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PETITIONER: DELHI CLOTH & GENERAL MILLS COMPANY LTD. & ANR.

       Vs.

RESPONDENT: RAJASTHAN STATE ELECTRICITY BOARD & ANR.

DATE OF JUDGMENT12/03/1986

BENCH: SEN, A.P. (J) BENCH: SEN, A.P. (J) MADON, D.P.

CITATION:  1986 AIR 1126            1986 SCR  (1) 633  1986 SCC  (3) 431        1986 SCALE  (1)416  CITATOR INFO :  RF         1986 SC1999  (6)  RF         1988 SC1989  (9)  RF         1992 SC2169  (12)

ACT:      Electricity Supply  Act, 1948  - SS.  49A and  49B  (as introduced by  Electricity  (supply)  (Rajasthan  Amendment) Act, 1976)  - Scope  of -  Electricity Board - Power of - To frame uniform  tariffs  unilaterally  -  Raise  demands  for payment of difference between uniform tariffs plus surcharge and agreed  tariffs  with  retrospective  effect  -  Whether permissible -  Whether s.49 of the Act is violative of Arts. 14, 19(1)(f)  & (g) and 31 (2) of the Constitution - Whether doctrine of Promissory estoppel attracted.      Words and Phrases -      ’Escalation  clause’,   ’Review’,  and   ’Surcharge’  - Meaning of.

HEADNOTE:      By an  agreement dated  July 28,  1961, the Respondent- State Electricity Board agreed to supply the appellants with bulk electrical  energy for their power oriented industry at a concessional  rate for  a period of 20 years. Under cl. 18 of the  agreement, it  was provided  that the rate of supply was reviewable  by the Board every five years after January, 1971, and the revision of rate was to be effected if to rise in the  cost of  generation out  of the total cost varied by 25% or  more from  the  cost  last  fixed.  It  was  further envisaged by cl.34(b) that the mutual rights and obligations of the  parties would  be subject  to alteration  by further legislation  relating   to   supply   and   consumption   of electricity enacted  during the period of the agreement. The Board  commenced   supplying  electrical   energy   to   the appellants with  effect from March 1, 1963. The Board issued various notifications from time to time bringing into effect the revised  tariffs for  the supply  of electricity  to its different  classes  of  consumers  at  different  rates.  By Notification dated  July 26, 1966, the Board imposed general surcharge on the appellants at the rate of 15% on the normal tariff. 634      The appellants  filed  a  petition  under  Article  226

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challenging the  power of the Board to levy the general sur- charge of  15%. The High Court allowed the petition and held that the  levy of general surcharge of 15% on the appellants was ultra  vires the  Board insofar  as the  appellants were concerned  because   the  parties   having  entered  into  a statutory agreement  dated July 28, 1961, there was a fetter created on  the power  of the Board to unilaterally increase the tariff under s. 49 of the Electricity (Supply) Act, 1948 and there-fore  the appellants  could not  be  subjected  to payment of the general surcharge of 15%. The Board preferred an appeal against the judgment of the Single Judge.      From January 1, 1971, the Board intimated its intention to the  appellants to revise the concessional rate of supply and charge  them the  uniform rate  of tariff under Schedule HS/LP/HT-1 as  applicable to  all large industrial consumers and the  general surcharge of 15% thereon in exercise of its powers under cl. 18 of the agreement. Accordingly, the Board by its  letter dated  February 1,  1971 forwarded a bill for the billing  month January  1971, raising  a demand  on that basis.      The appellants  thereupon filed  a writ  petition under Article 226.  A Single  Judge of  the High Court quashed the impugned bill  and held:  (i) that  the Board  was  entitled under the  first part  of cl.18 to review the rate of supply ’every fifth  year starting  from the first date of supply’, but in  view of  the restrictive  clause  contained  in  the second part  of cl.18  it was  impermisible for the Board to make any  such upward  revision in  the rate  of supply till January 1,  1971; (ii)  that in  the circumstances it can be inferred that  the rise  in the  cost of  generation was  at least 25%  and accordingly  the Board was entitled to revise the rate  of supply  by 25%  and (iii)  that  if  the  Board claimed a  further rise, it would have to establish that the rise in  the cost of generation was more than 25% and it had to for  that purposes  get the  percentage in  the  cost  of generation  determined  either  by  mutual  dialogue  or  by reference to arbitration.      During the  pendency of  the appeals  preferred both by the appellants  and the  Board,  on  February  7,  1976  the Governor of  Rajasthan promulgated  the Electricity (supply) (Rajasthan Amendment) Ordinance, 1976, by which new sections 49-A and 635 49-B were  introduced into the Act with retrospective effect to overcome  the difficulty  created by  the judgment of the High Court  in this  case,  and  more  particularly  by  the judgment of  this court  in Indian  Aluminium Co.  v. Kerala State Electricity Board, [1976] 1 S.C.R. 70. By the use of a non obstante  clause in  sub-s.(1) of s. 49A the Legislature made it  lawful for  the Board to revise, from time to time, the tariffs  fixed for  the supply of electricity to persons other than  licensees and  to frame  uniform tariffs for the purpose of  such supply.  Sub-s.(2) thereof provided that in revising or framing tariffs under sub-s.(1), the Board shall be guided by the principles set out in s. 59 and as respects any period  commencing on  and from  September 16, 1966 i.e. the date  on which the new s. 49 of the Act was brought into force, by  the provisions  laid down in sub-ss. (2), (3) and (4) of s. 49-A notwithstanding anything contained in the Act or in  any agreement,  undertaking, commitment or concession made before  the first day of April, 1964 i.e. the date when the uniform  tariffs were  first framed  by the  Board. Sub- s.(3)  of   s.  49A   provided  that  all  such  agreements, undertakings, commitments  or concessions as are referred to in sub-s.(1),  shall, insofar  as they are inconsistent with

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the provisions  of sub-ss.(1)  and (2)  and to the extent of the tariffs  fixed  or  provisions  made  therein  for  such fixation, be  void and  shall be  deemed always to have been void. Section  49A (3) thus had the effect of nullifying the agreement entered  into by  the appellants  with  the  Board under s.49  for supply  of electricity at concessional rate. Similarly by  use of  a non obstante clause, s. 49B provided that any  amount realised  or demand  made or created by the Board or  the Government,  etc.  according  to  the  uniform tariffs in  force from  time to  time or  against any person claiming any  special  tariffs  under  any  such  agreement, undertaking or  concession made before February 7, 1976, the date of  promulgation of  the Ordinance,  shall be deemed to have been validly realised, made or created under the Act as amended by the Ordinance.      Immediately thereafter  on March  12, 1976,  the  Board furnished the  appellants with  a bill for the billing month of February  1976 at  uniform rate,  under Schedule  LP/HT-1 framed by the Board’s tariff Notification dated May 28, 1974 together with the general surcharge of 15%.      The appellants,  therefore, filed  petition under  Art. 226 636 challenging the  constitutional validity  of ss. 49A and 49B of the  Act, as introduced by the Amending Ordinance as also the impugned bill sent by the Board for the billing month of February, 1976.      On  November   4,  1976   the  Board   issued   another Notification under  s.49(1) framing  revised uniform tariffs to be  applicable for  the billing  month of December, 1976. But unlike  the earlier notifications, this notification did not contain  any exclusionary  clause granting exemption for specially negotiated  loads. On  November 3,  1977 the Board furnished another  bill to  the appellants  claiming arrears amounting to  Rs. 5.57  crores on  account of the difference between the  normal rate  of tariff  and the agreed rate for the supply  of electrical energy for the period from January 1, 1971 to January 31, 1976.      The appellants filed another petition under Article 226 questioning their liability to pay the said amount.      The High  Court upheld  the constitutional  validity of ss. 49A  and 49B of the Act as introduced by the Electricity (Supply) (Rajasthan  Amendment) Act, 1976 and also the right of the Board to revise the rate of supply as agreed upon for the period  commencing from  January  1,  1971  onwards  and enforce a  demand for  payment of the difference between the uniform tariffs  as fixed  from time  to time and the agreed rate.      In  the   appeals  to  the  Court,  the  questions  for consideration were  : (i)  Interpretation of  the  terms  of agreement  between   the  parties   dated  July   28,  1961, particularly cl.  18 and  34(b) thereof; (ii) Interpretation of ss. 49A and 49B of the Act; and (iii) whether the demands raised by  the Board  for payment  of the  difference by the impugned bills  dated February  1, 1971  and March  12, 1976 which  involved   the  imposition  of  a  liability  on  the appellants by  the retrospective conferment of a prospective power under  s.49A and  the validation  of such  power under s.49B was  wholly arbitrary  and irrational, confiscatory in nature and  amounted  to  deprivation  of  property  without payment of  compensation and was thus violative of Arts. 14, 19(1)(f) and (g) and 31(2) of the Constitution. 637      On behalf of the appellants it was contended : (i) that cl.18 was  an escalation  clause and therefore the Board was

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not entitled  to unilaterally  frame uniform  tariffs as due and payable  by the appellants but the rate of increase must be in  proportion to, or correlated with, the actual rise in the  cost  of  generation;  (ii)  that  the  stipulation  in cl.34(b) cannot  be regarded as a contractual stipulation at all and  that in  no case  cl.34(b)  can  possibly  be  made applicable  to   any  purported  alteration  of  contracting parties’ right  for a  past period by means of retrospective legislation; all  that the parties contemplated was that the mutual rights  and obligations  would be  subject to  future legislations on  supply and  consumption of  electricity but such legislations  necessarily had  to be valid legislations and  if   cl.34(b)  was  to  be  treated  as  a  contractual stipulation providing  that the  rights  stipulated  in  the agreement  were   subject  to   any  modification   by   any legislation, valid  or invalid,  cl.34(b) will  have  to  be struck down  as a totally uncertain clause which cannot find place in  any contract;  (iii) that  while  the  concessions stipulated by  the agreement  under s.49(1)  could have been altered in proportion to the rise in the cost of generation, such concession could not have been altogether eliminated as that would  amount to  a  total  disregard  of  the  guiding principles contained  in section  49(3) and thus contrary to the mandate  of s.49(2) of the Act; (iv) that ss.49A and 49B were integrally  connected and  were intended  and meant  to achieve a joint purpose which was merely to validate such of the past  actions of  the Board  as would have been valid if s.49A had already been in force at the relevant time and the demand to be validated had to be raised prior to February 7, 1976 and  not on  a date  subsequent thereto; since the bill dated  March   12,  1976  was  subsequent  to  the  date  of promulgation of  the Ordinance,  the same  was not validated under s.49B;  it was  not open to the Board to make a demand from the  appellants for  payment of  charges for the period commencing from  June 1,  1974 and  ending with  February 6, 1976 according  to the  uniform tariff of 1974; and (v) that the demand  raised by  the Board  against the appellants for payment of  the difference  between the  uniform tariffs and the agreed rate for the period subsequent to January 1, 1971 was violative  of Arts.  14, 19(1)(f)  and (g), and 31(2) of the Constitution.      On behalf of the Respondent-Board it was contended: (i) that cl. 18 is not an escalation clause; (ii) that cl.34(b) 638 makes the  contract subject  to any  legislation;  that  the rights which  the parties  derived under  the agreement  for supply of  electricity at  a concessional rate under s.49 of the Act  was defeasible;  and that  being so, ss.49A and 49B had to  be read  into the  contract and  therefore became  a contractual term; that the appellants derived a right to get electricity at a concessional rate only for a limited period till January  1, 1971  and thereafter  the Board derived the power to  revise the  rate of supply under cl.18 and it was, therefore competent  for the  Legislature  to  enact  a  law providing for application of uniform tariffs notwithstanding any  such  commitment,  undertaking  or  concession  to  the contrary made during any period prior to April 1, 1964. ^      HELD :  1.  By  virtue  of  ss.  49A  and  49B  of  the Electricity  (Supply)   Act,  1948   as  introduced  by  the Electricity (Supply) (Rajasthan Amendment) Act, 1976, it was lawful for  the Respondent-Board  to revise the special rate of tariff  agreed upon  and to  raise a  demand against  the appellants by  its letter dated February 1, 1971 for payment of the  difference between the uniform tariff under Schedule

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HS/LP/HT-I applicable  to  all  large  industrial  consumers under the  Board’s tariff  notification dated April 26, 1969 and the concessional rate in terms of cl.18 of the agreement between the  parties dated July 28, 1961 for the period from January 1,  1971 upto  February 6,  1976, i.e.  the date  of promulgation  of   the   Electricity   (Supply)   (Rajasthan Amendment) Ordinance, 1976, as also the general surcharge of 15% thereon  levied by  the Board by its tariff notification dated April  26, 1969  as from  September 16,  1966 onwards. [689 C-E]      2. The  Board’s  letter  dated  March  12,  1976  being subsequent to  the date of promulgation of the ordinance the demand raised  by the  Board  for  payment  of  the  revised uniform tariff under Schedule LP/HT-I applicable to all such large  industrial   consumers  under   the  Board’s   tariff notification dated  May 28, 1974 purporting to act under ss. 49A and 49B of the Act read with cl.18 of the agreement, was not validated  by s.49B  and, therefore,  the Board was only entitled to  recover uniform  tariff at  the same  rate i.e. under Schedule  HS/LP/HT-1 of  1969 for the period from July 1,  1974  to  February  6,  1976,  that  is,  prior  to  the promulgation of the Ordinance. [689 E-G] 639      3. The  Board was  entitled by  the terms  of s.49A  to raise a  demand for  payment of  the revised  uniform tariff under Schedule LP/HT-I of 1974 w.e.f.   February 7, 1976 and thereafter as  per the  revised uniform  tariffs framed from time to time as applicable to all large industrial consumers in terms of c1.18 of the agreement. [689 G-H; 690 A]      4. An  "escalation clause"  according to  its  accepted legal connotation  means a  clause which  takes care  of the rise and  fall of prices in the market, whereas the right to review confers  the power to revise the rate of supply. [666 D-E]      5. The  word ’review’  in c1.18 necessarily implies the power of  the Board  to have  a second look and to so adjust from time  to time its charges as to carry on its operations under the Act without sustaining a loss. The parties clearly contemplated by  c1.18 for a fresh revision of the rate once in a  block of  five years.  The only fetter on the power of the review  is that  contained  in  the  proviso  to  c1.18, according to  which power  of review shall be exercisable if the component  of cost  of generation  out of the total cost varies by  25% or  more and  that such  power shall  not  be exercisable by  the Board  till January  1, 1971. Therefore, c1.18 cannot be regarded to be an escalation clause. [666 F- H]           Butterworths’   Encyclopadeia    of   Forms    and           Precedents,  4th   Edn.,  Vol.3,  p.148;  Hudson’s           Building and  Engineering  Contracts,  10th  Edn.,           Keating’s  Buiding  Contracts,  4th  Edn.,  p.498;           Black’s Law  Dictionary, 4th Edn., p.639; American           Jurisprudence, 2nd  Edn., Vol.17, p.786 and Corpus           Juris Secundum, Vol.17, p.806, referred to.      6. The  true object and purpose of the enactment should not be  ignored and  due  effect  should  be  given  to  the provisions of ss.49A and 49B of the Act with a retrospective effect which  clothed the  Board  with  power  to  make  the uniform  tariffs  applicable  to  bulk  consumers  like  the appellants who  under agreements entered into with the Board on July 28, 1961, that is, before April 1, 1964, the cut-out date mentioned  in sub-s.(1) of s.49A had been, to the great financial detriment  of the  Board, enjoying  a concessional rate of supply which had no relation to the existing cost of generation, with the

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640 result that the burden of this cost had to be passed over to other consumers.  As is  clear from the Statement of Objects and  Reasons   of  the  Bill,  the  Legislature  thought  it expedient to amend the Act so as to cover the rising cost of generation from  time to  time, notwithstanding  any special contract, undertaking  or concession  to the  contrary.  The legislative mandate  contained in  ss.49A and 49B of the Act as  introduced   by  the   Rajasthan  Electricity   (Supply) Amendment Act, 1976, subserves the public interest to ensure that the  Board shall  not, as  far  as  practicable,  after taking credit  for any  subvention from the State Government under s.63, carry on its operations under the Act at a loss. [672 A-E]      7.1 It  is not  uncommon  for  statutory  contracts  to contain a  term  like  c1.34(b)  which  makes  the  contract subject to  future legislation. Such a clause can usually be found in forest or excise contracts relating to the grant of a privilege which subjects the mutual rights and obligations flowing from  such a  contract to be liable to be altered or modified by subsequent legislations. [669 A-B]      7.2  In   the  instant   case,  the  rights  which  the appellants  derived   under  the  agreement  for  supply  of electricity at a concessional rate under s.49 was defeasible inasmuch as  on a fair construction of the terms of c1.34(b) taken in  conjunction with the conduct of the parties, it is clear that  the parties  had contemplated  that  the  mutual rights and  obligations under  the contract would be subject to alteration  by future  legislation. That being so, ss.49A and 49B  have  to  be  read  into  the  contract  and  these provisions  by  virtue  of  c1.34(b)  became  a  contractual stipulation. [668 E-F; 670 H; 671 A-B]      8.  The   State  Legislature  under  Entry  38  of  the Concurrent  List   was  competent  to  enact  the  Rajasthan Electricity (Supply)  Amendment Act, 1976 and introduced the impugned  ss.49A   and  49B  with  retrospective  effect  to overcome the  difficulty created  by the  decision  of  this Court in  Indian Aluminium  Company’s  case  (Supra).  There being a  change in the law brought about by the introduction of ss.49A and 49B of the Amending Act, the Court is bound to give effect  to these  provisions  notwithstanding  anything contained in  the Act  or  in  any  agreement,  undertaking, commitment or  concession to  the contrary made by the Board before the first day of April, 641 1964, or  the decision  of this  Court in  Indian  Aluminium Company’s case (supra). [673 D-D]      Indian Aluminium  Company v.  Kerala State  Electricity Board, [1976] 1 S.C.R. 70 referred to.      9. A  combined reading  of the  provisions contained in ss.49A and  49B shows  that the  Board is  relieved  of  the shackles of  the contractual  obligations flowing  from  the agreements relatable  to s.49(3), and the Board is empowered in terms  of s.49A  to revise  the tariffs  or frame uniform tariffs with  respect to consumers enjoying special benefits as from  September 16, 1966. However, the Board could not on the strength  of s.49A  alone recover the difference between the uniform  tariffs fixed  from time to time and the agreed rate of  supply from  the appellants  for  the  period  from January 1,  1971 to  February 6,  1976 without  the  aid  of s.49B. [677 F-H; 678 A]      10. Section  49B on its terms has no application unless there was  a demand  raised or  created prior to February 7, 1976, the  date of  promulgation of the ordinance. There is, therefore,  insuperable  barrier  in  applying  the  uniform

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tariff under  Schedule LP/HT-I  framed by the Board’s tariff notification dated  May 28,  1974 from  the billing month of July 1974  i.e. from  June 1,  1974 to February 6, 1976. The Board never intimated the appellants that they would have to pay charges  for the  supply of  electricity to them at that rate. Therefore,  the appellants  would be  liable for  that period to  pay charges at the uniform tariff as per Schedule HS/LP/HT-I framed by Board’s tariff notification dated April 26, 1969. [678 A-D]      11. The  word "surcharge"  is not  defined in  the Act. Plainly, it  means an additional or extra charge of payment. A surcharge  is in  substance an  addition to the stipulated rates of  tariff. The  general surcharge of 15% as also that the uniform  tariff were part of the general burden borne by all consumers  alike. Whatever  may have  been the  position under the  old s.49,  the new  section as substituted by the Amendment Act  30 of 1976, makes it plain that the Board can fix uniform  tariffs. The  power to fix uniform tariffs must necessarily  include  power  to  make  uniform  increase  in tariffs. Section  49A had  the effect  of removing the Board from the  shackles of the agreement to supply electricity as a concessional rate entered 642 into under  s.49. The  effect of  the non/obstante clause in sub-s.(1) of  s.49A was  to nullify the agreement. [678 E-F; 679 G-H; 680 A-B]      Bisra Stone  Lime Co.  Ltd. v. Orissa State Electricity Board, [1976]  2 S.C.R.  307;  and  Shorter  Oxford  English Dictionary, p. 2199 relied upon.      Indian Aluminium Co. v. Kerala State Electricity Board, [1976] 1 S.C.R. 70; and Titagarh Papers Mills Ltd. v. Orissa State Electricity Board & Anr., [1975] 2 S.C.R. 436 referred to.      12. Where a law does not, in reality, affect a transfer of ownership  or possession, Art. 31(2) cannot be attracted. In order  to constitute  acquisition within  the meaning  of Art. 31(2),  there must be transfer of ownership of property to the  State or to a Corporation owned or controlled by the State. [683 F-G]      13. Unless  the taking  of property  had taken place in either of  the two way i.e. "acquisition or requisitioning", there was  no  obligation  to  pay  compensation  under  the Constitution. The  extinction of the right of the appellants under the  contract with the Board to get electric supply at a concessional  rate under  cl.18 of  the agreement  for the period after January 1, 1971 when revision of tariff was due under cl.  18 thereof,  had not  amounted to  acquisition of property under Art. 31(2). Further, there was no question of any transfer  of money  representing any  debt owned  by the Board from the appellants which stood extinguished by reason of ss.49A  and 49B  of the  Act. All that the appellants had under their  contracts with the Board was a defeasible right by reason  of cl. 34(b) of the agreement. The appellants had contracted themselves  by cl.  34(b) to  be subject  to  any subsequent legislation,  and s. 49A of the Act struck at the agreement. It  is an  enabling provision  and  empowers  the Board to  revise the  tariffs for supply of electricity to a class of  consumers enjoying special benefit under agreement entered into  under s.  49(3). The  Board was  competent  to review the  tariff in  terms of  cl. 18  of the agreement as from January  1, 1971.  Section 49A liberates the Board from the constraints  of the  agreed  rate  under  the  agreement entered into  by the Board with the appellants under s.49 of the Act and empowers the 643

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raising of  demand according  to the  uniform tariffs. Here, there was no debt due or owing to the State or a Corporation owned or controlled by the State. Article 31(2) was thus not attracted. [683 G-H; 684 A-B; 683 C-F]      14. The  concept of  "property" in  Art. 31  is  not  a narrow concept  and is  used in  a comprehensive  sense. Any legal right which can be enforced through a Court is a right in the  nature of  property within  the meaning  of Art. 31. [682 G-H; 683 A]      Indian Aluminium Co. v. Kerala State Electricity Board, [1976] 1  S.C.R. 70;  Madan Mohan  Pathak v. Union of India, [1978] 3  S.C.R. 334; H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia  Bahadur v.  Union of  India, [1971] 3 S.C.R. 9; and State  of M.P.  v. Rajojirao Shindi, [1968] 3 S.C.R. 489 distinguished.      15. The  contention based  on  Art.  19(1)(f)  and  (g) cannot prevail.  The present case concerns only with sale of goods i.e.  electricity and  price to  be paid therefor, for "tariff" is  nothing but  the  price.  The  contract  itself provided for  revision  of  the  rate  under  c1.18  of  the agreement after  January 1,  1971. The  Board was within its powers in  applying the  uniform tariffs  to the  appellants after the  period stipulated  for  had  expired.  There  was nothing unreasonable  for the  Board to  have  enforced  the uniform tariffs as against the appellants as from January 1, 1971.  Reasonableness   of  the   increase  in   tariff   is established by  the fact  that the  Board was  not bound  to supply electricity  to the appellants at a concessional rate by incurring operational losses beyond that date. [687 D-F]      16. The  appellants have  not shown  nor  produced  any material to show that they have suffered any loss on account of the increase in tariff. There is nothing to show that the appellants had  not the  capacity  to  bear  the  burden  of uniform tariffs.  It cannot be said that the impugned demand made  by   the  Board   as  against   the  appellants   were confiscatory  in  nature.  When  all  the  large  industrial undertakings including the public sector undertakings of the Government of India and the State Government were paying for the supply of electricity at uniform tariffs fixed from time to time, the appellants had no right to claim immunity. [687 F; 688 D-E] 644      17. It  is evident  that the  cost of generation in the grid was  far higher than the concessional rate at which the appellants were  getting the  supply. As  a result the Board was incurring  very heavy losses on account of this low rate for  a   large  bulk   consumption.  It   would  have   been unreasonable for  the Board  not to have applied the uniform tariffs to  the appellants  as from January 1, 1971 when the Board derived  the power  to revise  the rate under c1.18 of the agreement.  The component  of cost  of generation worked out by  the Board  shows that  the appellants  were  getting their electricity  free of  all  charge.  Even  the  uniform tariff under HS/LP/HT-I was very much less than the price at which the Board was getting its supply. Therefore, there was no reason why the appellants should not be treated alike wit all other  large  industrial  undertakings  which  were  all subjected to  payment of  uniform tariffs fixed from time to time. The  contention based  on Art.14 must, therefore fail. [686 D-F; H; 687 A-C]      18. There  was no  question of any estoppel against the Board inasmuch  as the  appellants did  not open  their  PVC plant on  account of  any assurance or promise by the Board. The appellants  approached the  Board  for  supply  of  high tension ower  for their  industrial complex  and  the  Board

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complied with  the request.  Even otherwise,  the appellants have not  made out  that but  for the statutory contract for supply of electricity at a concessional rate under s.49 they would not have established their industry. There were number of  incentives   offered  by   the   State   Government   to enterpreneurs to  set up  their industries in the State. The Board is  not the  Government and the appellants cannot rely on promissory  estoppel for  the incentive  offered  by  the Government. [688 F-H; 689 A-B]      19.  All  the  appeals,  except  CA.  No.  2675/80  are dismissed. Civil  Appeal No.  2675/80  arising  out  of  the judgment and  order of  the Division Bench of the High Court dated September  12, 1980  dismissing S.B. Writ Petition No. 8579/80 filed  by the appellants challenging the validity of the bill  dated March  12, 1976,  for payment  of Rs. 21,35, 506.70p. for  the billing  month of February 1976, is partly allowed to the extent that the said bill is quashed with the declaration that  the Respondent Board is empowered in terms of s.49A of the Electricity (Supply) Act, 1948 as introduced by the  Electricity (Supply) (Rajasthan Amendment) Act, 1976 to 645 raise a  fresh demand  for payment under Schedule HS/LP/HT-1 of 1969 for the period from July 1, 1974 to February 6, 1976 and further  that the  Board is entitled to recover from the appellants charges  under Schedule  LP/HT/1 of  1974 as from February 6,  1976 and  thereafter as per the revised uniform tariffs, framed from time to time as applicable to all large industrial consumers  together with general surcharge of 15% thereon in  terms of c1. 18 of the agreement.  [690 E-H; 691 A-B]

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2675- 2679 of 1980.      From the  Judgment and Order dated 12th September, 1980 of the  Rajasthan High  Court in Writ Petitions Nos. 628/76, 525/77, 114, 121 and 152 of 1973.      Shanti Bhushan and P.H. Parekh for the Appellants.      Dr. Y.S.  Chitale, S.N.  Kakkar,  V.M.  Tarkunde,  B.D. Sharma, Sushil  Kumar  Jain,  Sudhanshu  Atreye,  Badri  Das Sharma, R.K. Mehta and H.P. Gupta for the Respondents.      The Judgment of the Court was delivered by      SEN, J.  These five  consolidated  appeals  by  special leave from  the common  judgment and  orders of  a  Division Bench of  the Rajasthan  High Court dated September 12, 1980 raise questions  of far-reaching importance. By the judgment under  appeal,   the   Division   Bench   has   upheld   the constitutional  validity   of  ss.   49A  and   49B  of  the Electricity  (Supply)   Act,  1948,  as  introduced  by  the Electricity (Supply)  (Rajasthan Amendment)  Act, 1976, with retrospective effect,  making it  lawful for  the  Rajasthan State Electricity  Board to  revise from  time to  time  the tariffs fixed  for the  supply of  electricity in respect of any period  commencing from September 16, 1966 i.e. the date of introduction of the new s. 49 by the Electricity (Supply) (Amendment) Act,  1966, and  for the  validation  of  amount realized, demand  made or  created by the Board according to the uniform  tariffs in  force from  time to time before the publication in  the  official  Gazette  of  the  Electricity (Supply) (Rajasthan  Amendment) Ordinance,  1976, i.e. prior to February  7,  1976,  the  date  of  promulgation  of  the Ordinance.

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646      Upon that  view, the  Division Bench  has reversed  the judgmemt and  order of  Tyagi, J. dated October 17, 1969 and upheld the  impugned notification dated July 26, 1966 issued by the  Board for  the levy of a general surcharge of 15% of the normal  tariff as  also the  judgment and  order of J.P. Jain, J.  dated April  13, 1973  holding that  the Board was entitled to  recover  from  the  appellants  the  difference between the  normal rate  of tariff  and the special rate of tariff agreed  upon  between  the  parties  in  terms  of  a statutory agreement  dated July  28, 1961  under s.49 of the Act as  it then  stood, by  virtue of ss. 49A and 49B of the Act read  with cl.18  of the  agreement as from January 1971 onwards  for   the  supply   of  electrical  energy  to  the appellants for  the  electro-chemical,  electro-thermal  and poli-vinyl chloride industry known as Messrs Shriram Vinyl & Chemical Industries, Kota, formerly known as Rajasthan Vinyl & Chemical  Industries, and to levy the general surcharge of 15% thereon  contrary to  the terms  and conditions  of  the aforesaid agreement for the supply of such electrical energy to the  appellants at a concessional rate for a periot of 20 years. Pursuant  thereto, the  Division Bench has upheld the demand raised  by the  Board by its letter dated February 1, 1971 for  payment of Rs.11,67,959.95p. for the billing month January 1971 onwards at normal tariffs together with general surcharge  of   15%  thereon   under  Schedule   HS/LP/HT-1, applicable to  all  large  industrial  consumers  under  the Board’s tariff  notification dated  April  26,  1969,  under c1.18 of the agreement i.e. prior to the promulgation of the Ordinance. It  has also  upheld the  demand  raised  by  the Board’s  letter   dated  March   12,  1976  for  payment  of Rs.21,35,506.72p. for  the billing  month February  1976  at normal tariff  plus the  general surcharge  of  15%  thereon under Schedule  LP/HT-1 applicable  to all  large industrial consumers under  the Board’s  tariff notification  dated May 28, 1974  purporting to act under ss. 49A and 49B of the Act read with  c1.18 of  the agreement for the period subsequent to the promulgation of the Ordinance.      The principal  question in  controversy is  whether ss. 49A and  49B of  the Act were integrally connected with each other;  and   if  so,  the  retrospective  conferment  of  a prospective power  validated any  amount realized, or demand made or  created by  the Board,  according  to  the  uniform tariffs from time to time, 647 from or  against any  person claiming  any  special  tariffs under any  agreement, undertaking, commitment or concessions made, before  the first day of April 1964 i.e. the date when the uniform  tariffs were  first  framed  by  the  Board  at different rates  for different  clasess of  consumers by its notification dated  March 18, 1964, notwithstanding anything contained in  the Act or in any such agreement, undertaking, commitment or  concessions so made. This question turns on a construction of  the provisions contained in ss. 49A and 49B of the  Act, the  constitutionality of  which has  not  been challenged before us.      Sub-s. (1)  of s.  49A of  the Act  by  the  use  of  a nonobstante clause  has the  effect of  nullifying all  such agreements, undertakings  or  commitments  made  before  the first day  of April  1964 by  the Board or the Government of Rajasthan or  the Government  of any  covenanting  State  of Rajasthan or  in any  judgment and  order of  any court, and provides that  it shall  be lawful  for the Board to revise, from time  to time,  the tariffs  fixed for  the  supply  of electricity to  persons other  than licensees  and to  frame

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uniform tariffs for the purpose of such supply in respect of any period  commencing on  and from  September 16, 1966, the date when  new s.  49 had  come in force. Sub- s.(2) thereof provides that  in revising  the tariffs  or framing  uniform tariffs under  sub-s.(1), the  Board shall  be guided by the principles set  out in  s.59  and  as  respects  any  period commencing on  and from  September 16,  1966 i.e.  after the introduction of  the new s. 49 of the Act, by the principles laid down  in sub-ss. (2), (3) and (4) of s. 49. Sub- s. (3) of s.  49A provides  that all  such agreements, undertaking, commitment or  concessions as  are referred to in sub-s.(1), shall, insofar  as they are inconsistent with the provisions of sub-ss.(1) and (2) and to the extent of the tariffs fixed or provisions  made therein  for such  fixation, be void and shall be deemed always to have been void. One of the crucial questions is  whether the demand to be validated in terms of s. 49B  of the  Act, had  to be  raised prior to February 7, 1976 and  not on a date subsequent thereto and therefore the appellants were  liable to  pay the  revised uniform  tariff under Schedule  LP/HT-1 of  the Board’s  tariff notification dated May  28, 1974  w.e.f. July  1, 1974. The contention on behalf of  the appellants is that s. 49B of the Act in terms does not  have the effect of validating the demand raised by the Board  by its letter dated March 12, 1976 for payment of charges for the 648 supply of electrical energy to them at uniform tariff framed by the  aforesaid Board’s  notification dated  May 28, 1974, such a demand having been made after the promulgation of the Ordinance i.e.  after February  7, 1976;  and if that be so, whether the  Board was  only entitled  to recover  from  the appellants uniform  tariff under  Schedule HS/LP/HT-1 framed by the  Board’s tariff  notification dated April 26, 1969 as from January 1971 onwards. Various subsidiary questions also arise, viz.  whether the  demands so raised are violative of Art.14,  Art.19(1)(f)   and  (g)   and  Art.31(2)   of   the Constitution.                          The Facts      Facts giving  rise to  these appeals  are these.  By an agreement  dated   July  28,   1961  the   Rajasthan   State Electricity Board,  Jaipur agreed  to apply  the  appellants with bulk  electrical energy  upto maximum  of 25,000 KW per year for their Rajasthan Vinyl & Chemical Industries situate at Kota  for electro-chemical,  electro-thermal and  PVC and allied industrial  products at  a concessional  rate  for  a period of  20 years  upon the terms and conditions contained therein. Cl.17  of the agreement provides for a special rate of tariff  as negotiated between the parties and is in these terms :           "17. The  consumer shall  pay to  the Board  every           month charges  for the  electrical demand  made by           the consumer  during the  preceding month  at  the           rate of  201.04/12 =  Rs. 16.753  per KVA  of  the           demand  assessed  which  shall  be  calculated  as           defined in clause 19." We are informed that this works out roughly to 3p. per unit.      Under c1.18  of the  agreement, the  rate of supply was reviewable by  the Board  every five  years after January 1, 1971. Proviso  thereto was  in the  nature of a rider and it provided  that  the  revision  of  rate  shall  be  effected provided the  component of  cost of  generation out  of  the total cost  varied by  25% or more from the cost last fixed. The relevant part of c1.18 may be reproduced :           "18.........The rate  of supply  as determined  in           clause 17 above shall be reviewed every fifth year

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649           starting from  the date  of first  supply provided           the component  of cost  of generation out of total           cost varies  by 25%  or more  from the  cost  last           fixed. Further  the rate  fixed by  this Agreement           shall be  reviewed only  on or  after 1st January,           1971." It  is   not  necessary  to  set  out  c1.31  which  is  the arbitration clause.  C1.34(b) of  the agreement  which has a material bearing upon these appeals reads as follows :           "34(b) Nothing  contained in this Agreement or any           amendment  thereof   shall  restrict  any  rights,           obligations and discretions which the Board or the           Consumer  has   derived  under   any   legislation           relating to  supply and consumption of Electricity           enacted during the period of this Agreement."      It is  necessary to mention that Messrs Rajasthan Vinyl & Chemical  Industries was  set up by the appellants at Kota for electro-chemical,  electro-thermal and  PVC  and  allied industrial products  with  a  capital  investment  of  Rs.10 crores  as   a  result  of  the  Board  agreeing  to  supply electrical energy  at a  concessional rate  which came to be known later  as Messrs  Shriram Vinyl & Chemical Industries. It is a power oriented industry and electricity is the basic raw material.  The only  other industry  of this kind in the country was the one set up by Messrs Calico Mills Ltd. which has since been closed.      It is  common ground that the Board commenced supplying electrical energy  to the  appellants with effect from March 1, 1963. The Board in pursuance of its powers under s. 49 of the Act, with the prior concurrence of the State Government, has been  issuing various  notifications from  time to  time bringing into  effect the  revised tariffs for the supply of electricity  to   its  different  classes  of  consumers  at different rates.  The first  of these was notification dated March 18, 1964 which brought into effect the revised tariffs for the  supply of  electricity to  its consumers  and  they became applicable  for  the  consumption  recorded  for  the billing  month   May  1964   onwards.  C1.3   of  the   said notification provided that the revised tariffs shall replace all existing  tariffs and  shall supersede  all the existing orders of  the Board and the State Government in that behalf with effect  from the  date of  introduction of  the revised tariffs, except for the following, namely : 650           "(i) Special  contracts for Large or Special loads           separately negotiated or to be negotiated; and           (ii) Special  loads for which concessional tariffs           have been  already given  under the  orders of the           Government/Board."      The second  of these  notifications was  the one  dated July 26, 1966 by which the Board purported to levy different rates of  surcharge on  different classes  of consumers with effect from the billing month of September 1966. The general surcharge imposed  on the  appellants was  15% on the normal tariff. The  third notification dated April 26, 1969 brought into effect the revised tariffs for supply of electricity to consumers  falling  under  the  category  ’large  industrial loads’ viz. schedule HS/LP/HT-1 with effect from the billing month June  1969, and  the fourth  dated May 28, 1974 making effective revised  tariffs for  the supply of electricity to its consumers from the billing month of July 1974. The third and  fourth  notifications  contained  similar  exclusionary clause. According  to the appellants, the uniform tariffs as revised from  time to time under the aforesaid notifications

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were not applicable to them in view of the said exclusionary clause.      The appellants filed a petition in the High Court under Art.226 of the Constitution assailing the power of the Board to levy  the general  surcharge of  15% under  the  impugned notification  dated   July  26,  1966.  The  aforesaid  writ petition was  allowed by  Tyagi, J.  by his  judgment  dated October 17,  1969 by  which the  leared Judge  held that the impugned notification  levying general  surcharge of 15% was ultra  vires   the  powers  of  the  Board  insofar  as  the appellants were  concerned. The  decision was  based on  the ground that  the parties  having entered  into  a  statutory agreement dated  July 28,  1961 for  a concessional  rate of tariff  for   the  supply   of  electrical   energy  to  the appellants, there  was a  fetter created on the power of the Board to  unilaterally increase the tariff under s.49 of the Act and  therefore the  appellants could not be subjected to payment of  the general surcharge of 15%. Feeling aggrieved, the Board  preferred an  appeal against  the judgment of the learned single Judge.      As from January 1, 1971, the Board manifested its 651 intention to  the appellants to revise the concessional rate of supply  and charge  them the uniform rate of tariff under Schedule HS/LP/HT-1  as applicable  to all  large industrial consumers and  the  general  surcharge  of  15%  thereon  in exercise of  its powers  under cl.18 of the agreement. There followed several  meetings between the officers of the Board and the  representatives of  the appellants  and  they  were informed that  they would have to pay for the consumption of electricity at  the normal rate of tariff prevalent plus the general surcharge  of 15%.  It is  quite  evident  from  the appellants’ letter  dated September 5, 1970 addressed to the Chairman of the Board that the Board had the power to review the tariff  insofar as  they  were  concerned  as  and  from January 1,  1971. In  their letter they adverted to cl.18 of the agreement  which conferred  power on the Board to review the tariff  on or  after January 1, 1971 and referred to the discussion they had with the Chairman and other officials of the Board,  making a  request that  the Board should furnish the necessary  details with regard to the total cost and the component of  cost of  generation at  the time of the supply under the  agreement as  well as  the relevant  time, if any review  of   tariff  was  being  contemplated.  In  response thereto, the  Board by its letter dated December 22/24, 1970 drew the  attention of  the appellants  to cl.18  and stated that the  cost of  generation had  been worked  out  in  the office of  the Board  and it had been found that the present cost was  higher than  25%  of  the  cost  of  the  time  of executing the agreement as detailed below :      "Component of cost of generation       at the time of agreement :               2.089 P/Kwh.      Component of cost of generation      during the year 1969-70 :                 5.17 P/Kwh." It went on to say :           "In view  of this, the Board is entitled to review           the rates  of supply  to you and intends to charge           from 1st  January,  1971,  at  the  normal  tariff           Schedule  HS/LP/HT-1   (copy  enclosed)  plus  15%           general surcharge."      Accordingly, the Board by its letter dated February 1, 652 1971 enclosed  a bill for the billing month January 1971 for a sum  of Rs.12,18,740.60p.  at the  normal  tariff  with  a rebate   of    Rs.50,780.65p.   which    worked    out    to

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Rs.11,67,959.95p. It  was stated that the rate of supply had been reviewed  by the  Board under  cl.18 of  the  agreement w.e.f. January  1, 1971  and  the  rate  charged  was  under Schedule  HS/LP/HT-1  applicable  to  all  large  industrial consumers. We  are informed  that this  works out to 7.67 p. per unit  exclusive of  the general  surcharge of 15% and to 8.73p. inclusive  thereof and  this more or less represented the actual cost of generation.      On a  petition filed by the appellants under Art.226 of the Constitution assailing the validity of the demand raised by the  Board by  its letter  dated February 1, 1971 and the enclosed bill  for Rs.11,67,959.95p.  on the ground that the Board was  not entitled  to revise the tariffs applicable to them under  cl.18 as  from January 1, 1971, J.P. Jain, J. by his order  dated April  13, 1973  quashed the  impugned bill issued by  the Board. He repelled the construction sought to be placed  by the  appellants on  the terms  of cl.18 of the agreement and  held that  the Board  was entitled  under the first part  of cl.18  to review  the rate  of supply  ’every fifth year  starting from  the first date of supply’, but in view of  the restrictive clause contained in the second part of cl.18 it was impermissible for the Board to make any such upward revision  in the rate of supply till January 1, 1971. He further  rejected the  contention of  the appellants that the Board was not competent to review the tariff under cl.18 prior to  March 1,  1973. He  also held that it was not open for them  to contend  that the  cost of  generation had  not varied by  25% or  more, they  having by  their letter dated January 18,  1971 addressed to the Board declined to go into the question of cost of generation as on the date last fixed and at  the relevant  time i.e.  in the  year 1969-70 on the pretext that they were advised that the rate revision was in no case  due till March 1, 1973. The learned Judge next held that in  the circumstances  he would  infer that the rise in the cost  of generation was at least 25% and accordingly the Board was  entitled to  revise the  rate of supply by 25% of the rate  specified in  cl.17 upon the basis that the upward revision in  the rate  of supply  under  cl.18  must  be  in proportion to,  or correlated  with, the  actual rise in the cost of  generation. In  that view,  he held  that the Board could not unilaterally impose the normal tariff in disregard of the agreement, and added : 653           "Sub-s.(3) of  s.49 of  the Electric  Supply  Act,           1948 clearly  empowers the  Board to fix different           tariffs if  it considers it necessary or expedient           for the  supply of electricity to any non-licensee           having regard  to the geographical position of the           area, the nature of the supply is required and any           other relevant  factor. The  petitioner company is           admittedly the  biggest consumer  in the State and           the Board  at one  time under the agreement agreed           to give  it an  exceptional rate.  Sub-s.(3) is an           exception to  sub-s.(1) which  lays down  that the           Board shall  frame uniform tariff. Sub-s.(4) again           prescribes a  limitation  to  sub-s.(3)  that  the           Board shall  not give undue preference. It has not           been the  case of  the Board that by executing the           agreement any  undue preference  was shown  to the           petitioner company." In conclusion,  the learned  Judge held  that if  the  Board claimed a  further rise, it would have to establish that the rise in  the cost of generation was more than 25% and it had to for  that purpose  get the  percentage  in  the  cost  of generation determined either by mutual dialogue or reference

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to arbitration.           Promulgation of the Electricity           (Supply) (Rajasthan Amendment)           Ordinance, 1976 :           Introduction of Sections 49A           And 49B into the Act.      Both the  appellants and  the Board  preferred appeals. While the  aforesaid appeals were pending in the High Court, on February  7, 1976  the Governor  of Rajasthan promulgated the Electricity  (Supply) (Rajasthan  Amendment)  Ordinance, 1976 by  which new  ss.49A and  49B were introduced into the Act with  retrospective effect  to overcome  the  difficulty created by  the judgment of the High Court in this case, and more particularly  by the  judgment of  this Court in Indian Aluminium Company  v.Kerala State Electricity Board [1976] 1 S.C.R. 70.  By the use of a non-obstante clause in sub-s.(1) of s.49A  the Legislature  made it  lawful for  the Board to revise, from  time to time, the tariffs fixed for the supply of electricity to persons other 654 than licensees  and to frame uniform tariffs for the purpose of such supply. Sub-s. (2) thereof provided that in revising or framing tariffs under sub-s.(1) the Board shall be guided by the principles set out in s.59 and as respects any period commencing on  and from  September 16, 1966 i.e. the date on which the new s.49 of the Act was brought into force, by the provisions laid  down in  sub-ss.(2), (3)  and (4)  of s.49A notwithstanding anything  contained in  the Act  or  in  any agreement, undertaking, commitment or concession made before the first  day of April 1964, i.e. the date when the uniform tariffs were  first  framed  by  the  Board  by  its  tariff notification dated  March 18,  1964.  Sub-s.  (3)  of  s.49A provides that all such agreements, undertakings, commitments or concessions  as are  referred to  in sub-s.  (1),  shall, insofar as they are inconsistent with the provisions of sub- ss.(1) and  (2) and  to the  extent of  the tariffs fixed or provisions made therein for such fixation, be void and shall be deemed  always to  have been  void. The agreement between the parties  thus had the effect of nullifying the agreement between the  parties entered  into by  the  Board  with  the appellants  under   s.49  of  the  Act  for  the  supply  of electricity at  a concessional  rate  for  their  industrial undertaking. Similarly,  by the use of a non obstante clause s.49B provided  that notwithstanding  anything contained  in the Act  or in  any agreement,  undertaking or concession as are referred  to in  sub-s.(1) of s.49A, any amount realized or demand  made or  created by  the Board  or the Government etc. according  to the uniform tariffs in force from time to time from or against any person claiming any special tariffs under any  such agreement,  undertaking or  concession  made before February  7, 1976,  the date  of promulgation  of the Ordinance, shall  be deemed  to have  been validly realized, made or  created under  the Act as amended by the Ordinance. It is necessary to reproduce s.49A in its entirety and s.49B insofar as relevant, which read:           "49A. Power of the Board to revise certain tariffs           :-           (1) Notwithstanding anything contained in this Act           or in  any agreement,  undertaking, commitment  or           concessions made,  before the  first day of April,           1964 by  the Rajasthan  State Electricity Board or           the Government of Rajasthan or by the ruler or 655           Government of  any covenanting State of Rajasthan,           or in any judgment or order of any court, it shall

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         be lawful  for the said Board to revise, from time           to time,  the tariffs  fixed  for  the  supply  of           electricity to persons other than licensees and to           frame uniform  tariffs for  the  purpose  of  such           supply.           (2) In  revising the  tariffs or  framing  uniform           tariffs under  sub-section  (1),  the  said  Board           shall be  guided by  the  principles  set  out  in           section 59  and as  respects any period commencing           on and  from the  16th day  of September, 1966, by           the principles  laid down in sub-sections (2), (3)           and (4) of section 49.           (3) All such agreements, undertakings, commitments           or concessions  as are  referred to in sub-section           (1), shall,  in so  far as  they are  inconsistent           with the  provisions of  sub-sections (1)  and (2)           and  to   the  extent  of  the  tariffs  fixed  or           provisions made therein for such fixation, be void           and shall be deemed always to have been void.           49B. Validation of certain tariffs etc. -           Notwithstanding anything  contained in this Act or           in  any   agreement,  undertaking   or  concession           referred to  in sub-section  (1) of secton 49A, or           in any judgment or order of any Court -           (a)  any   amount  realized,  or  demand  made  or           created, by the Rajasthan State Electricity Board,           or the  Government of  Rajasthan or  the ruler  or           Government of  any covenanting State of Rajasthan,           according to  the uniform  tariffs in  force  from           time to  time, from or against any person claiming           any special  tariffs  under  any  such  agreement,           undertaking or  concession before the publications           in the  official Gazette of the Electricity Supply           (Rajasthan Amendment)  Ordinance, 1976,  shall  be           deemed to  have been  validly  realised,  made  or           created under  this Act  as amended  by  the  said           Ordinance." 656      Immediately thereafter  on March  12,  1976  the  Board furnished the  appellants with  a bill  for  payment  of  an amount  of   Rs.21,35,506.72p.  for  the  billing  month  of February 1976 at uniform rate, under Schedule LP/HT-1 framed by the  Board’s  tariff  notification  dated  May  28,  1974 together with the general surcharge of 15%.      The appellants  were therefore  constrained to move the High Court under Art.226 of the Constitution challenging the constitutional validity  of ss.49A  and 49B  of the  Act, as introduced by  the aforesaid  Ordinance as also the impugned bill sent  by the  Board for  the billing  month of February 1976 for  Rs.21,35,506.72p. On  November 4,  1976 the  Board issued another  notification under  s.49(1) framing  revised uniform tariffs  at different  rates for  different class of consumers which  became applicable from the billing month of December  1976.   But  unlike   the  earlier   notifications prescribing uniform  tariffs under  s.49(1) of the Act, this notification  did   not  contain   any  exclusionary  clause granting exemption for specially negotiated loads. While the matters were  pending before  the High Court, on November 3, 1977 the  Board furnished  another bill  to  the  appellants claiming arrears  amounting to  Rs.5.57 crores on account of the difference  between the  normal rate  of tariff  and the agreed rate  for the supply of electrical energy to them for the period from January 1, 1971 to January 31, 1976.      Again, the  appellants filed  another petition  in  the High Court  under Art.226  of the  Constitution  questioning

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their liability  to pay the said amounts. Both the aforesaid writ petitions,  namely, the  one challenging  the vires  of ss.49A and  49B of  the Act  as well  as the legality of the impugned bill  sent by  the Board claiming Rs.21,35,506.72p. for the  billing month  of  February  1976,  and  the  other questioning the  legality and  propriety of  the bill  dated November 3,  1977 raising  a demand  for payment  of Rs.5.57 crores on  account of  the difference  between  the  uniform rates of  tariffs and  the agreed  rate of  supply  for  the period from  January  1,  1971  to  January  31,  1976  were referred to a Division Bench.      By the judgment under appeal, a Division Bench speaking through Fudal, J. allowed the appeal preferred by the Board 657 and dismissed  that of  the appellants  as well  as the writ petitions filed  by them.  The learned  Judge disallowed the contention raised  on behalf  of the  appellants as  to  the constitutional validity  of ss.49A  and 49B  of the  Act  as introduced by the Electricity (Supply) (Rajasthan Amendment) Act, 1976  and upheld  the right  of the Board to revise the rate of supply as agreed upon for the period commencing from January 1, 1971 onwards and enforced a demand for payment of the difference  between the  uniform tariffs  as fixed  from time to  time and  the agreed  rate. Learned counsel for the parties have  placed no  reliance on  the  judgment  of  the Division Bench  which, according to them, does not deal with the points raised.              Extent of the Appellants liability      We find  it convenient  at this  stage to  indicate the extent  of  the  appellants’  liability  involved  in  these appeals. From the abstract statement filed by the Board, the net amount  due with  interest as  per the  uniform  tariffs under Schedule  HS/LP/HT-1  framed  by  the  Board’s  tariff notification dated  April  26,  1969  for  the  period  from January 1,  1971 to  June 30,  1974 and  the uniform  tariff Schedule LP/HT-1  framed by  the Board’s tariff notification dated May  28, 1974  for the  period from  July 1,  1974  to February 6,  1976 together with the general surcharge of 15% on the  tariff from  September 16,  1966  and  the  interest thereon comes  to Rs.14,50,99,654-47p. On the other hand, if the appellants  contention regarding the in applicability of the uniform  tariffs under  Schedule LP/HT-1 of 1974 were to prevail on  the ground  that the Board had failed to raise a demand for payment of electricity charges at that rate prior to February  7,  1976,  the  date  of  promulgation  of  the Ordinance, the  net amount due on account of this difference for  the   aforesaid  period  applying  the  uniform  tariff Schedule HS/LP/HT-1  of 1969  comes to  Rs.12,10,51,510-46p. The  resultant  sums  have  been  arrived  at  after  making adjustment of  various payments  made by the appellants from time to time towards the bills submitted by the Board as per the interim  orders passed  by the  High Court  from time to time together with interest, as also under the interim order of this  Court dated  October 6, 1980 while granting special leave and  stay of the operation of the judgment of the High Court. We  may state  that the figures given in the abstract statement filed by the 658 Board more  or less  correspond with  those in the statement filed by  the appellants.  The difference  between  the  two amounts  with   interest  thereon   at  9%   works  out   to Rs.2,41,58,937. That  is the magnitude of the claim in these appeals.      We had  the benefit  of  hearing  Shri  Shanti  Bhushan appearing for the appellants and Dr. Y.S. Chitale, on behalf

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of the  Board. At  the  very  outset  Shri  Shanti  Bhushan, learned counsel  for the appellants with all fairness stated that he  does not  challenge the  constitutional validity of ss.49A and 49B of the Act.                  The nature of controversy.      The controversy  in these  appeals can  be viewed  from three aspects.  First rests  on the  interpretation  of  the terms of  the agreement  between the  parties dated July 28, 1961 and  the various  clauses thereof, particularly clauses 18 and  34(b) which both have a material bearing. The second on the  construction of ss.49A and 49B of the Act, the scope and  effect  of  s.49A  which  by  the  non-obstante  clause nullifies the  agreement for the supply of electrical energy at a concessional rate to the appellants and makes it lawful for  the   Board  to   charge  the   uniform   tariff   with retrospective effect  from September  16, 1966 i.e. the date on which  the new  s.49  was  introduced,  and  s.49B  which validates the  making  of  such  demand  with  retrospective effect. As  also the  validity of the demands created by the Board by  its letter  dated February 1, 1971 for the billing month January  1971 for  Rs.11,67,959. 95p.  under  Schedule HS/LP/HT-1 to  the Board’s  tariff notification  dated April 26, 1969  applicable to  all large industrial consumers, and the bill sent by the Board on March 12, 1976 for the billing month February  1976 for  payment of Rs.21,35,506-72p. under Schedule LP/HT-1  to the  Board’s tariff  notification dated May 28,  1974. The  third comprises  of  various  subsidiary issues as  to whether the Board is precluded by the doctrine of promissory  estoppel from  raising these demands, as also whether such demands are violative of Arts. 14, 19(1)(f) and (g) and  31(2) of the Constitution. We shall deal with these contentions in seriatim. 659      In order  to appreciate  the  issues  involved,  it  is necessary to  deal with  the legislative changes. Under s.49 of the Act as it stood at the relevant time i.e. on July 28, 1961, the  date of  agreement, a general power was conferred on the  Board to  supply electricity  upon  such  terms  and conditions as  it may,  from time to time, fix having regard to the  matters referred  to in that section and the proviso thereto directed  the Board  not to show undue preference to any person  in fixing  the tariffs.  The section  was in the following terms :           "49. Provision  for the sale of electricity by the           Board to persons other than licensees :           Subject to  the provisions  of this Act and of any           regulations made  in this  behalf, the  Board  may           supply electricity  to  any  person  not  being  a           licensee upon  such terms  and conditions  as  the           Board may  from time  to time fix having regard to           the nature and geographical position of the supply           and the purposes for which it is required :           Provided  that   in  fixing  any  such  terms  and           conditions  the   Board  shall   not  show   undue           preference to any person."      It appears  that a  view was  taken by  the Bombay High Court in  a case relating to the Kalyan Borough Municipality that s.49  of the  Act as  it then stood, did not permit the Board to  frame uniform  tariffs for  consumers  in  compact areas as well as consumers in sparse areas, so as to require the former  to pay a part of the cost involved in the supply of electricity  to the  latter i.e.  so as  to cast a higher burden on  the consumer in a compact area, where the cost of supply was  less. An  appeal was  brought by the Maharashtra Electricity Board  to this Court. During the pendency of the

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appeal,  Parliament   enacted   the   Electricity   (Supply) Amendment Act,  1966 by which the Act was amended in various particulars. It  is only  necessary to refer to two sections of  the   Amendment  Act  viz.  ss.11  and  24.  Section  11 substituted, with  retrospective effect,  new s.  49 in  the place of  old s.49,  and s.24  of the amending Act validated the imposition  and collection  of charges for the supply of electricity, preventing  any person  from claiming refund of any amount paid by him in excess of 660 the amount  due under  the Act. The new s.49 of the Act runs as follows :           "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;           (b) the  coordinated 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  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 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  purposes 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." 661      In  Maharashtra   State  Electricity  Board  v.  Kalyan Borough Municipality  & Anr. [1968] 3 S.C.R. 137, this Court reversed the  decision of  the Bombay  High Court and it was held that  the levying  of uniform  tariff on  the consumers irrespective of  whether they  were in  sparse areas  or  in compact areas, which was not directly related to the cost of supply, did  not amount  to a  colourable exercise of taxing power by Parliament.      The   Electricity    (Supply)   (Rajasthan   Amendment) Ordinance was  first promulgated  on February 7, 1976, later replaced by  the Electricity  (Supply) (Rajasthan Amendment) Act, 1976  introducing ss.49A and 49B to the Act, to obviate the difficulty  created by the judgment of the High Court in this case  as also by the decision of this Court in the case of the  Indian Aluminium Company v. Kerala State Electricity Board [1976]  1 S.C.R. 70. In the Indian Aluminium Company’s case, the  Court speaking  through Bhagwati,  J.  held  that agreements for  supply of electricity to the consumers for a specified period  at a  special tariff  are  the  result  of negotiations between the Board and the consumers and hence a

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matter of  agreement between  them. Such  agreements for the supply of  electricity to  the consumers  must therefore  be regarded as  having  been  entered  into  by  the  Board  in exercise of the statutory powers conferred under s.49(3) and thus there  could be  no question  of such stipulation being void as  fettering the  exercise of  the statutory powers of the Board  under s.49(1). The learned Judge observed that in fact such  agreements under s.49(3) represented the exercise of the statutory powers and the Board could not unilaterally frame uniform tariffs under s.49(1) of the Act in derogation of such  agreements entered  into under  s.49(3). Upon  that basis, the learned Judge further observed that the Board was not competent  to enhance  the charges  under the  guise  of fixing uniform tariffs because, sub-s.(1) of s.49 is subject to sub-s.  (3); and  once special  tariffs were  fixed under sub-s.(3) there  could be  no  question  of  fixing  uniform tariffs applicable to such consumers under sub-s.(1). Such a power could not be exercised in violation of the stipulation fixing special tariffs under sub-s.(3).      According to  s.59 of the Act, the Board is required to carry on  its operations  without incurring any loss. In the Indian Aluminium  Company’s case, however, the learned Judge repelled the  contention of  the Board  that  since  it  was operat- 662      ing at  a loss  it was bound under s.59 to readjust its charges to  avoid the  loss. It  was said that s.59 does not give a charter to the Board to enhance its charges in breach of a  contractual obligation. The view taken by the Court in that case would have had a disasterous effect in some of the States if  new ss.49A  and 49B  were not  introduced by  the Ordinance. In  the State  of  Rajasthan,  not  only  special agreements or concessions in tariffs were made several years ago by  the covenanting States, but also by the old State of Rajasthan after its formation as a Part B State; and if they were allowed  to continue, they would not cover the existing cost of  generation with  the result that the burden of this cost would  have to  be passed  on to other consumers who do not,  in  any  way,  benefit  from  such  special  contracts providing  concessional   tariffs.  It   would   have   been manifestly  unjust  and  discriminatory  that  one  consumer should benefit  at the  cost of  other consumers  or general tax-payers. It  was therefore thought expedient to amend the Act with  retrospective effect  so as to enable the Board to revise the  contractual rates  in order to cover the cost of generation from  time to  time, nothwithstanding any special contract, undertaking  or concession  to the  contrary.  See Statement of  Objects & Reasons for the Electricity (Supply) (Rajasthan Amendment) Bill, 1976.           Purport and effect of ss. 49A and 49B of the Act.      It is a well-known principle that for the validation of an invalid  act done  under an Act, it is essential that the subsequent validating  statute must  confer  power  for  the doing of the Act at the time it was done, and that the power should  also   be  exercised.   In  the   absence  of   such authorisation for the doing of the Act, the validation would be futile as that would only amount to attempt to exercise a power  which  exhypothesi  did  not  exist.  This  has  been achieved by  the Legislature  by enacting  s.49A of the Act. The purport and effect of s.49A of the Act is to nullify the judgment  of  the  High  Court  and  more  particularly  the decision of  this Court  in Indian  Aluminium Company’s case laying down  that sub-s.(1) of s.49 was subject to sub-s.(3) and therefore the Board could not unilaterally frame uniform tariffs under s.49(1) with respect to the class of consumers

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who were  entitled to the supply of electricity at a special rate by  virtue of agreements entered into by the Board with them under sub-s.(3) of s.49. By the 663 use of  the non-obstante clause in s.49A(1), the Legislature has removed  the hurdle  placed on the Board against framing of uniform  tariffs with  respect to such class of consumers and by  the retrospective  conferment of a prospective power empowered the  Board to  raise a  demand for  payment of the difference between the uniform tariffs in force from time to time and the special rates as respects any period commencing on and  from September  16, 1966  i.e. the date when the new s.49 of  the Act  was  brought  into  force.  On  its  plain construction, s.49A makes it lawful for the Board to revise, from time  to time,  the tariffs  fixed for  the  supply  of electricity to  all such consumers who were enjoying special benefits by  virtue of  the agreements entered into with the Board under  s.49(3) of  the Act,  and also to frame uniform tariffs for  the purpose  of  such  supply,  notwithstanding anything contained in any agreement, undertaking, commitment or concession  to the  contrary made by the Board before the first day  of April  1964. The non-obstante clause contained in  s.49(1)   has  clearly  the  effect  of  overriding  the agreement between the parties.      Section 49B  of the  Act  by  the  non-obstante  clause provides that  notwithstanding anything contained in the Act or in  any agreement,  undertaking or concession referred to in sub-s.(1)  of s.49A,  or in  any judgment or order of any Court, any amount realized, or demand made or created by the Board, according  to the  uniform tariffs in force from time to time,  from or  against any  person claiming  any special tariffs   under   any   such   agreement,   undertaking   or concessions, before  the publication in the official Gazette of the  Ordinance i.e.  before February  7, 1976,  shall  be deemed to  have been validly realized, made or created under the Act,  as amended by the Ordinance. A combined reading of ss.49A and  49B seeks to achieve a two-fold object. S.49B in terms validates the demands raised by the Board by virtue of its powers  under s.49A  against the appellants prior to the promulgation of  the  Ordinance  on  February  7,  1976  for payment of  the difference  between the  uniform tariffs  in force from  time to  time and  the  special  rates  as  from January 1,  1971. The  other legal  consequence is  that the appellants who  were entitled  to supply of electricity at a concessional rate  under the  agreement between the parties, became subject  to payment  of uniform tariffs in force from time to  time and  it became lawful for the Board to raise a demand upon that basis subsequent to the promulgation 664 of the  Ordinance and  also to  revise the tariffs fixed for the supply  of electricity  to them.  The appellants  do not dispute their liability to pay for the supply of electricity according  to  the  uniform  tariffs  fixed  for  all  large industrial consumers  as  from  February  7,  1976  and  the dispute only  relates to  the power  of the Board to raise a demand for payment of the difference for the past period.                 Contentions of the parties.      It is  in this  setting and the factual background that we are required to consider the submissions addressed to us. As already  stated, the  controversy in these appeals can be viewed from three aspects, namely, (i) Interpretation of the terms of  the agreement  between the  parties dated July 28, 1961,  particularly   cls.  18   and  34(b)   thereof;  (ii) Interpretation of  ss.49A and  49B of  the  Act;  and  (iii) Whether the  demands raised  by the Board for payment of the

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difference by  the impugned bills dated February 1, 1971 and March 12,  1976 which involved the imposition of a liability on the  appellants by  the  retrospective  conferment  of  a prospective power  under s.49A  and the  validation of  such power under  s.49B  was  wholly  arbitrary  and  irrational, confiscatory  in  nature  and  amounted  to  deprivation  of property  without  payment  of  compensation  and  was  thus violative of  Arts.14, 19(1)(f)  and (g)  and 31(2)  of  the Constitution. It  would be convenient to deal with the first and third aspects together.           Interpretation of the agreement           between the parties :           Clause 18 of the agreement.      As to  the construction  of the  terms of the agreement between the  parties we  may  first  deal  with  cl.18.  The appellant’s submission is that on a true construction of the agreement, cl.18  is nothing  but an  escalation clause  and therefore the  Board was  not entitled to unilaterally frame uniform tariffs as due and payable by the appellants but the rate of  increase must  be in  proportion to,  or correlated with, the  actual rise in the cost of generation. It is said that in every case, the function of the Court is to find the contractual intention  by placing  a construction of what is just and reasonable. The agreement was for the sale and 665 purchase of electricity and the prices had been specifically stipulated by  the parties  in cl.17.  A perusal of cl.17 of the agreement  which fixes the rate of supply at the rate of 201.04/12 =  Rs. 16.753 per KVA of the demand assessed shows that the  rate had been worked out by the parties jointly on the basis  of some calculation with reference to the cost of generation. The  only reasonable construction should be that clear  co-relation   between  the  cost  of  generation  and increase in  the rate  of supply had been stipulated, as was the view  expressed by Jain, J. On re-determination the rate of supply  could be  increased only  to the  extent that the cost of  generation had  gone up  and not  to any  arbitrary extent. C1.18  is not  susceptible of  a construction  which could make  the price  of the  goods totally  uncertain  and dependent on  the arbitrary  volition of  one party  to  the contract. In this connection, the appellants placed reliance on the following passages from Anson’s Law of Contract, 25th Edn., p.61:           "On the  other hand,  a transaction which at first           sight seems  to have  some essential  term of  the           bargain undetermined  may, by  implication, if not           expressly, provide  some method  of  determination           other than a future agreement between the parties.           In that event, since it is a maxim of the law that           id certum  estquod certum reddi potest, there will           be a  good contract. In every case the function of           the Court  is to  put a  fair construction on what           the parties have said and done, though the task is           often a  difficult  one  when  an  instrument  has           attempted  to  record  some  complicated  business           bargain.  The   parties  making   such  a  bargain           naturally assume  that it  will be carried out and           therefore  do  not  always  express  it  with  the           exactness  of   terminology  that  lawyers,  whose           profession   leads   them   to   contemplate   the           possibility  of   future  disputes,   might   have           employed."      It is  accordingly urged  that cl.18  was an escalation clause and  therefore the-power  of the  Board to revise the rate of  supply arises  as and  when the  cost of generation

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goes up, and therefore the rate must be in proportion to, or correlated with,  the actual rise in the cost of generation. Learned 666 counsel for the appellants tried to draw sustenance from the following extract from the Statement of Objects & Reasons of the Rajasthan Electricity (Supply) Amendment Bill, 1976 :           "Such special  agreement or  concessions in tariff           were made  several years ago by covenanting States           and if  they were  allowed to continue, they would           not cover  the existing  cost of  generation, with           the result that the burden of this cost would have           to be passed over to other consumers....... "           "It was, therefore, expedient to amend the Act....           so  as   to  enable   the  Board   to  revise  the           contractual rates  in order  to cover  the  rising           cost   of    generation   from   time   to   time,           notwithstanding any  special contract, undertaking           or concession to the contrary."      We find  it difficult  to subscribe  to the  contention advanced by learned counsel for the appellants that c1.18 is an escalation  clause and  therefore the  Board’s  power  to revise the  rate of  supply must be restricted to the actual rise in  the component  of cost  of generation.  As  rightly pointed out  by learned  counsel appearing  on behalf of the Board, an  ’escalation clause’  according  to  its  accepted legal connotation  means a  clause which  takes care  of the rise and  fall of prices in the market, whereas the right to review confers the power to revise the rate of supply. It is submitted that  c1.18 in  terms provides  that the  rate  of supply as determined in c1.17 shall be ’reviewed every fifth year starting  from the  date of  first  supply’.  The  word ’review’ in c1.18 necessarily implies the power of the Board to have a second look and to so adjust from time to time its charges as  to carry on its operations under the Act without sustaining a loss. The parties clearly contemplated by c1.18 for a  fresh revision  of the  rate once  in a block of five years. The  only fetter  on the  power  of  review  is  that contained in the proviso of c1.18. The limitations placed on such power  are two-fold  in nature.  The first  of these is that such  power of  review  shall  be  exercisable  if  the component of cost of generation out of the total cost varies by 25%  or more.  The second is that such power shall not be exercisable by  the Board  till  January  1,  1971.  If  the parties intended  c1.18 to be in the nature of an escalation clause, 667 the language  would have  been different. In that event, the rate of  supply being  linked with  the component of cost of generation  would   keep  on  progressively  increasing.  In support of  his submissions,  learned counsel  for the Board referred  to  us  Butterworths’  Encyclopaedia  of  Forms  & Precedents,  4th  edn.,Vol.3,  p.148,  Hudson’s  Building  & Engineering  Contracts,   10th  edn.,   Keating’s   Building Contracts, 4th  edn., p.498  and Black’s Law Dictionary, 4th edn., p.639  giving different  forms of  ’rise and  fall’ or escalator clause  in building  or commercial  contracts, and the accepted  meaning thereof.  The  expression  ’escalation clause’ has  a well  defined meaning.  This is  brought  out succinctly in  American  Jurisprudence,  2nd  edn.,  vol.17, p.786 in these terms :           "In some  contracts, there  is what is known as an           escalator or  fluctuation clause, which is defined           as one  in which  the contract  fixes a base price           but contains  a provision  that in  the  event  of

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         specified cost increases, the seller or contractor           may raise the price upto a fixed percentage of the           base, and  such escalator  clauses  are  generally           held to be sufficiently definite for enforcement."      In Corpus Juris Secundum, vol.17, p.806, the law on the subject is stated thus :           "(A) contract  giving one of the parties the right           to vary the price is not unenforceable for lack of           mutuality where the right is not an unlimited one,           as where  its exercise  is subject  to express  or           implied limitation,  such as  that  the  variation           must  be   in  proportion   to  some   objectively           determined base,  or must  be reasonable; and this           rule has  been applied to contracts containing so-           called "escalator" clauses."      These considerations  however do  not apply  as on  its true  construction.  Cl.18  cannot  be  regarded  to  be  an escalation clause.  There is  therefore  no  basis  for  the submission that  there could  only be proportionate increase keeping in  view the  increase in  the component  of cost of generation.           The effect of cl.34(b) of the Agreement 668      Turning next  to cl.34(b), the rival contentions may be set out.  The appellants’  contention is  that firstly,  the stipulation in  cl.34(b) cannot be regarded as a contractual stipulation at  all and  secondly, that  in no case cl.34(b) can possibly  be made applicable to any purported alteration of contracting parties’ rights for a past period by means of retrospective legislation.  It was said that cl.34(b) cannot be construed  in a  manner favourable to the Board; all that the parties  contemplated was  that the  mutual  rights  and obligations would  be  subject  to  future  legislations  on supply and  consumption of electricity but such legislations necessarily had to be valid legislations and if cl.34(b) was to be  treated as  a contractual  stipulation providing that the rights  stipulated in  the agreement were subject to any modification by  any legislation, valid or invalid, cl.34(b) will have  to be  struck down  as a totally uncertain clause which cannot  find place  in any  contract and  such clauses have been  described as  meaningless terms in Anson’s Law of Contract, 25th edn., p.63 :           "Finally, we  should note  that  if  the  contract           contains an  indefinite, but subsidiary provision,           the courts  have felt  at liberty to strike it out           as being  without significance, and to give effect           to  the   rest  of   the  contract   without   the           meaningless term."      The contention  to the  contrary on behalf of the Board is that  a plain  reading of  cl.34(b)  makes  the  contract subject to  any legislation.  The right  which  the  parties derived under  the agreement  for supply of electricity at a concessional rate  under  s.49  of  the  Act  was  therefore defeasible. That  being so, it would be as if ss.49A and 49B of the  Act had  to be  read into the contract and therefore became a  contractual  term.  The  submission  is  that  the appellants  derived   a  right   to  get  electricity  at  a concessional rate  only for a limited period till January 1, 1971 and  thereafter the  Board derived  the power to revise the rate  of supply  under cl.18.  It was  competent for the Legislature to  enact a  law providing  for  application  of uniform  tariffs   notwithstanding  any   such   commitment, undertaking or  concession to  the contrary  made during any period prior  to April  1, 1964.  There is,  in our opinion, considerable force  in the submissions advanced on behalf of

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the Board. 669      It is not uncommon for statutory contracts to contain a term like  cl.34(b) which  makes the  contracts  subject  to future legislations.  Such a  clause can usually be found in forest or  excise contracts  relating  to  the  grant  of  a privilege which  subjects the  mutual rights and obligations flowing from  such a  contract to be liable to be altered or modified by  subsequent legislations.  Although there was no such term  in the  Indian Aluminium Company’s case, even so, the Court speaking through Bhagwati, J. observed :           "(A) case may conceivably arise where there may be           an overriding  statutory provision which expressly           or by  necessary implication authorizes the public           authority to  set  at  naught,  in  certain  given           circumstances,  a   stipulation  though   made  in           exercise of a statutory power. Where there is such           a  statutory   provision,  the  stipulation  would           certainly be binding..."      On a  plain construction of the terms of the agreement, the appellants  were  no  doubt  guaranteed  the  supply  of electricity for  a period  of 20  years but the right to get the supply at the concessional rate was subject to the power of the  Board to  effect a  revision of  the rate  of supply every fifth  year starting  from the  date of  first  supply subject to the only restriction that such revision could not be effected  before January  1, 1971. The Board’s contention that  the   right  of   the  appellants  to  the  supply  of electricity at  a  concessional  rate  under  the  agreement entered into  by the  Board with  them under s.49 of the Act was defeasible,  is clearly  well-founded and  must be given effect to.  It  follows  that  the  rights  derived  by  the appellants  under     the   contract  were  subject  to  the stipulation contained  in cl.34(b)  which  made  the  mutual rights  and  obligations  of  the  parties  subject  to  any legislation  relating   to   supply   and   consumption   of electricity enacted during the period of the agreement.      It was  rightly contended  on behalf  of the Board that while the Board under the agreement had undertaken to supply the appellants  25MW power  for a  period of  20 years,  the concessional rate  of supply  was assured  to them only till January 1, 1971 and could not be had for ever. The scheme of the Act  is that  the Board  is required to function without loss 670 and to  achieve the  said purpose,  the Board is vested with power to  adjust its charges from time to time. There was no justification for  the Board  to give preferential treatment any longer  to the appellants who were bulk consumers beyond January 1,  1971  as  against  all  other  large  industrial consumers  who  were  subjected  to  uniform  tariffs  under schedule HS/LP/HT-1  under the  Board’s tariff  notification dated April  26, 1969.  Once it  was found by the High Court that the  component of  cost of  generation out of the total cost as  on the date of Board’s tariff notification of April 26, 1969  had increased  at least by 25%, the fetter on that power was  removed and  the Board  was  entitled  to  demand payment according  to  the  uniform  tariff  under  schedule HS/LP/HT-1 applicable  to all large industrial consumers but for the agreement.      Under the restrictive covenant contained in cl.18, such revision of  rate could  not be  effected by  the Board till January 1,  1971. Once  the period  was over,  the Board was entitled to  have a  second look  and taking an overall view when it  found that  it was  no longer  possible  to  supply

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electricity at the concessional rate which had no reasonable relation to  the uniform  tariff under HS/LP/HT-1 applicable to  all   large  industrial  consumers,  it  manifested  its intention to review the rate of supply from January 1, 1971. The appellants  knew that  the review  of rate  was  due  on January 1, 1971 as is clear from their letter dated December 5, 1970  by which they wanted to know the extent of increase and the  basis therefor.  In response  thereto, the Board by its letter dated December 22/24, 1970 left them in no doubt. It was  made clear  to them  by the  Board that  the uniform tariff  under   HS/LP/HT-1  framed  by  the  Board’s  tariff notification dated  April 26,  1969 would  be applicable  to them as  to all  other large industrial consumers. The Board by its  subsequent letter  dated February  1, 1971 intimated its decision  to charge uniform tariff at that rate from the billing month  of January  1971  onwards,  and  the  general surcharge of  15% thereon from July 1966 upon December 1970. At no  stage, did  the appellants  contend that c1.18 was an escalation clause  and  the  rate  should  be  increased  in proportion to  the rise in the cost of generation. They only asserted that  it should  be ’reasonable’  and the extent of increase determined.      On a  fair construction  of the terms of c1.34(b) taken in  conjunction   with  the  conduct  of  the  parties,  the conclusion is 671 irresistible that  the parties  had  contemplated  that  the mutual rights  and obligations  under the  contract would be subject to  alteration by future legislation. That being so, ss.49A and  49B of the Act have to be read into the contract and  these   provisions  by  virtue  of  c1.34(b)  became  a contractual stipulation.           Whether the  raising of  demand for payment of the           difference between  the uniform  tariffs  and  the           agreed  rate  was  in  disregard  of  the  guiding           principles contained  in s.49(3)  contrary to  the           mandate of s.49A(2) of the Act.      Faced with  the difficulty,  learned  counsel  for  the appellants contended  that the Board in raising the impugned demands  against  the  appellants  for  payment  of  charges according to the uniform tariffs framed under s.49(1) of the Act from  time to  time, as  per its  letter of demand dated February 1,  1971 for  payment of  Rs.11,67,959.95p. for the billing  month   of  January  1971  onwards  under  schedule HS/LP/HT-1 under the Board’s tariff notification dated April 26, 1969 and its subsequent letter of demand dated March 12, 1976 for  payment of Rs.21,35,506.72p. for the billing month of February  1976 under  schedule LP/HT-1  under the Board’s tariff notification  dated May  28, 1974  purporting to  act under ss.49A  and 49B  of the  Act read  with c1.18  of  the agreement, had  not any  regard to the special circumstances on the  basis of  which the  appellant’s set up its industry which required  electricity at very reasonable rate in order to be  able to  sustain its  operations. It is further urged that while  s.49A of the Act might have enabled the Board to increase the  special tariff  applicable to  the  appellants even  in  disregard  of  the  limitations  imposed  on  such revision by  c1.18 of the agreement, the special position of the appellants’  industry could  not be totally disregarded. In other  words, while  the concessions  stipulated  by  the agreement under  s.49(1) of  the Act could have been altered in proportion  to the  rise in  the cost of generation, such concession could not have been altogether eliminated as that would amount  to a total disregard of the guiding principles contained in  s.49(3) and  thus contrary  to the  mandate of

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s.49A(2) of  the Act.  Sub-s.(2) of  s.49A further  provides that in  revising such tariffs or framing uniform tariffs as respects any  period commencing  on and  from September  16, 1966 672 the Board  shall be  guided by  the principles  laid down in sub-ss. (2),  (3) and  (4) of  s.49A of  the Act.  At  first blush, this  argument plausible  though it  appears,  is  on closer scrutiny not well-founded. It ignores the true object and purpose of the enactment and fails to give due effect to the  provisions  of  ss.49A  and  49B  of  the  Act  with  a retrospective effect  which clothed  the Board with power to make the  uniform tariffs  applicable to bulk consumers like the appellants  who under  agreements entered  into with the Board on  July 28,  1961 i.e.  before April 1, 1964, the cut out date  mentioned in  sub-s.(1) of  s.49A had  been to the great  financial   detriment  of   the  Board   enjoying   a concessional rate  of supply  which had  no relation  to the existing cost of generation, with the result that the burden of this cost had to be passed over to other consumers. As is clear from the Statement of Objects and Reasons of the Bill, the Legislature  thought it expedient to amend the Act so as to cover  the rising  cost of  generation from time to time, notwithstanding  any   special  contract,   undertaking   or concession  to   the  contrary.   The  legislative   mandate contained in  ss.49A and 49B of the Act as introduced by the Rajasthan Electricity (Supply) Amendment Act, 1976 subserves the public  interest to  ensure that the Board shall not, as far as  practicable, after  taking credit for any subvention from  the   State  Government   under  s.63,  carry  on  its operations under the Act at a loss.           Power of  the Board  to unilaterally frame uniform           tariffs under  sub-s.(1) of  s.49 of  the  Act  in           derogation of the agreement under s.49(3):      Placing strong  reliance on  the decision of this Court in the  Indian Aluminium Company’s case, learned counsel for the appellants  drew our  attention to  various observations made by  Bhagwati, J.  during the  course  of  his  judgment laying down that under the scheme of the Act the Board could not unilaterally  frame uniform tariffs under s.49(1) of the Act in  derogation of  such agreements  entered  into  under s.49(3) and  therefore was  not  competent  to  enhance  the charges under  the guise  of fixing  uniform tariffs because sub-s.(1) of  s.49 is subject to sub-s.(3) and, once special tariffs were  fixed  under  sub-s.(3),  there  could  be  no question  of  fixing  uniform  tariffs  applicable  to  such consumers under sub-s.(1) and that 673 such a  power could  not be  exercised in  violation of  the stipulation fixing special tariffs under sub-s.(3). Emphasis was particularly laid on the observations of Bhagwati, J. in the Indian Aluminium Company’s case where after referring to the  earlier  decision  of  this  Court  in  Kalyan  Borough Municipality’s case,  supra, the learned Judge observed that : (i)  the cost was not the sole criterion in fixing tariffs under  s.49(1)   and  (ii)  where  the  Board  was  under  a contractual obligation  not to  charge under  a  stipulation validly made  under s.49(3)  anything more  than a specified tariff for  a specified  period, it would not be practicable for it to enhance its rates of charges even if it finds that it is incurring operational loss. That view expressed by the learned Judge  proceeded on  the hypothesis,  to use his own words, that ’Section 59 does not give a charter to the Board to  enhance   its  charges  in  breach  of  its  contractual stipulation’. We  are afraid, the contention cannot prevail.

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Nor are  the appellants  entitled to any relief on the basis of the  decision of this Court in Indian Aluminium Company’s case. The State Legislature under Entry 38 of the Concurrent List  was  competent  to  enact  the  Rajasthan  Electricity (Supply) Amendment  Act, 1976  and  introduce  the  impugned provisions contained  in ss.49A  and 49B  with retrospective effect to overcome the difficulty created by the decision of this  Court   in  Indian  Aluminium  Company’s  case.  These provisions so  enacted confer an enabling power on the Board to revise  the tariffs from time to time notwithstanding any provision of  the  Act  or  any  agreement,  undertaking  or concession to  the  contrary,  and  also  to  frame  uniform tariffs with  respect to  the class  of  consumers  enjoying special benefits  under agreements  entered  into  with  the Board under s.49 of the Act. There being a change in the law brought about  by the introduction of ss. 49A and 49B of the Act by  the Electricity  (Supply) (Rajasthan Amendment) Act, 1976, the  Court is bound to give effect to these provisions notwithstanding anything  contained in  the Act  or  in  any agreement, undertaking,  commitment  or  concession  to  the contrary made  by the  Board before  the first  day of April 1964, or  the decision  of this  Court in  Indian  Aluminium Company’s case.           Scope and  effect of  Sections 49A  and 49B of the           Act: Power  of the  Board  to  raise  demands  for           payment of  the  difference  between  the  uniform           tariffs and  the agreed  rate  with  retrospective           effect and the validation thereof 674      Turning next  to the second aspect, question is whether the Board  was entitled  to recover  from the appellants the difference between  the uniform  tariffs and the agreed rate for the  supply of  electricity to  them with  retrospective effect by  virtue of the powers derived under ss.49A and 49B of the Act read with c1.18 of the agreement. That depends on the construction  of ss.49A and 49B of the Act. The question pertains to  two periods  : (i)  from January 1, 1971 to May 31, 1974  and (ii)  from June  1, 1974  to February 6, 1976. According to its plain terms, s.49A has been structured in a manner to  attain a two-fold object. In the first place, the non-obstante caluse  in sub-s.(1) of s.49A has the effect of overriding the  provisions of  the Act  and  nullifying  the judgment of  the High  Court and  more particularly  of this Court in  Indian Aluminium  Company’s case which invalidated the framing  of uniform  tariffs by  the Board under s.49(1) with respect to consumers who were entitled to the supply of electricity at  a special  rate by  virtue of the agreements entered into  by the Board with them under sub-s.(3) of s.49 of the  Act. Sub-s.(1)  of  s.49A  is  clearly  an  enabling provision and  makes it  lawful for  the Board  not only  to revise from  time to  time the  tariffs applicable  to  such class  of  consumers  but  also  to  frame  uniform  tariffs applicable to  them as respects any period commencing on and from September  16, 1966 i.e. the date when the new s.49 was brought into  force.  Sub-s.(2)  thereof  provides  that  in revising the  tariffs or  framing uniform tariffs, the Board shall be  guided by  the principles  set  out  in  s.59.  It further provides  that as  respects any period commencing on and from  September 16, 1966, it shall also be guided by the principles laid  down in  sub-ss. (2),  (3) and (4) of s.49. Such powers  of revising  the  tariffs  or  framing  uniform tariffs were  exercisable notwithstanding anything contained in the Act or in any agreement, undertaking or concession to the contrary made by the Board before the first day of April 1964 or  the judgment  and order of any Court. Sub-s. (3) of

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s.49A  provides  that  all  such  agreements,  undertakings, commitments or  concessions as are referred to in sub-s.(1), shall, insofar  as they are inconsistent with the provisions of sub-ss.(1) and (2) and to the extent of the tariffs fixed or provisions  made therein  for such  fixation be  void and shall be  deemed always  to have  been void.  Secondly, sub- s.(1) of  s.49A as  construed prospectively  makes it lawful for the Board to revise the tariffs from time to time and to 675 frame  uniform   tariffs  with  respect  to  such  class  of consumers on or after February 7, 1976, the date on which it was brought into force.      According  to  its  plain  language,  the  non-obstante clause in  sub-s.(1) of  s.49B has  the effect of overriding the provisions  of the  Act or any agreement, undertaking or concession  referred   to  in   sub-s.(1)  of   s.49A.   The consequence that ensues is this. Sub-s.(2) of s.49B provides that any  amount realized  or demand  made or created by the Board, according  to the  uniform tariffs in force from time to time,  under s.49 from or against any person claiming any special  tariffs  under  any  such  agreement,  undertaking, commitment or  concession made  before February 7, 1976, the date of  promulgation of  the  Ordinance,  contrary  to  the decision of this Court in Indian Aluminium Company’s case or of the  High Court,  shall be  deemed to  have been  validly realized, made  or created  under the Act. The appellants do not dispute  their liability  to pay  uniform tariffs  fixed from time  to time as from February 7, 1976. The controversy is only  with regard  to  their  liability  to  pay  uniform tariffs fixed  from time to time for the past period and the extent of their liability.           Liability of the appellants to pay uniform tariffs           framed by  the Board from time to time under s.49A           read with  s.49B for  the period prior to February           7, 1976  and the  corresponding right of the Board           to raise such demands.      Shri Shanti  Bhushan contends  that ss.49A and 49B were integrally connected  and were intended and meant to achieve a joint  purpose which  was merely  to validate  such of the past actions  of the Board as would have been valid if s.49A had already  been in force at the relevant time. He contends that if  the Board’s  uniform tariff notifications dated May 18, 1964,  April 26, 1969 and May 28, 1974 had not contained an exclusionary  clause (3) set out above, for the exclusion of all  consumers who  were governed by specially negotiated tariff, any  demand raised  under s.49A  of the  Act on  the basis of  such uniform tariffs fixed from time to time prior to February  7, 1976  would have  been validated under s.49B notwithstanding that  the said  demands when  made were  not authorized in  view of  the stipulations  contained  in  the agree- 676 ment. As to the claim for the period from January 1, 1971 to May 31,  1974, the  learned counsel  urges that the Board is seeking to  recover from  the  appellants  charges  for  the supply of  electricity as per normal tariff prescribed under the Board’s notification dated April 26, 1969. As to this he mainly relies  on the  exclusionary clause  (3) of  the said tariff notification.  As to  the period from June 1, 1974 to February 7,  1976 for  which the  Board raised  a demand for payment of  the charges  for the  supply of  electricity  at normal tariff  framed by  the Board’s notification dated May 28, 1974,  apart from relying on similar exclusionary clause contained therein,  he submits  that the  Board never made a demand on the appellants that they would have to pay for the

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supply of  electrical energy  at normal  tariff as framed by the Board’s tariff notification dated May 28, 1974. In fact, he submits that there was no letter sent by the Board to the appellants like  the one dated December 22/24, 1970 by which it made  a demand  for payment of charges at uniform tariffs framed by  the Board’s  tariff notification  dated April 26, 1969. The  learned counsel  urges that  as is clear from the terms of s.49B of the Act, the demand to be validated had to be raised  prior to  February 7,  1976 and  not  on  a  date subsequent thereto.  He submits  that it  was therefore  not open to  the Board  to make a demand from the appellants for payment of  charges for  the period  commencing from June 1, 1974 and  ending with  February 6,  1976  according  to  the uniform  tariff   of  1974.   There  is,   in  our  opinion, considerable force in the argument.      Dr. Chitale  tried to impress upon us that s.49A of the Act must after February 7, 1976, the date of promulgation of the Ordinance,  operate on  its own  force and therefore the Board was entitled to raise demands at uniform tariffs under schedule LP/HT-1 under the Board’s tariff notification dated May 28,  1974 from  that date  till  November  4,  1976  and thereafter as  per the  revised uniform tariffs as framed by the Board’s  notification dated November 4, 1976. As regards the past  period i.e. as from January 1, 1971 to February 6, 1976 he  contends that  s.49A could still be had recourse to by the  Board  without  the  aid  of  s.49B.  The  submssion proceeds  upon  the  basis  that  the  power  of  the  State Legislature to  make a law under Entry 38 of List III of the Seventh Schedule carries with it the ancillary power to make a law with retrospective 677 effect. It  could therefore  enact a  provision like  s. 49A prescribing a  rate of  uniform tariff  under  s.49(1)  with retrospective   effect    as   from    January   1,    1971, notwithstanding anything  contained in  the Act  or  in  any agreement, undertaking,  commitment  or  concession  to  the contrary entered  into by  the Board  after the first day of April 1964.  We find  it  rather  difficult  to  uphold  the contention. The  question does  not really arise because the Legislature has  not framed  a law  for  the  imposition  of uniform tariffs  on  consumers  with  retrospective  effect. S.49A is primarily enacted to override the provisions of the Act  or   of  any   agreement,  undertaking,  commitment  or concession  to  the  contrary  made  by  the  Board  or  the Government prior  to the  first day  of April  1964 for  the supply of  electricity to  consumers at  a concessional rate relatable to s.49(3) of the Act. That is the clear effect of the non-obstante  clause  which  removes  the  legal  hurdle placed in the way of the Board framing uniform tariffs under s.49(1) of the Act for such class of consumers. Sub-s.(1) of s.49A provides  that it  shall be  lawful for  the Board  to revise the  tariffs from  time to  time and to frame uniform tariffs for  the supply  of electrical energy. The words ’it shall be  lawful’ used  in s.49A  (1) are essentially in the nature of  conferment  of  a  prospective  power.  Sub-s.(2) thereof however  further states  that in revising or framing such tariffs  under sub-s.(1),  the Board shall be guided by the principles  set out  in s.59 of the Act. It then goes on to say  that as  respects any  period commencing on and from September 16,  1966 the  Board shall also be governed by the principles laid  down in  sub-ss.(2), (3)  and (4) of s.49A. Sub-s.(3)   makes   all   such   agreements,   undertakings, commitments or  concessions as are referred to in sub-s.(1), insofar as they are inconsistent with the provisions of sub- ss.(1) and  (2) and  to the  extent of  the tariffs fixed or

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provisions made therein for such fixation, be void and shall always be  deemed to  have been  void. A combined reading of these provisions  shows that  the Board  is relieved  of the shackles of  the contractual  obligations flowing  from  the agreements relatable  to s.49(3), and the Board is empowered in terms  of s.49A  to revise  the tariffs  or frame uniform tariffs with  respect to consumers enjoying special benefits as from September 16, 1966.      As already  stated, the Board could not on the strength of s.49A alone recover the difference between the uniform 678 tariffs fixed  from time  to time  and the  agreed  rate  of supply from  the appellants  for the  period from January 1, 1971 to  February 6, 1976 without the aid of s.49B. S.49B on its terms  has no  application unless  there  was  a  demand raised or  created prior  to February  7, 1976,  the date of promulgation  of   the   Ordinance.   There   is   therefore insuperable barrier  in applying  the uniform  tariff  under schdule LP/HT-1  framed by  the Board’s  tariff notification dated May  28, 1974 from the billing month of July 1974 i.e. from June  1, 1974 to February 6, 1976. Although the uniform tariff under schedule LP/HT-1 of 1974 was brought into force from the  billing month  of July  1974 i.e. with effect from June 1,  1974 the  Board never intimated the appellants that they would have to pay charges for the supply of electricity to them  at that  rate. Undoubtedly,  no letter like the one dated December  22/24, 1970 demanding payment of charges for the supply  of electricity  was however written by the Board to  the  appellants  intimating  them  that  they  would  be governed by  the schedule  LP/HT-1  framed  by  the  Board’s tariff notification  dated May  28, 1974. That being so, the appellants would now be liable for the period in question to pay charges at the uniform tariff as per schedule HS/LP/-HT- 1 framed  by the  Board’s earlier  tariff notification dated April 26, 1969.           Liability to pay the general surcharge.      That takes  us to the question whether the Board had no power  under   the  Act   to  levy  a  surcharge.  The  word ’surcharge’ is  not defined  in the  Act. Plainly,  the word ’surcharge’ means  an additional or extra charge or payment: Shorter Oxford  English Dictionary,  p.2199. As held by this Court in  Bisra Stone  Lime Company  Ltd. &  Anr. v.  Orissa State Electricity  Board  &  Anr.  [1976]  2  S.C.R.  307  a surcharge is  in substance  an addition  to  the  stipulated rates of  tariff and  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. 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 cl.18 of the agreement. We must however refer to the decision of this Court in M/s. Titagarh Paper Mills  Ltd. v.  Orissa State  Electricity Board & Anr. [1975]  2   S.C.R.  436   where  the   Court   taking   into consideration cl.13 of the agreement therein which was in 679 term similar  to cl.18, had to consider the scope and effect of ss.49 and 59 of the Act and following the decision in the Indian Aluminium Company’s case stated:           "Neither s.  49 nor s. 59 confers any authority on           the Board  to  enhance  the  rates  of  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

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         electricity." The Court  accordingly in  Bisra Stone  Lime Company’s  case held that  the power of revision of rates of the Board under s.49(1) and (2) as also under s.59 of the Act remained under suspended animation  during the  subsistence of  a statutory agreement entered  into in  conformity with  s.49(3) of  the Act. But  this pro  tempore ban  on revision  of rates could only last  till the legislature introduced ss.49A and 49B of the Act  empowering the  Board to revise the rates and frame uniform  tariffs   with  retrospective   effect.  This   was constitutionally permissible as indicated by Bhagwati, J. in the Indian Aluminium Company’s case in these words :           "(A) case may conceivably arise where there may be           an overriding  statutory provision which expressly           or by  necessary implication authorises the public           authority   to    set   at    naught,   in   given           circumstances,  a   stipulation  though   made  in           exercise of a statutory power."      The Board  was therefore  well  within  its  rights  in raising a  demand by  its letter dated February 1, 1971 that the appellants  would be subject not only to uniform tariffs under Schedule HS/LP/HT-1 applicable to all large industrial consumers as  from January  1, 1971 in terms of cl.18 of the agreement but  also be  subject to  the general surcharge of 15% for  the period  commencing on  and from  September  16, 1966, the  date mentioned in sub-s.(2) of s.49A. The general surcharge of 15% as also the uniform tariff were part of the general burden  borne by  all consumers  alike. Whatever may have been  the position  under the old s.49, the new section as substituted by 680 the Amendment  Act 30 of 1966, makes it plain that the Board can fix  uniform tariffs.  The power  to fix uniform tariffs must necessarily  include power  to make uniform increase in tariffs. S.49A had the effect of removing the Board from the shackles  of   the  agreement   to  supply   electricity  at concessional rate entered into under s.49. The effect of the non-obstante clause in sub-s.(1) of s.49A was to nullify the agreement.              Subsidiary issues : Article 31(2)      Finally, there  still remains the third aspect. Various subsidiary issues  were raised,  namely, whether  the demand raised by  the Board  against the  appellants for payment of the difference  between the  uniform tariffs  and the agreed rate for  the period  subsequent  to  January  1,  1971  was violative of  Art.14, Art.19(1)(f)  and (g) and Art.31(2) of the Constitution. Of these, the main contention put forth by Shri Shanti Bhushan, is that the extinguishment of the right which the  appellants had to get electricity at concessional rate for  a period of 20 years which was enforceable against the Board  as held in the Indian Aluminium Company’s case by s.49A, and  the conferral  of a corresponding benefit to the Board to  revise the  tariffs from time to time and to frame uniform  tariffs  for  supply  of  electricity  to  them  as respects any  period subsequent  to September 16, 1966 (here we are  concerned with  the period  subsequent to January 1, 1971), amounted  to deprivation  of property without payment of compensation  and in  contravention of Art.31(2). He goes to the  extent of contending that the matter is concluded by the seven-Judges’  decision of  this Court  in the  case  of Madan Mohan  Pathak v.  Union of  India [1978]  3 S.C.R. 334 where the  majority held  that the  concept of  property  in Art.31 is  not a  narrow concept  and at p.359 of the Report accepted the  view expressed by Hegde, J. in the Privy Purse case [1971]  3 S.C.R. 9 that any right which was enforceable

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through courts  was property.  We were  referred to  several passages in the judgment delivered by Bhagwati, J. to derive home the  point that  it was  not necessary  for the  law to provide in  so many  words that  property was transferred to the State  or to  a Corporation  owned or  controlled by the State  for   attracting  the  provisions  of  Art.31(2)  and particularly emphasis was laid on the following observations :           "Where by reason of extinguishment of a right or 681           interest of  a person,  detriment is  suffered  by           him, and  a corresponding  benefit accrues  to the           State, there  would be  transfer of  ownership  of           such right  or interest to the State. The question           would always  be :  who is  the beneficiary of the           extinguishment   of    the   right   or   interest           effectuated by  the law ? If it is the State, then           there would  be transfer of ownership of the right           or interest  to the  State, because what the owner           of the right or interest would have lost by reason           of the extinguishment would be the benefit accrued           to the State."      The Court  observed in  M.M.  Pathak’s  case  that  the direct effect  of the  impugned Act was to extinguish or put an end  to the debts due from the Life Insurance Corporation to class  III and  Class IV employees. This was not disputed on  behalf   of  the  Life  Insurance  Corporation  and  the controversy was  whether the  extinguishment of  these debts involved any  transfer of  ownership of property to the Life Insurance  Corporation.  It  was  conceded  by  the  learned Attorney-General on behalf of the Life Insurance Corporation as a  proposition of  law that  an illegal  deprivation of a pecuniary benefit  to which any person is entitled under any law amounts to deprivation of property within the meaning of Art.31(2). He  however sought  to make a distinction between extinguishment and  transfer of  ownership  of  a  debt  and contended that  when ownership  of a debt is transferred, it continues to exist as a debt in the hands of the transferee, but when a debt is extinguished it ceases to exist as a debt and it is not possible to say that the debtor has become the owner of the debt. In dealing with the contention, the Court observed at  p.368 of  the Report,  that where  by reason of extinguishment of a right or interest of a person, detriment is suffered  by him,  and a corresponding benefit accrues to the State,  there would  be transfer  of ownership  of  such right or  interest to  the State.  The Court stated that the question would  always be  : who  is the  beneficiary of the extinguishment of  the right  or interest effectuated by the law ?  If it  is the  State, then there would be transfer of ownership of  the right  or interest  to the  State, because what the  owner of  the right or interest would have lost by reason of the extinguishment would be benefit accrued to the State. It  referred to  the view  expressed by  Hegde, J. in State of Madhya Pradesh v. Ranojirao Shinde, 682 [1968] 3  S.C.R. 489,  that it  was  possible  to  view  the abolition of  cash  grants  under  the  Madhya  Pradesh  law impugned in  that case  as a statutory transfer of rights of the grantees to the State and extended the same principle in judging the validity of s.3 of the impugned Act, and added :           "When a  debt due  and owing  by the  State  or  a           corporation owned  or controlled  by the  State is           extinguished  by   law,  there   is  transfer   of           ownership of  the money representing the debt from           the  creditor   to  the   State   or   the   State

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         owned/controlled corporation.           ***    ***    ***    ***    ***           The extinguishment  of the  debt of  the  creditor           with corresponding  benefit to  the State or State           owned/controlled  corporation  would  plainly  and           indubitably involve  transfer or  ownership of the           amount representing  the debt  from the  former to           the  latter.   This  is   the   real   effect   of           extinguishment of  the debt  and by  garbing it in           the form  of extinguishment,  the State  or  State           owned/controlled corporation cannot obtain benefit           at the  cost of  the creditor  and yet  avoid  the           applicability of Art.31, clause(2)." The Court  also observed that the verbal veil constructed by employing the  device of  extinguishment of  debt cannot  be permitted  to  conceal  or  hide  the  real  nature  of  the transaction.      We fail  to appreciate the relevance of the decision in M.M.  Pathak’s   case  to  the  instant  case.  The  fallacy underlying  the   agreement  is  that  it  proceeds  on  the assumption that  there is by reason of ss.49A and 49B of the Act an illegal deprivation of any pecuniary benefit to which the appellants  were entitled  and the extinguishment of the right they  had to the supply of electricity at concessional rate for  a period  of  20  years  in  accordance  with  the agreement amounted  to a deprivation of property withing the meaning of  Art.31(2) of  the Constitution. While it is true that the  concept of  ’property’ in  Art.31 is  not a narrow concept and is used in a comprehensive 683 sense, any legal right which can be enforced through a court is a  right in  the nature of property within the meaning of Art.31. According  to the Court in M.M. Pathak’s case, ’Even an actionable  claim is  ’property’ in  Art.31  and  can  be compulsorily acquired  under cl.2  thereof’. But  it is  not necessary to  enter upon the controversy whether the State’s power of  acquisition of property under Art.31(2) extends to choses of action for purposes of this case. All that we need notice is  that the majority in M.M. Pathak’s case, accepted the view of Hegde, J. in the Privy Purse case that any right which was  enforceable through courts was ’property’, but it does not  logically follow  that the  extinguishment of  the right to  get electricity  at concessional rate by reason of ss.49A and  49B of  the Act  for the  period  subsequent  to January 1,  1971 necessarily  attracted Art.31(2).  All that the appellants had under their contract with the Board was a defeasible right  by reason  of cl.34(b) of the agreement as pointed out  by us  above.  The  appellants  had  contracted themselves by  cl.34(b) to  be  subject  to  any  subsequent legislation. All  that s.49A of the Act does is to strike at the  agreement  between  the  parties.  It  is  an  enabling provision and  empowers the Board to revise the tariffs from time to  time and  to frame  uniform tariffs  for supply  of electricity to a class of consumers enjoying special benefit under  agreement  entered  into  under  s.49(3).  The  Board undoubtedly was  competent to  review the tariff in terms of cl.18 of  the agreement  as  from  January  1,  1971.  S.49A liberates the  Board from the constraints of the agreed rate under the  agreement entered  into by  the  Board  with  the appellants under s.49 of the Act and empowers the raising of demand according  to the uniform tariffs. Here, there was no debt due  or owing  to the  State or  a Corporation owned or controlled by the State.      Where a  law does not, in reality, affect a transfer of ownership or  possession, Art.31(2)  cannot be attracted. In

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order  to  constitute  acquisition  within  the  meaning  of Art.31(2), there  must be  transfer of ownership of property to the  State or to a Corporation owned or controlled by the State. Cl.2(A)  to Art.31  introduced  by  the  Constitution (Fourth Amendment)  Act, 1955  made clear  what was meant by ’acquisition  or   requisitioning’  within  the  meaning  of cl.(2). Unless  the taking  of property  had taken  place in either of  the two  ways, there  was no  obligation  to  pay compensation under 684 the Constitution.  It  can  hardly  be  suggested  that  the extinction  of  the  right  the  appellants  had  under  the contract  with  the  Board  to  get  electric  supply  at  a concessional rate  under c1.18  of  the  agreement  for  the period after January 1, 1971 when revision of tariff was due under c1.18  thereof, amounted  to acquisition  of  property under c1.31(2).  Further,  there  was  no  question  of  any transfer of  money representing  any debt  owed by the Board from the  appellants which  stood extinguished  by reason of ss.49A and  49B of  the Act.  We are  clearly of the opinion that the  principles laid  down in M.M. Pathak’s case are in no way attracted to the present case.                          Article 14      The contention based on Art.14 and Art.19(1)(f) and (g) need not  detain us  for long. Taking up the contention that the raising  of demand  by the  Board by  its  letter  dated February 1,  1971 for Rs.11,67,959.95p. at normal tarrif for the billing  month January  1971 under  Schedule  HS/LP/HT-1 applicable to  all large  industrial consumers  as  per  the Board’s tariff  notification dated  April 26,  1969 together with general  surcharge of  15% thereon,  and by  its letter dated March 12, 1976 for Rs.21,35,506.72 p. at normal tariff for the  billing month  February 1976 under Schedule LP/HT-1 applicable to such large inddustrial consumers framed by the Board’s tariff notificition dated May 28, 1974 together with general surcharge  of 15%  thereon, was  violative of Art.14 and therefore constitutionally impermissible inasmuch as the public sector  undertakings in  the State like the Hindustan Zinc  Limited   and  Hindustan  Copper  Limited  which  were similarly circumstanced  were  not  subjected  to  any  such liability and  such differential  treatment was  without any reasonable classification.  The contention  must be rejected at the  very threshold.  There is  no averment  made by  the appellants in  any of  the petitions  filed before  the High Court that  while the  Board purported  to raise  or  create demands  as  against  the  appellants  for  payment  of  the difference between  the uniform  tariffs and the agreed rate as respects  the period  beginning from  January 1,  1971 by making the  uniform tariffs  of 1969  and 1974 applicable to them together with the general surcharge of 15% thereon, the large public  sector undertakings  viz. the  Hindustan  Zinc Limited and  the Hindustan  Copper Limited  were allowed the privilege of a concessional rate for the supply of 685 electricity to  them by  virtue of  agreements entered  into under s.49.  On the  contrary, the  Board  in  its  counter- affidavits specifically  pleaded that  all large  industrial undertakings with  capital investments  several  times  more than that  of the  appellants were  paying for the supply of electricity at  the normal  tariff. The  Board  particularly gave the  instances of  the two  public sector  undertakings Hindustan Copper  Ltd. and  Hindustan Zinc  Ltd., which were both industries  controlled by  the Government  of India and were taking  heavy loads  with huge investments, were paying at the  normal tariff.  For instance,  Hindustan Copper Ltd.

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whose investments  were to  the tune  of over  Rs.100 crores were  paying  for  the  consumption  at  the  normal  tariff although the load of that industry was 31,000 KVA comparable with the load of the industry set up by the appellants which was 29,412  KVA. The  same was  the case with Hindustan Zinc Ltd. We may set out the relevant averment which goes thus :           "It is wrong to say that 1.4.64 has been appointed           as the date to give any benefit to any Corporation           owned or  controlled by the Central Government. So           far as  the Corporations controlled by the Central           Government are  concerned, it  is  submitted  that           Hindustan  Copper,   which  is   equally  a  large           consumer as  the petitioner  company, did  not get           any supply of electricity at a rate different from           what is  fixed by  the uniform  tariff. As for the           other  concern   namely  Hindustan  Zinc,  it  was           commissioned in January 1968 and ever since it was           charged at  the uniform tariff framed in 1964 plus           general surcharge  of  15%  imposed  in  1966.  No           concession was  given to  it at  the time  when it           started functioning. The only concession given was           that in  1969 when  the rates  were  revised,  the           revised rates  were not  applied to Hindustan Zinc           and it  was continued to be charged at the uniform           tariff of  1964 plus  15%  surcharge  till  April,           1974. Since  May 1974 the increased tariff of 1969           was applied  to Hindustan  Zinc also  and the  new           tariff of 1974 ever since its coming into force is           applied  to   it.  It  is,  therefore,  absolutely           incorrect to  say that 1.4.64 is fixed in order to           give any benefit to the Corporations controlled by           the Central Government because 686           Hindustan Zinc started production sometime in 1968           and Hindustan  Copper much  later. The date 1.4.64           is therefore  more reasonable  being the  date  on           which the  uniform  tariffs  were  framed  by  the           Board."      The Board  further averred  that apart  from these  two Corporations there  are several  other industries controlled by  the   Central  Government   or  the   State   Government commissioned after  April 1,  1964, and all these industries were paying  at the  normal tariffs  fixed by the Board from time to time.      The argument  of differential  treatment is an argument of despair.  The Board  has averred  that there  is one grid which is  fed from  supplies from  different sources whether thermal, hydel  or atomic  and it was impossible to say what power came  from which  source. In  1971  the  Atomic  Power Project started  to supply  power and  the Board  was  being built at  the rate  of about 14p. per unit. Later on, due to the breakdown of this source the Board had to purchase large quantum of  electricity from various other sources at a cost falling between  18 to 19p. per unit. This was done in order to maintain  the supply  of electricity  to the consumers in the State,  including the appellants. It is evident that the cost of  generation in  the grid  was far  higher  than  the concessional rate  of 3p.  per unit  at which the appellants were getting the supply. As a result the Board was incurring very heavy  losses on  account of  this low rate for a large bulk consumption.  It would  have been  unreasonable for the Board not  to  have  applied  the  uniform  tariffs  to  the appellants as  from January  1, 1971  when the Board derived the power  to revise  the rate under c1.18 of the agreement. The Board  by its  letter  dated  December  24,  1970  after

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drawing the  attention of  the appellants  to c1.18  of  the agreement. The  Board by  its letter  dated December  22/24, 1970 after drawing the attention of the appellants to c1. 18 of the  agreement, intimated  that they  would be charged as from January 1, 1971 at the normal tariff schedule HS/LP/HT- 1 fram ed by the Board’s tariff notification dated April 26, 1969 plus  15% general surcharge thereon. It was stated that the component  of cost  of generation had been worked out in the office  of the  Board and  it was higher than 25% of the cost fixed at the time of the execution of the agreement, as detailed therein. The component of cost of generation during the year  1969-70 was  5.17p./Kwh. This,  we  are  informed, works 687 out to 7.67 p. per unit without the general surcharge of 15% and  to   8.73p.  per  unit  including  the  surcharge.  The concessional rate  as stipulated  in c1. 17 of the agreement was more  or less  3p. per  unit. The uniform tariff of 1969 works out  approximately to  7.67p. per  unit,  the  uniform tariff of  1974 at  14.64p. per  unit, the uniform tariff of 1976 at  16.01p. and  the uniform  tariff of 1978 at 18.83p. The  appellants   were  thus   practically   getting   their electricity free  of all  charge. Even  the  uniform  tariff under HS/LP/HT-1  was very much less than the price at which the Board was getting its supply. In the premises, there was no reason  why the  appellants should  not be  treated alike with all  other large industrial undertakings which were all subjected to  payment of the uniform tarrifs fixed from time to time. The contention based on Art.14 must therefore fail.                  Article 19(1)(g) and (g).      The next  contention  based  on  Art.19(1)(f)  and  (g) cannot obviously  prevail. The  present case  concerns  only with sale of goods i.e. electricity and the price to be paid therefor,  for  ’tariff’  is  nothing  but  the  price.  The contract itself  provided for  revision of  the  rate  under c1.18 of  the agreement after January 1, 1971. The Board was within its  powers in  applying the  uniform tariffs  to the appellants after  the period  stipulated  for  had  expired. There  was  nothing  unreasonable  for  the  Board  to  have enforced the  uniform tariffs  as against  the appellants as from January  1, 1971.  Reasonableness of  the  increase  in tariff is  established by  the fact  that the  Board was not bound  to   supply  electricity   to  the  appellants  at  a concessional rate  by incurring  operational  losses  beyond that date.  The appellants  have not  shown nor produced any material to show that they have suffered any loss on account of the increase in tariff. A grievance was made on behalf of the Board  that the  appellants  had  not  despite  repeated requests  produced   the  balance-sheets  to  show  how  the increase in  tariff made serious in-roads on their business. At the hearing before us, learned counsel for the appellants placed the annual reports of the Delhi Cloth & General Mills Ltd. for  the years  1978-79 to  1983-84, and the profit and loss account  of Messrs  Shriram Vinyl & Chemical Industries from the  years 1965-66  to 1982-83.  In these reports it is stated that  the claim  of the  Board  for  payment  of  the difference between 688 the uniform  tariffs and  the agreed rate had been upheld by the High  Court and  that the  Company had preferred appeals before this  Court. It  is further stated that in compliance with this  Court’s interim  order directing them to pay Rs.3 crores on  account  of  the  difference  in  five  quarterly instalments commencing  from December  1980, it had paid the instalments as  directed which  were debited to the Profit &

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Loss  Account   and  treated   as  allowable  deduction  for computing the  provision  for  taxation  in  the  respective earlier years.  It is  also stated  that as at June 30, 1984 there was  an unprovided  liability on  this account  of  12 crores 16.44 lakhs which includes interest of 5.09 crores. A memorandum of  hypothecation had  been executed  creating  a charge on  the whole  of the  movable plant,  machinery  and equipment of  the PVC  plant at  Kota in favour of the Board for an  amount of Rs.4.57 crores for which Rs.60.92 lakhs in fixed deposit  accounts with  the banks  had been  given  as security. The  Profit &  Loss Account  of the  PVC plant  at Kota, it  is stated  in foot note 4 : From the year 1980-81, 100% payment  to RSEB  has been made on the basis of uniform tariff, under  orders of the Supreme Court. There is nothing to show that the appellants had not the capacity to bear the burden of  uniform tariffs.  It  cannot  be  said  that  the impugned demands made by the Board as against the appellants were confiscatory  in nature.  When all the large industrial undertakings including the public sector undertakings of the Government of India and the State Government were paying for the supply of electricity at uniform tariffs fixed from time to time,  the appellants had no right to claim immunity from it.                     Promissory estoppel.      Question of  promissory estoppel  does not really arise and, in  our opinion,  rightly not  pressed. The  appellants have laid  no foundation in the pleadings for application of the doctrine of promissory estoppel. There is no question of any estoppel  against the  Board inasmuch  as the appellants did not  open their PVC plant on account of any assurance or promise by  the Board.  The opening  part of  the  agreement itself shows  that the  appellants approached  the Board for supply of  high tension  power for  their industrial complex and the  Board complied  with the request. There was thus no question of any promise. Even otherwise, the appellants have not made out that but for the 689 statutory  contract   for  supply   of  electricity   at   a concessional rate under s.49 they would not have established their industry.  It is  significant to  note that there were number of  incentives offered  by the  State  Government  to enterpreneurs to  set up their industries in the State, such as, land at concessional rates, reduced development charges, facilities of  railway siding free of cost and free of rent, reduced charges  for industrial  water, special  arrangement regarding disposal of affluence, loan for subsidiary housing schemes, etc.  In any event, the Board is not the Government and the  appellants cannot  rely on  promissory estoppel for the incentives offered by the Government.      To sum  up :  (1) By virtue of the provisions contained in ss.49A  and 49B  of the Electricity (Supply) Act, 1948 as introduced by the Electricity (Supply) (Rajasthan Amendment) Act, 1976, it was lawful for the Rajasthan State Electricity Board to  revise the  special rate of tariff agreed upon and to raise a demand against the appellants by its letter dated February 1,  1971 for  payment of the difference between the uniform tariff  under schedule  HS/LP/HT-1 applicable to all large  industrial   consumers  under   the  Board’s   tariff notification dated April 26, 1969, and the concessional rate in terms of c1.18 of the agreement between the parties dated July 28,  1961 for  the period  from January  1,  1971  upto February 6,  1976 i.e.  the  date  of  promulgation  of  the Electricity (Supply)  (Rajasthan Amendment) Ordinance, 1976, as also  the general  surcharge of 15% thereon levied by the Board by  its tariff  notification dated  April 26,  1969 as

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from September  16, 1966  onwards. (2)  The  Board’s  letter dated March  12,  1976  being  subsequent  to  the  date  of promulgation of  the Ordinance,  the demand  raised  by  the Board for  payment  of  the  revised  uniform  tariff  under schedule LP/HT-1  applicable to  all such  large  industrial consumers under  the Board’s  tariff notification  dated May 28, 1974  purporting to  act under ss.49A and 49B of the Act read with c1.18 of the agreement, was not validated by s.49B and therefore the Board was only entitled to recover uniform tariff at  the same  rate i.e.  under schedule HS/LP/HT-1 of 1969 for  the period  from July 1, 1974 to February 6, 1976, that is, prior to the date of promulgation of the Ordinance. (3) The  Board was entitled by the terms of s.49A to raise a demand for  payment of  the  revised  uniform  tariff  under schedule LP/HT-1 of 1974 w.e.f. February 7, 1976 690 and thereafter  as per  the revised  uniform tariffs  framed from time  to time  as applicable  to all  large  industrial consumers in  terms of  c1.18 of  the agreement.  All  other contentions viz. that the impugned demands were violative of Art.14,  Art.19(1)(f)   and  (g)   and  Art.31(2)   of   the Constitution stand rejected.      In that  view of  the matter, the bill furnished by the Rajasthan State  Electricity  Board  dated  March  12,  1976 requiring   the    appellants   to    pay   an   amount   of Rs.21,35,506.72p. for  the billing month of February 1976 at the revised  uniform tariff under schedule LP/HT-1 framed by the Board’s  tariff notification dated May 28, 1974 together with the  general surcharge  of 15% must be quashed, and the Board shall  instead raise  a fresh demand on the appellants to pay uniform tariff under schedule HS/LP/HT-1 framed under the Board’s tariff notification dated April 26, 1969 for the period from  July 1,  1974 to February 6, 1976 together with 15% general surcharge thereon. It is declared that the Board was entitled  under s.49A  of the  Act  to  raise  a  demand against the  appellants for  payment of  the revised uniform tariff under  schedule LP/HT-1  of 1974  w.e.f. February  7, 1976 and  thereafter as  per the  revised  uniform  tariffs, framed from  time  to  time,  as  applicable  to  all  large industrial consumers  together with the general surcharge of 15% thereon in terms of c1.18 of the agreement.      The result  therefore is  that all  the appeals, except C.A.No. 2675/80,  must fail  and are dismissed. Civil Appeal No.2675/80 arising  out of  the judgment  and order  of  the Division Bench  of the  High Court  dated September 12, 1980 dismissing  S.B.  Writ  Petition  No.8579/80  filed  by  the appellants challenging  the validity  of the  aforesaid bill dated March 12, 1976 sent by the Rajasthan State Electricity Board for payment of Rs.21,35,506.72p. for the billing month of February  1976 is  partly allowed. The said Writ Petition is allowed  to the  extent that  the  bill  for  payment  of Rs.21,35,506.72p. for  the billing month of February 1976 at the revised uniform tariff under schedule LP/HT-1 of 1974 is quashed for  the  reasons  stated  above.  It  is,  however, declared that  the  Rajasthan  State  Electricity  Board  is empowered in terms of s.49A of the Electricity (Supply) Act, 1948, as  introduced by  the Electricity (Supply) (Rajasthan Amendment) Act, 1976 to 691 raise a  fresh demand  for payment under schedule HS/LP/HT-1 of 1969  for the  period from  July 1,  1974 to  February 6, 1976. It  is further  declared that the Board is entitled to recover from  the appellants  charges under schedule LP/HT-1 of 1974  as from  February 6, 1976 and thereafter as per the revised uniform  tariffs,  framed  from  time  to  time,  as

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applicable to  all large  industrial consumers together with the general  surcharge of  15% thereon  in terms of c1.18 of the agreement.      The appellants  having substantially  failed  must  pay two-thirds of  the costs  of these  appeals to the Rajasthan State Electricity  Board. The  State of  Rajasthan will bear its own costs. A.P.J.         Civil Appeals Nos. 2676 to 2679/80 dismissed.                Civil Appeal No. 2675 of 1980 partly allowed. 692