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PETITIONER: M/S. KANORIA CHEMICALS AND INDUSTRIES LTD. ETC.

       Vs.

RESPONDENT: U.P. STATE ELECTRICITY BOARD & ORS.

DATE OF JUDGMENT:       10/03/1997

BENCH: B.P. JEEVAN REDDY, K.S. PARIPOORNAN

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T B.P. JEEVAN REDDY, J.      Civil Appeals  [Arising out  of  SLP  (C)  Nos.6588/94, 21905-06/93, 21913-14/93, 6479/94 & 23250/94      Leave granted in Special Leave Petitions.      These appeals  are preferred  against the judgment of a Division Bench  of the  Allahabad High  Court dismissing the writ petitions  filed by  the appellants. The appellants are large consumers of electricity.      By a  Notification dated  April  21,  1990,  the  Uttar Pradesh State  Electricity Board had revised the electricity Board  had   revised  the  electricity  rates/tariffs  under Section 49  of  the  Electricity  (Supply)  Act,  1948.  The Notification inter  alia provided for payment of interest in case the  bill amount  is  not  paid  within  the  specified period. Clause 7(b) read as follows:      "7(b) For delayed payment:      In  the   event  of   any  bill  of      whatever nature it may be not being      paid  by  the  due  date  specified      therein, the  consumer shall pay an      additional charge  per day of seven      paise per  hundred rupees  or  part      thereof on the unpaid amount of the      bill for  the period  by which  the      payment is  delayed, beyond the due      dated  specified   in   the   bill,      without prejudice  to the  right of      the   Board   to   disconnect   the      supply."      The  validity   of  the   aforesaid  Notification   was questioned in  the Allahabad  High Court  by way  of a  writ petition filed  by the  Eastern U.P. Chamber of commerce and Industry, Allahabad and certain individual consumers. On the Interlocutory Application  filed in  the said writ petition, the High Court passed the following Order on July 25, 1990:      "In this  case S/Sri Sudhir Agarwal      and   S.C.   Budhwar   have   filed      appearance     on     behalf     of      Respondents. They  pray for and are

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    granted two  weeks’ time for filing      rejoinder  affidavit.   List   this      petition for  disposal, if possible      at the  admission  stage,  on  16th      August, 1990.  This is necessary in      view of  recurrence of  this matter      in  large   number  of   cases  and      revenue  in   large   scale   being      affected for  electricity  charges.      Meanwhile  till   23-8-1990  unless      recalled earlier,  the operation of      the  notification  dated  21.4.1990      shall    remain     stayed.     The      respondents  are   restrained  from      realising the  additional amount of      electricity      charges       from      petitioners  in  pursuance  of  the      said  notification.   However,  the      petitioner shall continue to pay at      the old rate."             [Emphasis added]      The said  order was continued by subsequent Order dated August 30, 1990 and September 7, 1990.      It  appears  that  besides  the  above  writ  petition, several other  writ petitions  were  filed  questioning  the aforesaid Notification. In every writ petition, there was an Interlocutory Application  praying for  stay of operation of the said  Notification but  there does  not appear to be any uniformity in  the interim  orders made by the High Court in those  writ   petitions.  For   example,  in  Writ  Petition No.300097 of  1990 filed  by  the  Employer  Association  of Northern India,  the interim  order  was  to  the  following effect:      "Meanwhile  effect   shall  not  be      given  to  the  notification  dated      21st April,  1990  as  against  the      petitioners. However,  it  is  made      clear that  in the event of failure      of the  writ petition the petitions      shall  deposit  with  the  relevant      authority within  a period  of  one      month from the date of dismissal of      the writ  petition  the  difference      between the  amount of  electricity      dues,   which    will    be    paid      hereinafter  by   the   petitioners      under our  order and  the sum which      may be  calculated on the basis  of      the impugned notification."             [Emphasis added]      All  the  said  writ  petitions  challenging  the  said Notification were  ultimately dismissed  by a Division Bench on March 1, 1993.      From this stage onwards, we will refer to the facts and contentions in  civil  appeal  arising  from  Special  Leave Petition (C)  No.6588 of  1990 [preferred  by  M/s.  Kanoria Chemicals and  Industries Limited], as representative of the facts and  contention in  all the  matters being disposed of under this  judgment. Though  the individual facts vary, the questions arising in these appeals are common.      After the  dismissal of  the writ petitions on March 1, 1993 as aforesaid, Kanoria says, it deposited the difference amount  between  pre-revised  and  the  revised  electricity rates. It did not, however, deposit the "additional charges" leviable under  clause 7(b),  referred to  above, which  are

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generally referred  to -  and referred  to hereinafter  - as "late payment  surcharge". Thereupon,  the  Board  issued  a notice of  demand calling  upon  Kanoria  to  pay  the  late payment  surcharge   in   a   sum   of   Rs.3,27,01,408.88p. [calculated upto  February 28, 1993]. Similar demand notices were served  upon other  appellants also.  A fresh  batch of writ petitions were filed by several consumers including the appellants herein  questioning the  notices  demanding  late payment surcharge  under clause 7(b). The main contention of the appellants  before the  High Court  was that inasmuch as the High  Court had stayed the operation of the Notification dated April  21, 1990  [by its  Order dated July 25, 1990 as continued  from   time  to   time],  clause   7(b)  remained inoperative during the period July 25, 1990 to March 1, 1993 and, therefore,  no late  payment surcharge can be levied on the amount  withheld by  appellants under  the orders of the court, even  though  their  writ  petitions  were  dismissed ultimately. According  to the  appellants, it was not a case where the   court  injuncted the  Board from  collection the dues according  to the  aforesaid Notification,  or was it a case  where   the  collection  of  bill  amount  was  stayed simplicitor. It  was  a  case,  they  submitted,  where  the operation of  the very  Notification was  stayed which meant that from  the date  of the  stay order, clause 7(b) did not operate and was not effective till the dismissal of the writ petitions. Strong  reliance was  placed upon the decision of this Court  in Adoni  Ginning Factory  v. Secretary,  Andhra Pradesh State  Electricity Board  [1979 (4) S.C.C. 560]. The said contention  has been  rejected by  the Division  Bench. R.A. Sharma,  J., speaking  for the  Division  Bench,  first examined the  nature and effect of the interim orders passed by courts  pending disposal  of substantive matters and then opined that  in Adoni  Ginning, this Court cannot be said to have held  that in  the case  of stay  of operation  of  the Notification, interest  does not  accrue at  all. Sharma, J. pointed out  that the  said decision was concerned only with the period  during which  an order of injunction restraining the  Board  from  collecting  the  revised  charges  was  in operation and  this Court opined that an order of injunction does not  prevent the  accrual of  interest provided  by the relevant tariffs/rules.  Sharma, J.  pointed  out  that  the recoverability of  the interest amount of the period covered by an  order of  stay of  the Notification was not at all in issue in  Adoni Ginning  and, therefore,  it cannot  be said that there  is any  decision on the said question. Affirming the opt-repeated  principle that  a decision is an authority only for  what it actually decides, the learned Judge opined that the  consumers are  liable  to  pay  the  late  payment surcharge under  clause 7(b)  of the said Notification  even for the  period covered  by the  aforementioned order  dated July 25,  1990 [as  extended from time to time]. The learned Judge also  pointed out  that the  interim orders  passed in various  writ   petitions  were   not  uniform  and  by  way illustration set  out in  the interim order in Writ Petition No.30097 of 1990 [quoted by us hereinabove]. The correctness of the  judgment is  called in  question in  this  batch  of appeals.      Sri R.  Vaidyanathan, who  lead the arguments on behalf of the  appellants, submitted  that the impugned decision of the High  Court is  clearly  contrary    to  the  principles enunciated by  this  Court  in  Adoni  Ginning  and  cannot, therefore, stand.  Counsel relied  upon another  order  this Court dated  April 23,  1996 in  special leave  Petition (C) No.9087-88 of  1996 [M/s.  Hindalco  Industries  Limited  v. State of  Uttar Pradesh].  Learned  counsel  submitted  that

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clause 7(b)  of the  Notification dated  April 21,  1990 was penal in  nature inasmuch  as  the  late  payment  surcharge provided by  it works  out to  25.5 interest per annum. Such high rate of interest, learned counsel submitted, cannot but be characterized as penal.      Inasmuch as  the decision  in Adoni Ginning constitutes the sheet-anchor of the appellant’s case, it is necessary to closely examine  the facts  and ratio  of the said decision. Electricity charges  were  enhanced  by  the  Government  of Andhra Pradesh under an Order dated  30th January, 1955. The enhancement was  questioned by  certain consumer  by way  of writ petitions  in Andhra Pradesh High Court. The High Court stayed the  operation of  the Government Order enhancing the rates. The  writ petitions  came up  for  hearing  before  a learned Single  Judge on February 22, 1957 and were allowed. The Government  of Andhra  Pradesh  preferred  writ  appeals which were allowed by a Division Bench of that court on 19th December, 1958  upholding the  validity of  the enhancement. Thereafter, the Andhra Pradesh State Electricity Undertaking with effect  from Ist  April, 1959  issued bills  to several consumer call  in upon  them to  pay the arrears of enhanced charges.  No   demand  was  made  under  these  notices  for surcharge [for  delayed  payment  of  Bill  amount]  on  the arrears. Meanwhile  several consumers  approached this court and   obtained   order   of   injunction   restraining   the Government/Board from  realising from  them the  "amount  of arrears occasioned  by the enhancement of rates". Injunction was granted  by this  Court subject  to  certain  conditions including the  condition that  in the event of the dismissal of their  appeals, the appellants shall pay the arrears with interest calculated @ one percent per annum. All the appeals were  dismissed   by  this   Court  on   25th  March,  1964. Thereafter, the  Electricity  Board  issued  demand  notices calling upon the consumers to pay surcharge @ twelve percent per annum  on the  arrears in  respect  of  which  they  had obtained order  of injunction  pending their  appeals before this  court.   On  receipt  of  these  demand  notices,  the consumers again  approached the  High Court  by way  of writ petitions questioning  the demand. Their writ petitions were allowed  by   a  learned  Single  Judge  observing  that  no surcharge was  leviable during  the period when the order of injunction granted  by this  Court was  operation. The  writ appeal preferred   by  the Board were, however, allowed by a Division Bench  against which decision some of the consumers approach this  Court again. It is, therefore, clear that the only dispute  in Adoni Ginning pertained to the liability of the consumers to pay surcharge @ twelve percent per annum on the amount  not collected  from them  under  the  orders  of injunction granted  by this  Court pending their appeals. It is significant  to notice  that the dispute in the said case did not pertain to the liability of the consumers to pay the surcharge amount for the period covered by the order of stay granted by  the High  Court; the  Board did  not  choose  to demand any  surcharge for that period. The contention of the appellants in  Adoni Ginning  was  that  by  virtue  of  the injunction order granted by this Court, the consumers cannot be said  to be  in default in paying the electricity charges and, therefore,  no surcharge  was leviable.  The contention was rejected  by this  Court [D.A.  Desai and  O.  Chinnappa Reddy, JJ.].  The Court pointed out that according to clause (9), a  consumer was  liable to  pay the  bill amount within thirty days,  in default  of which  he was liable to pay "an additional charge  of on e percent on the amount of the bill for every month delay or part thereof". The contention urged by the  appellant therein  was  repelled  in  the  following

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words:      "The  injunction  granted  by  this      court  restrained   the  government      from  realising   the  arrears   of      enhanced charges.....  All that the      injunction did  was to restrain the      Board from  realising  the  arrears      which  meant  that  the  Board  was      restrained from taking any coercive      action  such  as  disconnection  of      supply of  electricity etc. for the      realisation  of  the  arrears.  The      operation of G.O. No.187 dated 30th      January,  1955,  as  such  was  not      stayed. Thus  the obligation of the      consumers to  pay  charges  at  the      enhanced rates  was  not  suspended      though the  Electricity  Board  was      prevented   from    realising   the      arrears. It was up to the consumers      to pay  or not  to pay the arrears.      If  they   paid  the  arrears  they      relieved  themselves   against  the      liability to pay surcharge. If they      did not  pay the  arrears they were      bound to  pay the surcharge if they      failed in  the appeals  before  the      Supreme Court.  This was  precisely      what  was   pointed  out   by   the      Electricity  Board   in  the  Bills      issued to  the consumers  after the      Supreme    Court     granted    the      injunction. We  may mention    here      that the  Electricity Board  is not      demanding  any   surcharge  on  the      arrears for the period during which      the Andhra  Pradesh High  Court had      granted stay.  It was  explained by      the   learned   Counsel   for   the      Electricity Board that no surcharge      was claimed  for that period as the      operation of  G.O.No.187 dated 30th      January 1955 had itself been stayed      at that time. Surcharge was claimed      for the  period  during  which  the      appeals were pending in the Supreme      court since  the Supreme  Court did      not   stay    the   operation    of      G.O.No.187 but  only restrained the      Board from  collecting the arrears.      That no stay of G.O.No.187 was ever      intended  to   be  granted  by  the      Supreme Court  is also  clear  from      the circumstance  that there was no      injunction     restraining      the      Electricity Board  from  collecting      future  charge   at  the   enhanced      rates. the  Electricity Board  was,      therefore,   right    in   claiming      surcharge for the period the during      which the  appeals were  pending in      the Supreme  Court and not Claiming      surcharge  for  the  period  during      which the  Writ Petition  and  Writ      appeals were  pending in  the  High

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    Court."             [Emphasis added]      The learned  counsel for  the appellants in the appeals before us  rely upon  the portions  underlined in  the above passage as a decision supporting their contention that where the operation  of Government  Order is  stayed, no surcharge can be  demanded  upon  the  amount  withheld.  We  find  it difficult  to   agree.  In   our  respectful   opinion,  the underlined portions  do not  constitute the  decision of the court. They  merely refer  to the fact that the Board itself did not make a demand for surcharge amount in respect of the period covered  by stay  under its  own understanding of the effect of  the stayed  order granted  by the  High Court and that it  was justified  in its opinion. The demand was , the court pointed  out, in  respect of the period covered by the order of  injunction granted  by this Court. This Court held expressly that  the grant of and injunction does not relieve the consumers  of their obligation to pay the charges at the enhanced   rates    and,   therefore,    the   demand    for surcharge/interest for  such  period  is  not  illegal.  The portions underlined  cannot be understood as laying down the proposition that  in respect  of the period covered by stay, no demand  can be  made. No  such proposition can be deduced from the  said passage for the reason that the liability for the said  was not  at all  in issue  in the  said  decision. Unless put  in issue  and pronounced upon, it cannot be said that there  was a  decision on  the said issue. There was no list between  the parties with respect to the period covered by the  stay order  of the  High Court.  If so, it cannot be said that  any decision  was rendered  by this  court on the said issue  or aspect,  as it  may be called. We, therefore, agree with  the High Court that Adoni Ginning cannot be read as laying  down the  proposition that the grant of stay of a Notification revising the electricity charges has the effect of relieving  the consumers/petitioners  of their obligation to  pay   late  payment  surcharge/interest  on  the  amount withheld  by   them  even  when  their  writ  petitions  are dismissed ultimately. Holding otherwise would mean that even though the  Electricity Board, who was the respondent in the writ petitions  succeeded therein,  is yet  deprived of  the late payment  surcharge which  is due to it under the tariff rules/regulation. It  would   be   a case  where  the  Board suffers prejudice  on account  of the order of the court and for no  fault of  it’s. It succeeds in the writ petition and yet loses.  The consumer  files the  writ petition,  obtains stay of operation of the Notification revising the rates and fails in  his attack  upon the  validity of the Notification and yet  he is  relieved of  the obligation  to pay the late payment surcharge for the period of stay, which he is liable to pay  according to  the  statutory  terms  and  conditions indeed form  part of  the contract of supply entered into by him with the Board. We do not think that any such unfair and inequitable proposition  can be  sustained in  law. No  such proposition flows  from Adoni  Ginning. It  is a  matter  of common knowledge  that several  petitioners [their  counsel] word the  stay petition  differently. On  petitioner may ask for injunction,  another may  ask for stay of demand notice, the third  on   may ask for stay of collection of the amount demanded and the fourth one may ask for the stay of the very Notification. Such  distinctions are  bound to occur where a large number  of writ  petitions are  filed challenging  the same Notification.  the interim orders made by the Court may also vary  in their  phraseology in  such a  situation. Take this very  case while  the consumers  has asked  for stay of operation of  the Government Order revising the rates, those

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very consumers  asked for  an injunction  when they  came to Supreme Court.  Furthermore, as  pointed out  rightly by the High Court,  the order of the stay granted by the High Court in  writ   petitions  questioning   the  validity   of   the Notification dated  April 21,  1990 were not uniform. In the case of  writ petition  filed by the Eastern U.P. Chamber of Commerce and  Industry,  Allahabad,  the  operation  of  the Notification was  stayed while  in  the  case  of  the  writ petition filed  by the  Employers  Association  of  Northern India, it  was directed  that "effect  shall not be given to the notification  dated 21st  April,  1990  as  against  the petitioner shall  deposit with the relevant authority within a period  of one  month from   the  date of dismissal of the writ  petition   the  difference   between  the   amount  of electricity dues  to be  paid hereinafter  by the petitioner under our  orders and the sum which may be calculated on the basis of  the impugned  notification". The  words "sum which may be calculated on the basis of the impugned notification" in the later order clearly mean and include the late payment surcharge  as   well.  The  acceptance  of  the  appellants’ argument would  thus bring  about a discrimination between a petitioner and a petitioner just because of the variation of the language  employed  by  the  court  while  granting  the interim order  though  in  substance  and  in  all  relevant aspects, they  are similarly  situated. It  is equally  well settled that  an order of stay granted pending disposal of a writ petition/suit or other proceeding, comes to an end with the dismissal  of the substantive proceeding  and that it is the duty  of the  court in such a case to put the parties in the same  position they  would have been but for the interim order of  the court.  Any other view would result in the act or order  of the  court prejudicing  a party  [Board in this case] for  no fault  of its  and would also mean rewarding a writ petitioner inspite of his failure. We do not think that any such  unjust consequence  can  be  countenanced  by  the courts. As a matter of fact, the contention of the consumers herein,  extended   logically  should  mean  that  even  the enhanced rates  are also  not payable for the period covered by the  order of  stay because  the operation  of  the  very Notification revising/enhancing the tariff rates was stayed. Mercifully, no such argument was urged by the appellants. It is ununderstandable how the enhanced rates can be said to be payable but  not he  late payment  surcharge are provided by the same Notification - the operation of which was stayed.      As has  been pointed  out by S.C. Agrawal, J., speaking for a  three-Judge Bench  in Shree  Chamundi Mopeds Ltd. vs. Church of South India Trust Association, Madras [ 1992 (3)  S.C.C.1], "while  considering  the  effect  of  an interim order  staying the  operation  of  the  order  under challenge, a  distinction has to be made between quashing of an order  and stay  of operation of an order. Quashing of an order results  in the  restoration of  the   position was it stood on the date of the passing of the order which has been quashed. The  stay  of  operation  of  an  order  does  not, however, lead to such a result. It only means that the order which has  been stayed  would not be operative from the date of the  passing of  the stay order and it does not mean that the said order has been wiped cut from existence."      Sri Vaidyanathan  relied upon an unreported order dated April 23,  1996 in Special Leave Petition (C) Nos.9087-88 of 1996 [Hindalco  Industries v.  State of  U.P.]. We have seen the order  but we  do not  find anything  in the  said order supporting the contention of the learned counsel.      Sri Vaidyanathan  contended  that  the  rate  of  ‘late payment surcharge’  provided by  clause 7(b) is really penal

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in nature  inasmuch as  it works  out to  25.5  percent  per annum. Learned  counsel also  submitted that the petitioners understood the  decision in  Adoni Ginning as relieving them of their  obligation to  pay interest for the period covered by the  interim order  and that    since  they  were  acting bonafide they  should not  be mulcted with such high rate of interest. We  cannot agree  that the  rate of  late  payment surcharge provided  by clause  7(b)  is  penal,  but  having regard to  the particular  facts and  circumstances of  this case and  having regard  to the  fact that petitioners could possibly have  understood the  decision in  Adoni Ginning as relieving them  of their  obligation  to  pay  interest/late payment surcharge for the period of stay, we reduce the rate of late  payment surcharge  payable  under  clause  7(b)  to eighteen percent. But this direction is confined only to the period covered  by the  stay orders  in writ petitions filed challenging  the  Notification  dated  April  21,  1990  and limited to  March 1,  1993, the  date on  which  those  writ petitions were dismissed.      For  the  above  reasons,  the  appeals  fail  and  are dismissed subject  to the  above  mentioned  direction  with respect to  the rate of levy of late payment surcharge under clause 7(b) of the Notification dated April 21, 1990.      Writ Petition (C) No.761 of 1993      Writ Petition  (C) No.761  of 1993 too is dismissed for the same reasons.      No costs.