governed                by Special Agreements.           (2)  Domestic power and lighting.           In  respect   of  irrigation  loads  (pumping  and      agriculture)  the   power  tariff  will  be  Re.  0.16p

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    (sixteen paise)  per unit  (Kwh) with  a rebate  of Re.      0.01p  (one   paise)  per   unit  ’KwhP’   for   timely      payment....           The above levy of surcharge of 10 per cent is also      applicable to  the power  supply to the Hindustan Steel      Ltd., Rourkela and Kalinga Iron Works, Barbil. 310           The levy  of 10  per cent  surcharge  will  be  on      demand  charges,  unit  charges,  maximum  and  minimum      charges and reservation charges.                *    *    *    *           The levy  of  surcharge  and  revised  tariff  for      irrigation loads has become necessary for improving the      Board’s overall  financial return  and enabling  it  to      undertake larger  developmental programmes  like  rural      electrification.                *    *    *    * It appears  that the  second purpose in the above Press Note with reference  to  "larger  developmental  programmes  like rural electrification" was omitted by a revised Press Note.      The company  unsuccessfully challenged  the levy of the surcharge  by  an  application  under  article  226  of  the Constitution in  the Orissa  High Court. Several contentions were raised  in the  petition before  the  High  Court.  The surcharge was,  inter alia, challenged as being violative of article 14  of the Constitution. This objection was repelled by the  High Court  and the  learned  counsel  appearing  on behalf of the company was unable to press the same before us in view  of the  Presidential  suspension  of  that  article during the emergency.      Some other  grounds, including  that clause 13 is ultra vires the Act, were taken before the High Court but have not been pressed before us.      Mr. Gupte,  the learned  counsel appearing on behalf of the appellants, submits as follows:-           (1)  The Board  has no  power to  levy a surcharge                under the provisions of the Act.           (2)  Clause 13 of the agreement cannot take in the                levy of  surcharge. It  is, therefore,  not a                matter for  reference  to  arbitration  under                clause 23 of the agreement.           (3)  Assuming it  has power under the Act or under                clause 13  to levy  a surcharge, the Board in                exempting  certain  categories  and  imposing                surcharge upon  the appellants  is guilty  of                discrimination which  is impermissible  under                section 49  of the  Act  and  clause  (2)  of                Schedule I to the agreement.      With regard  to his  first contention Mr. Gupte submits that surcharge  is unknown  to the provisions in the Act and the Board has no power under the Act to levy a surcharge. It is not  possible to accede to the submission that the demand of surcharge  cannot be included in the revision of rates of tariff.      The word  surcharge is  not defined  in  the  Act,  but etymologically,  inter   alia,  surcharge   stands  for   an additional or  extra charge  or payment  (see Shorter Oxford English Dictionary). Surcharge is thus a 311 superadded charge,  a charge  over and  above the  usual  or current dues. Although, therefore, in the present case it is in the  form of  a surcharge, it is in substance an addition to  the   stipulated  rates  of  tariff.  The  nomenclature, therefore, does  not alter  the position. Enhancement of the rates by  way of  surcharge is  well within the power of the

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Board to  fix or  revise  the  rates  of  tariff  under  the provisions of  the Act.  The first submission of counsel is, therefore, of no avail.      Before we  deal with  the second submission of counsel, we may  refer to  a recent  decision of  this Court  in  M/s Titagarh Paper  Mills Ltd. v. Orissa State Electricity Board and Another(1) (briefly the Titagarh’s case) to which one of us was  a party.  This Court  following the  decision in the Indian  Aluminium   Company  v.   Kerala  State  Electricity Board(2) with  regard to  the scope of sections 49 and 59 of the Act held in the Titagarh’s case (supra) as follows:-           "....neither section 49 nor section 59 confers any      authority on  the Board to enhance the rates for supply      of electricity where they are fixed under a stipulation      made in  an agreement. The Board has no authority under      either of  these two sections to override a contractual      stipulation and  enhance unilaterally the rates for the      supply of electricity". It is  clear from  the  above  decision  that  an  agreement entered in  exercise of  the power conferred by the statute, such as  under section  49(3) of  the Act,  cannot be set at naught by  unilateral exercise  of power  by the Board under the Act to enhance the rates agreed upon between the parties in the  absence of  any provision  in  that  behalf  in  the agreement itself.  In the  Indian Aluminium  Company’s  case (supra) there  was no provision in the agreement with regard to the  revision of  tariff, such as we find in clause 13 of the present  agreement. This  Court, therefore,  had not  to consider in  that case  about the  effect of  a clause  like clause 13.  In the  Titagarh’s case  (supra), however,  this Court had  to take  into  consideration  clause  13  of  the agreement therein  which is  the  identical  clause  in  the present case.      Sub-sections (1)  and (2)  of section  49  empower  the Board to  fix uniform  rates of  tariff. Sub-section  (3) of section 49 on the other hand reserves to the Board the power of fixing different tariffs having regard to certain factors mentioned therein. Section 49(3) contemplates what are known as ’special  agreements’. Power  under section 49(1) and (2) cannot  be   invoked  during   the  subsistence  of  special agreements providing  for stipulation  of rates of tariff in absence of  any reservation therein. Exercise of power under section 49(1)  and (2)  as also under section 59 will remain suspended during  the currency  of  the  special  agreements between the  parties and  no unilateral enhancement of rates is permissible under law. There is only a pro tempore ban on revision  of  rates  during  the  subsistence  of  statutory special agreements  entered in conformity with section 49(3) of the Act. 312      Mr. Gupte,  however, submits that since there have been special agreements  between the parties the stipulated rates could not  be increased by adding the surcharge in question. This argument  proceeds on a wrong assumption that surcharge is absolutely  different from  rates of  tariff. Besides the submission fails to take count of clause 13 of the agreement with regard  to revision  of rates.  The ratio of the Indian Aluminium Company’s  case (supra)  will be  available on all fours only  where there  is nothing in the special agreement with regard  to revision  of rates during the subsistence of the agreement.      With regard to the second submission, which overlaps to some extent  with the  first,  Mr.  Gupte  points  out  that revision of  tariff under  clause 13  cannot include levy of surcharge which  is distinct  from tariff. He also draws our

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attention to  the various  clauses in  the Press  Note where both the expressions ’surcharge and tariff’ are freely used. On the other hand, the learned Advocate General submits that the import  of surcharge  depends upon  the  nature  of  the original charge. If the surcharge is appended to a tariff it partakes of the character of tariff.      When  the   Press  Note  introduces  the  surcharge  in addition to tariff rates, not much can be made of for use of the two  words separately. We have already noted the meaning of  the  word  ’surcharge’  while  dealing  with  the  first submission of the learned counsel. We may only add that this Court in  Titagarh’s case  (supra)  put  the  matter  beyond controversy in the following words:-           "Now, the  effect of  the levy  of coal  surcharge      would be  to  enhance  the  rates  for  the  supply  of      electricity stipulated under the agreement".      Besides in  the  Titagarh’s  case  (supra)  this  Court further observed as follows:-           "Questions such  as: whether  the Board  has power      under clause  (13) of  the agreement  to levy  any coal      surcharge at all when no such power was conferred on it      by the  Act, whether the action of the Board in levying      the coal  surcharge on  the appellant under clause (13)      of the  agreement was  arbitrary  and  unreasonable  or      whether it  was  based  on  extraneous  and  irrelevant      considerations  and   whether,   on   the   facts   and      circumstances of  the case,  the  Board  was  justified      under clause  (13) of  the agreement  to levy  the coal      surcharge  on  the  appellant,  are  plainly  questions      arising under the agreement and they are covered by the      arbitration provision  contained in  clause (23) of the      agreement. All  the contentions raised by the appellant      against the  claim to  justify the  levy  of  the  coal      surcharge by  reference to clause (13) of the agreement      would, therefore, seem to be covered by the arbitration      agreement and  there is  no reason  why  the  appellant      should not  pursue the  remedy of  arbitration which it      has  solemnly   accepted  under   clause  (23)  of  the      agreement and instead invoke the extraordinary 313      jurisdiction of the High Court under Article 226 of the      Constitution to  determine questions  which really form      the subject matter of the arbitration agreement."      Although this Court was dealing with the coal surcharge in the  above decision, there is no distinction in principle between the  coal surcharge  or a  surcharge simpliciter and the ratio  of the  above decision will be applicable in this case.  The   second  submission   of  the  learned  counsel, therefore, fails  and the  point is  squarely covered by the above decision.  The matter  is, therefore,  covered by  the arbitration clause 23 of the agreement.      With  regard   to   the   last   submission   regarding discrimination founded upon section 49 of the Act and clause (2) of  the Schedule  I to  the agreement,  Mr. Gupte relied upon sub-section  (4) of  section 49  which provides that in fixing the tariff and terms and conditions for the supply of electricity, the  Board shall  not show  undue preference to any person. He also draws our attention to clause (2) of the conditions of  supply in the First Schedule to the agreement to the  effect that "the Department shall not be entitled to discriminate  between  different  consumers  in  fixing  the charges for  the supply of energy". The agreement is entered under the provisions of section 49(3) of the Act. If we read section 49  as a whole we find that under sub-section (1) of that section,  the Board  in supplying  electricity  to  any

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person not  being a  licensee "may  for the purposes of such supply frame  uniform tariffs".  However, under  sub-section (2) of  that section in fixing the uniform tariffs the Board shall have  regard to  the various  factors under four heads (a), (b),  (c) and  (d). Then  comes sub-section  (3)  which preserves 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".      Mr. Gupte  submits that  there is  no  reason  why  the power-intensive industries,  which are  governed by  special agreements, should  have been  exempted  from  the  levy  of surcharge in  the Press  Note. He  further points  out  that there are  eight industries  referred to  in paragraph 20 of the Special  Leave Petition which have not been subjected to the aforesaid 10 per cent surcharge even though the rates of electricity charged  per unit  in their  case are  less than those of the Orissa Textile Mills.      It is  enough to point out that the industries referred to in  the Special  Leave Petition  were covered  by special agreements and  we are  not even  told whether these special agreements had  a similar  clause  like  clause  13  in  the present case.  This Court  has held  that special agreements entered under  section 49(3)  cannot be  given a go-by while exercising the  power of  revision of rates under section 49 read with section 59. That being the position, the objection on the  score of  discrimination loses  all importance.  The totality of  the provisions  under section  49 does not give any scope for the plea of discrimination raised in this case and in view of clause 13 in the agreement itself. 314      We can  appreciate the handicap of counsel in advancing his arguments  under the  head of discrimination having lost the protective  amulet of  article 14  of  the  Constitution under the  Presidential embargo during the emergency. A plea of discrimination  which is  available when article 14 is in free play is not at par with the interdict of ’undue favour’ under section 49 of the Act. Apart from this, when law makes it obligatory  for certain special agreements to continue in full force  during their  currency stultifying  the power of the Board  to revise  the rates during the period, no ground of discrimination  can be made out on the score of exempting such industries as are governed by special agreements.      Although the  Press Note  in the  instant case  did not recite any  provisions of  the Act  under which the same was issued, mere omission to do so does not disentitle the Board to reply  upon clause  13 of  the agreement  for a  claim to revision of  the rates,  although in the form of a surcharge in this case. We, therefore, do not give any significance to the omission  in the  Press Note to refer to clause 13 or to any other  provision of  the Act.  The matter is, therefore, covered by the arbitration clause 23 of the agreement. It is not for  this Court to speculate what answers the Arbitrator will enter with regard to the disputed questions that may be raised before him. We are not to be understood as expressing any opinion  on the  merits of  the  dispute  or  difference between the parties with regard to the surcharge.      It is then submitted that this Court should not use its discretion in  favour of arbitration in a matter where it is a pure  question of law as to the power of the Board to levy a surcharge.  This submission  would have great force if the sole question involved were the scope and ambit of the power of the  Board under  sections 49 and 59 of the Act to levy a

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surcharge, as  it was  sought to  be initially  argued.  The question in  that event may not have been within the content of clause 23 of the agreement. But all questions of law, one of which  may be  interpretation of  the agreement, need not necessarily be withdrawn from the domestic forum because the court has discretion under section 34 of the Arbitration Act or under  article 226 of the Constitution and that the court is better  posted to  decide such questions. The arbitration clause 23  is a clause of wide amplitude taking in its sweep even  interpretation   of  the  agreement  and  necessarily, therefore, of  clause 13  therein. We are, therefore, unable to accede  to the  submission that  we should  exercise  our discretion to  withhold the matter from arbitration and deal with it ourselves.      We, therefore,  find no  justification  in  interfering with the  conclusion of the High Court in dismising the writ application.  In   the  result  the  appeals  fail  and  are dismissed. We will, however, make no order as to costs. P.B.R.                                    Appeals dismissed. 315