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PETITIONER: M/S HYDERABAD VANASPATHI LIMITED

       Vs.

RESPONDENT: ANDHRA PRADESH STATE ELECTRICITY BOARD AND ORS.

DATE OF JUDGMENT:       01/04/1998

BENCH: S.C. AGRAWAL, S.SAGHIR AHMAD, M. SRINIVASAN

ACT:

HEADNOTE:

JUDGMENT:                      J U D G E M E N T SRINIVASAN, J. I. Relevant facts,      The appellant in the earlier appeal of 1988 is a public limited company engaged in the manufacture of Vanaspathi. It entered  into  two  agreements  with  Andhra  Pradesh  State Electricity Board  hereinafter referred  to  as  ‘Board’  on 1.9.1970 and  27.8.1973 for supply of High tension power. In January, 1976  the  officers  of  the  Board  inspected  the factory premises and noticed  pilferage of energy. The power supply  was   immediately  disconnected  and  a  provisional assessment of  the loss  was  made  at  Rs.  61,28,535/-.  A prosecution was  launched under Section 379 I.P.C. read with Section 39  of the Indian Electricity Act, 1910, hereinafter referred to as the Electricity Act in the court of the Chief Metropolitan Magistrate, Hyderabad. The Board also initiated proceedings  calling   upon  the   appellant  to   file  its objections to  the  provisional  assessment.  The  appellant denied the allegations made by the Board. After enquiry, the final assessment  was made  fixing the lost at Rs. 55,511.81 Ps. The  order was challenged by the appellant in appeal but in vain.  The  appellant  filed  a  suit  in  the  court  of Additional Chief  Judge, City  Civil Court (Temp), Hyderabad for a  declaration that  it was not liable to pay any amount as penal  damages and  prayed for  a direction for refund of the amount  of Rs. 22.50 lakhs collected by the Board during the pendency of the assessment proceedings and for perpetual injunction   restraining   the   defendants   therein   from disconnecting the power supply. 2.   The suit  was contested  by the  Board. Several  issues were raised  including one  relating to  the jurisdiction of the  civil   court.  The   trial  court  held  that  it  had jurisdiction  to   try  the   suit  but  negatived  all  the contentions of  the plaintiff  and dismissed  the  suit.  On appeal, a  Division  Bench  of  Andhra  Pradesh  High  Court rejected the  pleas of the appellant and dismissed the same. The High  Court held that the terms and conditions of supply on the  basis of  which the  agreements were entered between the appellant  and the  Board did  not in any way contravene the provisions  of either  the  "  Electricity  Act  or  the

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Electricity (Supply)  Act. It  was  also  found  that  ample opportunity was  given to  the appellant  before  the  final order of  assessment was  made and  that the enquiry held by the officers  of the Board was in no way vitiated. Aggrieved by the  said  decision  of  the  High  Court  the  appellant preferred the said appeal on obtaining Special Leave of this court. 3.   The questions  which were  decided by the High Court in the  aforesaid   proceedings  were   raised  again  in  Writ Petitions under  Article 226 of the Constitution of India by some industrial  undertakings which  had also  entered  into agreements with  the Board  for supply  of electricity. When proceedings  were  initiated  by  the  Board  against  those industrial  undertakings  on  the  ground  of  pilferage  of electrical  energy   and  supply  was  disconnected  pending enquiry, those undertakings filed Writ Petitions challenging the validity  of  such  proceedings.  In  one  of  the  writ petitions, an  appeal was  filed  against  an  Interlocutory Order refusing  to grant  interim relief  to the  petitioner therein. When  that appeal  was admitted by a Division Bench the matter  was placed  before a  Full Bench for disposal as the Division  Bench  opined  that  the  view  taken  by  the Division Bench  in the  Civil Appeal referred to earlier was likely to  be in  conflict with  the "possible view that the contractual obligation upon the consumer of electricity that in case of a dispute as to the consumption, the adjudication shall be  by the officers of the Board shall be deviative of Article 14  of the Constitution of India". Thus all the writ petitions and  the writ appeals against interlocutory orders were heard  by a  Full Bench of three Judges and disposed of by a common judgment dated 12.9.1997. 4.   The  Full   Bench  opined  that  the  creation  of  the adjudicatory  process   by  a   contractual  obligation   in condition no.  39 of the ‘Terms and Conditions of Supply’ of electricity was  wholly vitiated"  The Full  Bench  observed that though  there is  no bar  against the  Board to recover compensation for  the loss caused to it even when a consumer is prosecuted  for the  same  offence  under  the  Act,  the enquiry into  the estimate  of the loss should be made by an independent and  properly constituted  body. Ultimately  the Full Bench concluded its order as follows:           "In   view    of   the   above      discussion, we  have no  hesitation      to hold  that condition  39 of  the      conditions framed  by the Board, to      the  extent   it   prescribes   the      procedure for  adjudication of  the      dispute relating  to  pilferage  or      malpractice of energy and for final      assessment   of    the   additional      charges, is  ultravires of  Section      24, 26 (6) and C1.IV(3) of schedule      of the  Act of 1910 and Sect. 49 of      Act of 1948, and is wholly vitiated      as being arbitrary and violative of      Article 14  of the Constitution and      is   accordingly    struck    down.      However,  the   contention  of  the      learned Advocate  General that  the      Board is  empowered to regulate the      supply  of   energy  including  the      power of  disconnection, on a prima      facie satisfaction  or suspicion of      a conduct  amounting to malpractice      or energy  on ground  of  including

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    malpractice of pilferage of energy.      The conditions in the agreements in      Appendix  III  &  IV  also  contain      stipulation  of   disconnection  of      supply on suspicion of violation of      conditions. Thus,  if an allegation      is made of malpractice or pilferage      against the  consumer an  d if  the      consumer denied  the allegation and      makes   an   application   to   the      Electrical  Inspector,   holds   on      preliminary facts,  that he  has no      jurisdiction in  the  matter,  then      the Board is empowered to take such      step as  it  may  deem  proper  and      appropriate including disconnection      of supply  on  certain  conditions.      This  action   of  the   Board,  is      however, subject to the scrutiny by      a court of law". 5.   It is  against the  said judgment of the Full Bench the Board has  filed the  Civil Appeals  Nos. 7139-7144 of 1997. All the  appeals have been heard together as the contentions are common.  For the  sake of  convenience, the parties will be hereafter  referred to  as the  Board on the one hand and the consumers on the other. 6.   The chief argument advanced on  behalf of the consumers is that  condition number 39 in the ‘Terms and Conditions of Supply’ of  electricity  which  are  purely  contractual  is ultravires the  provisions of  the Indian  Electricity  Act, 1910 hereinafter  referred to  as the  ‘Electricity Act’ and Electricity (Supply)  Act, 1948  hereinafter referred  to as the ‘Supply  Act’. Alternatively,  it is contended that even if the  terms are  statutory in nature, the condition is not valid. Thirdly,  it is  argued that  the said  condition  is violative of  Article 14  of the  Construction of India. Per contra, it  is contended  on behalf  of the Board that it is performing a  statutory obligation to supply electricity and has been  empowered by  the provisions  of Section 49 of the Supply Act  to impose such terms and conditions as it thinks fit. The  conditions which  have been  so imposed  including condition number 39 are statutory in character and are in no way contrary  to the provisions of either of the enactments. The conditions  are also  quite reasonable and cannot in any sense be termed arbitrary and violative of the provisions of Article 14 of the Constitution of India. II. RELEVANT STATUTORY PROVISIONS 7.   Before  adverting  to  the  rival  contentions,  it  is necessary  to   refer  to  certain  provisions  in  the  two enactments namely  Electricity Act  and the  Supply Act.  An Electricity Act  was passed  originally in  1903 but  it was repealed by  the Electricity  Act      which amended the law relating to  the supply  and use  of electrical  energy. The said Act  was not  a complete  Code on  the subject.  It was apparently  found   to  be   inadequate   for   coordinating development of  electricity on  regional basis.  Hence,  the Supply  Act   was   enacted   in   1948   to   provide   for rationalisation of  the production and supply of electricity and generally  for taking  measures conducive to electricity and generally  for taking  measures conducive to electricity development. While the earlier Act deals with the supply and use of  electric energy  and the  rights an d obligations of the licensees, the later Act  deals with statutory power and functions  of   the  Central  Electricity  Authority,  State Electricity Boards  and Generating  companies. Section 70(1)

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of the  later Act  provisions in  so far  as  there  is  any inconsistency therewith in the provisions of the earlier Act or any Rules made thereunder or any instrument having effect by virtue  of the  said Act  or Rules.  The proviso  to sub- section (1) clarifies that nothing in the later Act shall be doemed to  prevent the State Government from granting, after consultation with the Board, a licence not inconsistent with the provisions  of the  earlier Act to any person in respect of such  area and  on such terms and conditions as the State Government may think fit. Sub-s.(2) makes it clear that save as otherwise  provided in  the later  Act, the provisions of the Act shall be in addition to and not in derogation of the earlier Act. 8.   Section 26  of the  Supply Act is to the offer that the Board shall  in respect  of the   whole  State have  all the powers and obligations of the licensee under the Electricity Act and  the later  Act shall be deemed to be the licence of the Board  for the  purpose of  the earlier  Act. The  first proviso to  the Section  3 to  11, sub-ss.  (2) and   (3) of Section 21, Section 22, sub-section (i) to (v), clause (vii) and clauses (ix) to (xii) of the Schedule to the Electricity Act relating  to the  duties and  obligations of a licensee. The second proviso states that the provisions of clause (vi) to the  Schedule to the earlier Act shall apply to the Board in respect  of that  area only where distribution mains have been laid  by the Board and the supply of energy through any of them had commenced. 9.   In view  of the  provisions of Section 26 of the Supply Act our  attention has been drawn by the learned counsel for the  consumers  to  some  only  of  the  provisions  of  the Electricity Act.  Section 20  sets  out  the  power  of  the licensee or  any person  duly authorised  by the licensee to enter the  premises to  which energy  has been  supplied and remove fittings,  etc.  in  certain  circumstances  and  the procedure therefore.  Sub-sections (1) and (4) of Section 21 are in the following terms :           "Section  21(1).   A  licensee      shall not  be entitled to prescribe      any special  form of  appliance for      utilizing energy supplied by him or      save as provided (in any conditions      made  under   sub-s.  (2)   or)  by      Section  23,   sub-s.  (2),  or  by      Section 26,  sub-s.(7), in  any way      to control  or interfere  with  the      use of such energy :      provided that  no person  may adopt      any form  of appliance,  or use the      energy supplied  to him  so  as  to      unduly or  improperly to (interfere      with -      (a) the safety or efficient working      of licensee  electric supply  lines      or other works ; or      (b) the  supply of  energy  by  the      licensee to any other person).....      "(4)  Where   any   difference   or      dispute  arises  as  to  whether  a      licensee   has    prescribed    any      applicance   or    controlled    or      interfered   any    applicance   or      controlled or  interfered with  the      use of  energy in  contravention of      sub-section (1),  the matter  shall      be either referred to an Electrical

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    Inspector and  decided by  him, or,      if  the  licensee  or  consumer  so      desires,       determined        by      arbitration."      Section 24(1)  and    (2)  read  as      follows :-      "(1) Where  any person  neglects to      pay any  charge for  energy or  any      (sum,  other   than  a  charge  for      energy,) due  from him  to a energy      to him,  the  licensee  may,  after      giving not  less than  seven  clear      days  notice  in  writing  to  such      person and without prejudice to his      right to  recover  such  charge  or      other sub  my  suit,  cut  off  the      supply and  for that purpose cut or      disconnect any electric supply-line      or other  works, being the property      of  the   licensee,  through  which      energy may  be  supplied,  and  may      discontinue the  supply until  such      charge or  other sum, together with      any expenses  incurred  by  him  in      cutting off  and re-connecting  the      supply, are paid, but no longer.      (2) Where any difference or dispute      (which by  or  under  this  Act  is      required to  be  determined  by  an      Electrical  Inspector,   has   been      referred to  the Inspector)  before      as aforesaid  has been given by the      licenses, the  licensee  shall  not      exercise the  powers  conferred  by      this section  until  the  Inspector      has given his decision:      PROVIDED   that   the   prohibition      contained in this sub-section shall      not apply  in any case in which the      licensee  has  made  a  request  in      writing  to   the  consumer  for  a      deposit   with    the   (Electrical      Inspector) of  the  amount  of  the      licensee’s charges or other sums in      dispute   the    deposit   of   the      licensee’s further  charges for  or      for energy as they accrue, and t he      consumer has  failed to comply with      such request.)      Section 26(6)  is in  the following      terms :           "Where   any   difference   or      dispute arises  as to  whether  any      meter referred  to  in  sub-section      (1)  is  or  is  not  correct,  the      matter shall  be decided, upon t he      application of  either party, by an      Electrical Inspector;  an  d  where      the meter  has, in  the opinion  of      such Inspector  shall estimate  the      amount of  the energy  supplied  to      the  consumer   or  the  electrical      quantity contained  in the  supply,      during such time, not exceeding six      months, as  the meter shall not, in

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    the opinion of such Inspector, have      been   correct;    but   save    as      aforesaid,  the   register  of  the      meter  shall,  in  the  absence  of      fraud, be conclusive proof  of such      amount or quantity :           PROVIDED that  before either a      licensee or  a consumer  applies to      the Electrical Inspector applies to      the Electrical Inspector under this      sub-section, he  shall give  to the      other party  not  less  than  seven      days, notice of his intention so to      do". 10.  Learned counsel  has also draw our attention to Section 35 and  36 of  the said  Act as  well as Rules 4 to 6 of the Indian Electricity  Rules framed  under the  Act. Section 35 deals with  the  constitution  of  the  Advisory  Board  and Section  36   deals  with   the  appointment  of  Electrical Inspector. Rules  4 to  6 provide  for the qualifications of Inspectors etc.  We are  not extracting  those provisions as they  are  unnecessary  in  this  case.  In  the  course  of arguments our attention has also been drawn to Rule 27 which provides for  Model conditions  or supply  as  contained  in Annexure VI. 11.  Apart from  the above,  strong reliance  is  placed  on Clause VI  of the  Schedule to  the  Act  which  deals  with requisition  for  supply  to  owners  or  occupiers  of  any premises situate  within the  area of  supply of a licensee. Sub-clause (1)  and sub-clause  (3) of  Clause  VI  read  as follows :-      VI.  Requisition   for  supply   to      owners or occupiers in vicinity      (1)  Where,   (after   distribution      mains have been laid down under the      provisions of Clause IV or Clause V      and the  supply of  energy  through      those mains  or  any  of  them  has      commenced.) a  requisition is  made      by the  owner or  occupier  of  any      premises situate  within (the  area      of supply)  requiring the  licensee      to  supply   the  energy  for  such      premises the licensee shall, within      one month  from the  making of  the      requisition, (or within such longer      period    as     the    (Electrical      Inspector) may  allow) supply, and,      save in  so far  as he is prevented      from doing  so by cyclones, floods,      storms or  other occurrence  beyond      his  control  continue  to  supply,      energy  in   accordance  with   the      requisition.           ............           ...........      (3) Where any difference or dispute      arises as  to the  amount of energy      to  be   taken  or   guaranteed  as      aforesaid, or as to the cost of any      service-line   or    as   to    the      sufficiency of the security offered      by any owner of occupier, (or as to      the position of the meter board) or      as to  the improper uses of energy,

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    or as  to any alleged defect in any      wires,    fittings,     works    or      apparatus, or  as to  the amount of      the  expenses  incurred  under  the      third proviso  to  sub-cl.(1),  the      matter shall  be  referred  to  and      (Electrical Inspector)  and decided      by him. 12.  Turning to the provisions of the Supply Act, apart from the Sections  which we  have referred  to earlier, reference may be made to Sections 18 and 19. While Section 18 sets out the general  duties of  t he  Board, Section 19 sets out the powers of  the  Board.  Section  49  is  the  most  relevant provision in this case and  it reads as follows :      "Section 49. Provision for the sale      of  electricity  by  the  Board  to      persons other than licensees.-- (1)      Subject to  the provisions  of this      Act and   or  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  or the  following  factors,      namely-           (a) the  nature of  the supply           and the  purposes for which it           is required;           (b)      the      co-ordinated           development of  the supply and           distribution  of   electricity           within the  State in  the most           afficient    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   simplification  and           standardisation of methods and           rates  of   charges  for  such           supplies;           (d)    the    extension    and           cheapening  of   supplies   of           electricity    of     sparsely           developed areas.      (3)  Nothing   in   the   foregoing      provisions of  this  section  shall      derogate  from  the  power  of  the      Board, if it considers it necessary      or  expendient   to  fix  different      tariffs   for    the   supply    of      electricity of any person not being      a licensee,  having regard  to  the      geographical position  of any area,      the  nature   of  the   supply  and      purpose   for   which   supply   is      required  and  any  other  relevant      factors.      (4) In  fixing the tariff and terms

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    and conditions  for the  supply  of      electricity, the  Board  shall  not      show  undue   preference   to   any      person". 13.  Section 78  enables the  Government to  frame Rules  to give effect  to  the  provisions  of  the  Act.  Section  79 empowers the  Board to make regulation not inconsistent with the Act  and the Rules made thereunder to provide for all or any of  the matters  set out  therein. On  of them  is  "(i) principles governing  the supply to electricity by the Board to persons  other than  licensees under Section 49". Section 79A provides  that every  rule made  by the State Government under Section  78 and  every regulation  made by  the  Board under Section  79 shall be laid as soon as may be before the State Legislature. II. RELEVANT CLAUSES OF THE TERMS AND CONDITIONS OF SUPPLY 14.  Clause 39  which is  the main  target of attack defines various malpractices  provides for  enquiries  by designated officials. Clauses 39.4, 39.5., 39.6 read as follows :-      Clause 39.4  Officers authorised to      inspect  and  deal  with  cases  of      malpractice and pilferage of energy      are as indicated below : Sl.No.  Particulars         Officer or officers authorised         To inspect the  To disconnect and  issue  To make         premises and    provisional assessment    final ass.         make provision  notice to the consumer     appellate         -al assessment                             authority ------------------------------------------------------------  2.     H.T. Service     ADE.DE    ADE      S.E.     C.E.         including        & S.E.    incharge         temporary         supply ------------------------------------------------------------      "Clause   39.5    Where   on    the      inspection      of       consumer’s      installations or premises or on the      basis of  other information or data      there is  scope for suspecting that      a consumer  is guilty of "supply of      electricity to  any service, which,      is disconnected  by the  Board"  of      "pilferage of  energy", the officer      authorised in  this benefit  by the      Board  may   without  prejudice  of      Board’s   other    rights,    casue      consumer    to     be     forthwith      disconnected without any notice and      report the  mattera  to  the  Final      assessing authority. In the case of      the malpractices other than the one      mentioned above,  supply  shall  be      disconnected only  in the  event of      failure on the part of the consumer      to pay half of the estimated amount      within the period stipulated in the      previsional assessment notice."      "Clause 39.6 Provisional assessment      on the  loss sustained by the Board      and payment:           The inspecting  officer  shall      make a  provisional estimate of the      loss incurred  by the  Board by the      reason  of   the   malpractice   or      pilferage of  energy  committed  by

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    the   consumer   which   shall   be      assessed as  mentioned herein below      and  intimated   to  the  Assistant      Divisional Engineer  concerned. The      A.D.E.   concerned   shall   ensure      disconnection  of   such   services      forthwith   in    the    case    of      malpractice   with   reference   to      supply  of   electricity   to   any      disconnected service  or  pilferage      of energy. The Assistant Divisional      Engineer  shall   then  serve   the      consumer   with    a   notice    of      provisional   assessment   in   the      prescribed form.  Such notice shall      mention, interalia.,           (a) the matters noticed during           the    inspection     of    he           consumer’s    premises     and           installations.           (b)    the     reasons     for           disconnection already effected           or propose to be effected and           (c) a  provisional estimate of           the  losss  sustained  by  the           Board    computed    in    the           prescribed manner.      He shall inform the consumer to pay      half of  the provisionally assessed      amount, pending  the enquiry  to be      conducted    by    the    concerned      authority into  the case, to secure      restoration of  supply where supply      has been  disconnected or  to avoid      discontinuance of supply where such      payment  is   made  the  consumer’s      service shall  not b e disconnected      on   this    ground   pending   the      enquiry". 15.  The provisional  assessment of  the loss referred to in Clause 39.6  shall made  on the principles set out in clause 39.7.1 and  39.7.2. It  is provided that assessment shall be made for  the estimated  period of  malpractice subject to a maximum of one year  prior to the date of inspection. Clause 39.8.1 and  39.8.2 provide for provisional assessment notice in the case of malpractices other than supply of electricity to disconnected premises and disconnection of service on the consumer’s failure to pay the provisionally assessed amount. 16.  Clause 39.9 is in the following terms :      Clause 39.9.1 After the provisional      assessment notice  is servaed  upon      the consumer as mentioned in clause      39.3 thereof the officer authorised      in this  behalf by  the Board  (see      statement  referred  to  in  clause      39.4  above)  shall  issue  a  show      cause   notice    in   the    forms      prescribed therefore  advising  the      consumer to file his representation      if any,  within 30  days  from  the      receipt of the notice.      Clause 39.9.2  The said  officer of      the Board  shall, after  the expiry      of  the  aforesaid  notice  period,      enquire into  the matter  and after

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    giving  reasonable  opportunity  to      the  consumer   and   taking   into      account  all   relevant  facts  and      circumstances shall  decide whether      the    consumer    has    committed      malpractice or  pilferage of energy      and  if  so  satisfied  proceed  to      assess to the best of his judgment,      the loss  sustained by the Board on      account  of   such  malpractice  or      pilferage   of    energy   by   the      consumer.  The   consumer  may   be      represented by  an advocate  at the      time of  personal hearing  provided      the    consumer     files    proper      vakalatnama.      Clause   39.9.3 The final assessing      authority shall  then pass an order      setting out his conclusions and the      reasons thereof  and communicate  a      copy of  the order  to the consumer      and demand  the amount  if any  due      from the  consumer on  the basis of      such order  after giving  credit to      the amounts paid by him.      Clause 39.9.4  Payment of amount of      final  assessment.   The   consumer      shall pay  to the  Board within  30      days  of   the  receipt   of  final      assessment   order,   the   amounts      demanded therein". 17.  Against the order of final assessment an appeal lies to the designated  authority. The  appellant may be represented by  an  advocate  before  the  appellate  authority  at  the hearing. The  appellate authority shall give his reasons for his conclusion  except in  cases where the appeal is allowed in toto.  Clause 39.10.6  provides that  the order on appeal shall be  final subject to clause 39.11 and be not liable to be questioned  in any  court of  law clause  39.11 is in the following terms :      Clause 39.11  The Chairman  or  his      nomince  (the   nominee  being  any      member of  the Board)  may suo moto      at any  time call  for and  examine      the record  of any  order passed or      proceedings recorded  by the final)      assessment authority  or  appellate      authority  for   the   purpose   of      satisfying  himself  regarding  the      propriety of legality of such order      of proceeding  and  may  pass  such      order in  reference thereto,  as he      may think fit. No orders adverse to      the  consumer   shall   be   passed      without    giving     notice    and      opportunity for  making  a  written      representation to the consumer. The      order passed by the Chairman or his      nominee  shall  be  final  and  not      liable  to  be  questioned  in  any      court of  law. The  consumer  shall      have  no   right  to   invoke  this      provision". 18. Clause 46 reads thus :-           "Interpretation:         These

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    conditions  shall   be   read   and      construed as  being subject  in all      respects to  the provisions  of the      Indian   Electricity   Act,   1910,      Indian Electricity  Rules, 1956 and      the Electricity  (Supply) Act, 1948      in force  and as  amended from time      to time  and to  the provisions  of      any  other   law  relating  to  the      supply of  electricity for the time      being in  force and  nothing herein      above contained in these conditions      shall  abridge   or  prejudice  the      rights  of   the  Board   and   the      consumer under  any Central  Act or      State    Act    or    rules    made      thereunder". 19.  Appendix-III contains  the form  of H.T. agreement. The relevant clauses read as follows :      APPENDIX  -   III  Form   of   H.T.      Agreement           "Agreement executed  this  day      of  .......19       by..........for      themselves/himself/itself  and  for      their/his/her         assigns   and      successors in  favour of the Andhra      Pradesh State  Electricity Board  a      statutory  corporation  constituted      under section  5 of the Electricity      (Supply)   Act,    1948   and   its      successors and assigns herein after      called the Board.      2. SUPPLY OF POWER           I/We the  above mentioned have      requested  the  Board    to  Supply      Electricity at High Tension for the      purpose of ..........and the Andhra      Pradesh  State   Electricity  Board      agreed to  afford  such  conditions      notified by  them from time to time      under section 49 of the Electricity      (Supply) Act, 1943 and those herein      after mentioned.      3. LOAD/MAXIMUM DEMAND           I/We agree  to take  from  the      Andhra  Pradesh  State  Electricity      Board Electric  Power for a maximum      load not  exceeding......KVA  which      shall  b   e  taken  to  be  my/our      contracted demand for our exclusive      use   for    the   purposes   above      mentioned,          at          our      Mills/Factory/premises     situated      at..................My/our      contracted        load        shall      be..............Hp not  effect  any      change in  the  maximum  demand  or      contracted load.      4. RE-SALE OF ELECTRIC POWER           I/We  undertake   that;   I/We      shall not  sell  electrical  energy      obtained   under   this   agreement      without the  sanction in writing of      the Board.      5.  OBLIGATION   TO   COMPLY   WITH

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    REQUIREMENT OF  ACTS AND  TERMS AND      CONDITIONS OF SUPPLY:           I/We  further   undertake   to      comply with all the requirements of      the Indian  Electricity Act,  1910,      the Electricity  (Supply) Act, 1948      the Rules thereunder, provisions of      the tariffs  scale of Miscellaneous      and   General   charges   and   the      Mascellaneous and  General  charges      and the  terms  and  conditions  of      supply prescribed by the Board from      time to time and agree          ................          ................          ................           I/We hereby agree that if I/We      am/are found  indulging in their of      energy  or   any   malpractice   in      respect of use of electrical energy      I/We shall  pay additional  charges      as may be levied by the Board. I/We      also agree  that in  such an  event      the Board shall in addition to levy      of the additional charge have right      to disconnect supply of electricity      to my/our  premises for such period      as may be decided by the Board.                Signature of Consumer". IV NATURE OF AGREEMENT - STATUTORY OF CONTRACTUAL 20.  We have  already seen that Section 49 of the Supply Act empowers the Board to prescribe such terms and conditions as it thinks  fit for supplying electricity to any person other than a  licensee. The  section empowers  the Board  also  to frame uniform  tariffs for  such supply. Under Section 79(j) the  Board   could  have   made  regulation   therefore  but admittedly no  regulation has so far been made by the Board. The   Terms and  Conditions of  Supply were notified in H.P. Ms. No.  690 dated  17.9.1975  in  exercise  of  the  powers conferred by  Section 49  of the  Supply Act. They came into effect from  20.10.1975. They  were made  applicable to  all consumers availing supply of Electricity from the Board. The section in  the Act does not require the Board to enter into a contract  with individual consumer. Even in the absence of an individual  contract, the  Terms and Conditions of Supply notified by the Board will be applicable to the consumer and he will  be bound  by them.  Probably in  order to avoid any possible plea  by the  consumer that  he had no knowledge of the Terms  and Conditions  of Supply,  agreements in writing are entered with each consumer. That will not make the terms purely contractual.  The Board in performance of a statutory duty  supplied   energy  on   certain  specific   terms  and conditions  framed   in  exercise   of  a  statutory  power. Undoubtedly  the  terms  and  conditions  are  statutory  in character and they cannot be said to be purely contractual. 21.  In Punjab  State Electricity  Board Versus  Bassi  Cold Storage, Kharar  and Another  1994 Supp (2) S.C.C. 124, this court held  that  the  conditions  of  supply  are  akin  to subordinate legislation. 22.  In Bihar  State Electricity  Board  and  Others  Versus Parmeshwar Kumar  Agarwala and  Others (1996)  4 S.C.C. 686, the court  held that  they are  part of  statutory terms and conditions. In para 16 of the judgment the court said :           "Before  we   advert  to   the      effect  produced   by  a   combined

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    reading of  the  four  clauses,  it      deserves to be pointed out that the      terms    and     conditions    have      sacrosanctity, in  that Rule  27 of      the Indian Electricity Rules, 1956,      framed by  the Central  Electricity      Board in  exercise of  power  under      Section 37  of 1910  Act has,  read      with Annexure  VI thereof, provided      the  model   conditions  of  supply      which are required to be adopted by      the State  Boards.  It  is  on  the      basis       of   this   statutorily      prescribed  model,   with  suitable      variations, that  energy  had  been      supplied  by   the  Board   to  the      consumers. The model conditions can      be said  to be  akin to  the  model      Standing   Orders   prescribed   by      Industrial   Employment   (Standing      Orders)  Act,   1947,  which,  when      terms  and  conditions  of  service      between the  employer and employees      and they  govern  the  relationship      between the  parties,  as  held  in      Workmen V.  Firestone Tyre & Rubber      Co. of India (P) Ltd., SCC at p.832      (1973)  1   S.C.C.  813.   We   are      inclined to  think that  similar is      the effect of terms and conditions,      on which  a  State  Board  supplies      energy to the consumers". 23.  Learned counsel  for the consumers has referred to Shri Vidya Ram  Misra Versus  Managing Committee, Shri Jai Narain College (1972)  1 SCC  623. In  that case Statute 151 framed under the  Lucknow University  Act, 1920  provided that  the terms and  conditions  of  service  of  a  teacher  must  be incorporated in  the contract to be entered into between the teacher concerned  and t  he college.  Hence the  court held that the  terms and  conditions mentioned in Statute 151 had proprio vigore  no force  of law.  That  decision  has    no relevance here. 24.  The ruling  in  Executive  Committee  of  Vaish  Degree College. Shamli  and others Versus Lakshmi Narain and others (1976)  2   SCC  58   cited  by   learned  counsel   has  no applicability as  the court  found on  the  facts  that  the Executive Committee was not a statutory body. 25.  We are  unable to uphold the view expressed by the Full Bench in  the judgment  under  appeal  that  the  terms  and conditions of  supply are purely contractual. In our opinion the  Terms   and  Conditions  of  Supply  are  statutory  in character. V. The Supply Act 26.  It is  contended  that  Clause  39  of  the  Terms  and Conditions of  Supply falls  outside the  power conferred on the Board in Sec. 49 of the Supply Act. According to learned counsel the  power of  the Board  to impose  such terms  and conditions as  it thinks  fit, is  expressly made subject to the other  provisions of  the Act which means that the Board can impose  only such  conditions as  may  be  found  in  an agreement between  other ordinary  licensees and  consumers. The  contention   is  that  the  Board  can  neither  define ‘malpractices’ nor  prescribe an  adjudicatory machinery for assessing and  levying  penal  damages.  Such  matters  are, according to counsel, essential legislative functions. Which

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cannot be delegated to the Board. 27.  We are  unable to  accept the  contention.  Section  49 empowers the  Board to supply electricity on ‘such terms and conditions as  it thinks  fit’. It  may also  frame  uniform tariffs. We  have found  that the  terms and  conditions  of supply are  statutory in  character. They can be invalidated only if  they are  in conflict with any provision of the Act or the  Constitution. Learned  counsel have  not shown to us any provision  in the  Supply Act with which Clause 39 is in conflict. In so far as the Supply Act is concerned, argument hovers around  Section 49  only. The only limitation in that Section is  that the terms and conditions of supply should b e subject  to the  provisions of the Act. Clause 39 does not violate any provision in the Supply Act. It is the statutory duty of  the Board  to arrange for the supply of electricity throughout the  State and  for transmission and distribution of the same in the most efficient and economical manner. For that purpose  it has necessarily got to prevent unauthorised user, pilferage  or malpractices by the consumers. Hence the necessary safeguards  have to  be provided  as part  of  the conditions of  supply so that the consumers will be bound by them. While  on the  one hand,  the Board  has to recoup the loss suffered  by such  pilferage or other malpractices., it has  also   on  the   other  got  to  stop  immediately  the continuation thereof.  Hence the  terms  and  conditions  of supply have to provide for compensation as well as immediate disconnection. For  ascertaining the  loss  and  fixing  the compensation, uniform  procedure has  to  be  framed  and  a machinery constituted.  Clause 39  is only doing that. Every consumer is  made fully aware of the said terms and he signs the contract  only on that basis. He gives an undertaking in that  contract   that  if  he  is  found  indulging  in  any malpractice etc.  he shall  pay additional charges as may be levied by  the Board  and that  t he Board have the right to disconnect supply  of electricity  to his  premises for such period as may be decided by the Board. 28.  Learned  counsel   for  the  consumers  has  drawn  our attention to Powell Versus May (1946) All E.R. 444 wherein a bye-law made by the local country council was struck down as ultra vires the powers of the council as it was repugnant to the provisions  of  certain  statutes.  The  ruling  has  no application here. 29.  Strong reliance  is  placed  on  the  decision  of  the Queen’s Bench  Division in  Commissioners of  Customs    and Excise Versus  Cure & Deeley Ltd. (1961) 3 All E.R. 641. The Commissioners  of  Customs  and  Excise  were  empowered  by Section 33  (1) of  Finance Act  1940  to  make  regulations providing for  any matter  for which  provision ’appears  to them necessary"  for the  purpose of  "giving effect to" the statutory  provisions  relating  to  purchase  tax  "and  of enabling them  to discharge their functions thereunder". The Commissioners  made   the  Purchase  Tax  Regulations  1945. Regulation 12  provided that if any person failed to furnish a return  as required  by the  regulation the  Commissioners might determine  the amount  of tax appearing to them to b e due and  demand payment  thereof which shall be deemed to be the proper  tax. The  Court held that the said Regulation 12 was ultra  vires on three grounds :(i) It was no part of the functions  assigned   to  the   Commissioners  to   take  on themselves the  powers of  a High  Court  Judge  and  decide issues of fact and law as between the Crown and the subject; (ii) It  renders the  subject liable  to pay such tax as the Commissioners believed  to  be  due,  whereas  the  charging section impose a liability to pay such tax as in law is due" (iii) It was capable of excluding the subject from access to

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the courts and of defeating pending proceedings. 30.  The ruling  does not  help the  consumers in this case. The impugned  Clause 39  does  not  suffer  from  the  vices mentioned above.  No doubt, Clause 39.10.6 provides that the order on  appeal shall  be final subject to Clause 39.11 and not liable to be questioned in any Court of Law. But learned senior counsel for the Board, Mr. Shanti Bhushan, has fairly conceded that  the orders are subject to judicial review and the jurisdiction  of Courts  cannot be  taken away  by  that Clause. It  is to be noted that the trial court and the High Court and  the High  Court have  in  this  case  upheld  the jurisdiction of  the civil  court to entertain the suit an d consider the  validity of  the orders  passed  by  he  Board against the consumers. 31.  Reliance is  placed on  the decision  in Indian Express Newspaper (Bombay)  pvt. Ltd.  and others  etc. etc.  versus Union of  India &  others etc.etc.  (1985) 1  S.C.C. 641  to support the  argument that  Clause 39  is in  breach of  the principle of  delegated Legislation.  According  to  learned counsel the terms and conditions of supply may tantamount to a subordinate  legislation but  it must yield to the plenary legislation and that the Supply Act never intended to confer powers on  the Board  to frame  such terms and conditions of supply including  the power  to adjudicate a dispute between itself and  the consumer  and assess  the damages.  We  have already adverted  to the  provisions of  Section 49  of  the Supply Act  and pointed  out that the power conferred on the Board is not circumscribed by any limitation other than that it should  not contravene  the provisions of the Act. We are of the  opinion that  Section 39  is not  violative  of  any provisions of the enactment. 32.  In Jiyajeerao  Cotton Mills  Ltd. &  Anr, Versus Madhya Pradesh Electricity Board & Another 1989 Supp. (2) S.C.C. 52 the court held that the Board has powers under Section 49(1) and   (3) to  levy higher  charges for excess consumption of electricity and  it is  not essential  for the Board to make regulations indicating the basis for such levy before making the demand. 33.  Our attention  has been  drawn to  Agricultural  Market Committee Versus  Shalimar Chemicals  Works  Ltd.  (1977)  5 Supp. S.C.C.  516 in  which it has been held that a delegate while making subsidiary rules or regulations cannot widen or restrict the  scope or  t he Act or the policy or principle. The proposition has no application in the present case as we have found that the Board has not in any way violated any of the  provisions   of  the  Act  by  framing  the  terms  and conditions of  supply including  Clause 39.  Hence we reject the contention  that Clause 39 is ultra vires the provisions of the Supply Act. VI. The Electricity Act 34.  It is  vehemently argued  that provisions  in Clause 39 run counter  to the  relevant provisions  of the Electricity Act. In  particular, it  is said that Clause 39.1 covers the same field  as that  of ss.21  (4) and  26 (6)(b) and Clause VI(3) of  the Schedule in the said Act. According to learned counsel malpractice  and pilferage defined in CI.39 would be covered by  the aforesaid  provisions of  that Act  and  the authority to  decide the  same is  the Electrical  Inspector appointed by  the Government  and not  he  officers  of  the Board. It  is also  argued that  Clause 39.2  and  39.3  are contrary to Sec.20 of the Act and Clause 39.4 is contrary to Sec. 36  of the  Act read  with Rules  4 to  6 of the Indian Electricity Rules.  According to learned counsel, the entire clause 39  is violative of the provisions of Clause VI(I) in the Schedule to the Electricity Act as the latter enjoins on

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the Board  to continue the supply of electricity ‘save in so far as  prevented  by  cyclone,  floods,  storms  and  other occurrences beyond  its control. In short, the contention of the learned  counsel for the consumers is that the procedure prescribed in  the Electricity Act and the Rules would apply to all  situations arising between he Board and the consumer and the  same should be followed. According to him Clause 39 is invalid  and unenforceable in as much as it deviated from the provisions of the Electricity Act and the Rules. 35.  We  are   unable  to   accept  any   of  the  aforesaid contentions. We have carefully perused the provisions of the Electricity Act and we find that those provisons provide for a  different  situation.  Clause  39  will  come  into  play whenever there  is malpractice  or pilferage  on the part of the  consumer  or  a  fraud  played  by  the  consumer.  The Electrical Inspector  has no jurisdiction to deal with those matters. He  can  be  approached  only  w  hen  there  is  a defective meter  or any  defect in wries, fittings, works or apparatus. As  regards, CI.  (VI) of  the  Schedule  to  the Electricity Act,  it is  not applicable  unless distribution mains have  been laid  down under  the provisions  of Clause (IV) or  Clause (V)  and the  supply of energy through those mains of  any of  them  has  commenced.  The  provisions  of Section 26  of the  Supply Act  exclude the applicability of Clauses (1)  to (V)  of the schedule tot he Board. Hence CI. (VI) of  the schedule cannot by itself apply and that is why the second proviso to Section 26 clarifies the position that the provisions of Clause (VI) of the Schedule shall apply to the Board  in respect  of that  area only where distribution mains have  been laid by the Board and the  supply of energy through any  of them has commenced. The records before us do not disclose  any pleading on the part of the consumers that the requirement  of the  second proviso  to Section  26 have been satisfied.  No question  has been raised in that regard before the trial court. No doubt, the Full Bench of the High Court has placed reliance on Clause (VI) of the Schedule and the grounds  raised in  the Special  Leave Petition filed by the Board  do not refer to the same. But in the absence of a specific pleading to t hat effect it cannot be presumed that Clause (VI)  of the Schedule would apply. Even assuming that clause  applied,  it  will  not  alter  the  situation.  The difference or  dispute referred  to in sub-cl.(3) of CI.(VI) will  not  cover  fraudulent  malpractice  or  pilferage.  A perusal of  the said  sub/clause makes  it evident  that the matter shall  be referred to an Electrical Inspector only in cases of  defects mentioned  therein and  not otherwise.  We have no  hesitation to  reject  the  contention  of  learned counsel for  the consumers  and hold  t hat he provisions in clause  39   do  not   contravene  the   provisions  of  the Electricity Act. 36.  In State  of U.P. and others Versus Hindustan Aluminium Corpn. and  others (1979)  3 S.C.C. 229 the Court considered the  expression  "regulating"  in  Section  22  (b)  of  the Electricity Act  and observed  that the word "regulate" does not  include   prohibition.  The  ruling  has  no  relevance whatever in  the present  case. In  Andhra Pradesh  Carbides Ltd. and  another versus  Andhra Pradesh  State  Electricity Board, Hyderabad  and others  AIR 1986  Andhra Pradesh  37 a Single Judge  of the  Andhra Pradesh  High Court  held t hat regulations made  under the  Supply Act shall not be covered by Section 70 thereof and that Section 49 read with  Section 70 of  the said  Act does  not  empower  the  provisions  of Section 24 of the Electricity Act. The ruling has no bearing in the  present case  as we have found that Clause 39 of the Terms  and  Conditions  of  Supply  do  not  contravene  the

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provisions of either Act. 37.  In M.P.E.B.  and others versus Smt. Basantibai 1988 (1) S.C.R 890  this Court  held that  a  dispute  regarding  the commission of fraud in tampering with the meter and breaking the body-seal  is one outside the ambit of Section (26(6) of the  Electricity   Act  an   Electrical  Inspector   has  no jurisdiction to  decide such  cases of fraud. This Court has clearly pointed  out that under Section 26(6) if the dispute is as to whether the meter is or is not correct, it is to be decided by  the Electrical  Inspector. We  are  entirely  in agreement with that judgment. 38.  In Municipal  Corporation of Delhi versus Ajanta Iron & Steel Company  (Pvt.) Ltd.  (1990) 2  S.C.C. 659  this court found that there was a provision in the agreement between he Delhi Electric  Supply  Undertaking  and  the  consumer  for service of  notice as  a  pre-requisite  for  disconnection. Hence this  Court upheld the decree for mandatory injunction directing restoration  of supply of electricity discontinued during the  pendency of  the  suit  without  issue  of  such notice. 39.  In M.P.  Electricity Board,  Jabalpur and others Versus Harsh Wood  Products and  Another (1996)  4 S.C.C.  522  the Court held  that Section  24 of  the Electricity  Act  would apply to  a case  of regular supply made and prior demand of payment of  electricity charges  and it  does not  apply  to demand to  detection of  pilferage.  The  court  upheld  the validity of  similar conditions of supply of electricity and held that on a prima facie conclusion of power-theft reached by the  authorities, it  was not  necessary to  give further hearing to  the consumer  and the  action taken by the Board disconnecting the supply was not violative of Article 20 (1) and 14  of the  Constitution and  the principles  of natural justice.  We  are  in  agreement  with  the  view  expressed therein. 40.  In Belwal  Spinning Mills  &  Ors,  Versus  U.P.  State Electricity Board  and another (1977) 6 S.C.C. 740 the Court dealt with the provisions of Sections 26(6) and 26(7) of the Electricity Act  alongwith Section  20 thereof. A perusal of the judgment  shows that  the Bench was of the view that the provisions of  Section 26  would apply only when the dispute related to  the correctness  of the  meter. That ruling also supports the contention of the Board in this case. VII. Article 14, Constitution of India. 41.  What remains  to be  considered is  whether Clause 3 is violative of  Article 14 of the Constitution of India. Under this head,  the argument of learned counsel for consumers is that the  provisions in  the clause  are wholly unreasonable and against  the principles of Natural Justice. According to them, the  clause enables  the officers  to  disconnect  the service on  a suspicion  of malpractice and the consumer has to pay  50% of  the  provisional  assessment  amount  before getting it restored. It is also contended that the officials of the  Board are  enabled to  judge its  own cause  and the doctrine  of   bias  will   apply.  In   support  of   these contentions, our attention is drawn to : 1.   J. Mohapatra and Co. and Another versus State of Orissa and Another  (1984) 4 S.C.C. 103. 2.   State of  Karnataka versus Shree Rameshwara Rice Mills, Thirthahalli, (1987( 2 S.C.C. 160. 3.   Krishna Bus  Service Pvt.  Ltd. versus State of Haryana and Others, (1985) 3 S.C.C. 711. 4.   Rattan Lal  Sharma versus  Managing Committee, Dr. Hari Ram  (CO-education)  Higher  Secondary  School  and  Others, (1993) 4 S.C.C 10. 5.   LIC of  India and  Another versus  Consumer Education &

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Research Centre and Others, (1995) 5 S.C.C. 482.      None of  the ruling  will apply  in this  case. We have already referred  to the  judgment of  this  court  in  M.P. Electricity Board,  Jabalpur  and  others  versus  Harshwood Products Case  (1996) 4  S.C.C. 522 wherein it was held that when power  theft was  found  by  the  officials,  immediate disconnection of  the supply was not violative of Article 14 of the  Constitution and principles of Natural Justice would not apply. 42.  In  Petal   Parshottamdas  Vanmalidas,  versus  Gujarat Electricity Board  and another,  AIR  1987  Gujarat  188,  a Division Bench  of Gujarat  High  Court  considered  similar conditions and upheld their validity. The Bench said :      "Thus, it  is clear  that the Board      has formulated  such a condition in      order to  safeguard  its  interest.      Such a  condition is  there for the      purpose  of  checking,  apart  from      other   things,    the   theft   of      electricity. It  is not  a case  of      any defective  meter, but  it is  a      case of theft of electricity by the      consumer concerned.  As a matter of      fact, in  this case  it is  alleged      that the petitioner, by inserting a      plastic strip, was able to stop the      running of  the  meter and thereby,      committed theft of electricity. The      condition clearly  states as to the      procedure that  has to  be  adopted      for the  purpose of questioning the      departmental  action   in   levying      penal charges.  It  has  also  been      made clear  in the condition as tot      he limit  to which  the  Department      can go for the purpose of assessing      the theft  of  electricity.  In  no      case the Department can go beyond a      period of  six months, according to      this condition.  In  Condition  No.      34, we  are able to see that manner      of   assessment   also   has   been      specified. It  all these  steps are      taken  by   the   Department,   the      condition itself  states  that  the      consumer has  a remedy by filing an      appeal to the appropriate authority      within a  specified time.  Thus,  a      conjoint reading  of this Condition      and the  purpose for  which  it  is      intended, clearly  makes  out  that      such a  condition is  not arbitrary      or  unreasonable,  but  within  the      powers of  the Board  and,  in  our      opinion, it  does not offend any of      the Articles  of the  Constitution.      The argument  as if  the imposition      of penal  assessment before  filing      an appeal  is harsh  and makes  the      appeal    illusory     cannot    be      appreciated. The  penal assessment,      as  we   have  stated  already,  is      restricted  to  a  limited  period.      Such an  assessment was  made after      the Department itself was satisfied

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    with  regard   to  the   theft   or      electricity   committed    by   the      consumer   concerned.   Hence,   it      cannot  be  said  that  the  appeal      provided under  Condition No. 34 is      an illusory one". We agree with the above opinion. 43.  The principle  ‘Nemo Judex in Cause Sua’ will not apply in this  case as  the officers have no personal its with the consumers. A s pointed out by learned senior counsel for the Board,  they   are  similar  to  Income  Tax  or  Sales  Tax Officials. There  is nothing wrong in their adjudicating the matter especially  when the consumers many be represented by an  advocate   and  the   formula  for   making  provisional assessment is  fixed in  the clause  itself. As argument has been advanced  that  the  Board  has  recently  deleted  the provision enabling the consumer to be represented by a power of attorney  agent. it  is contended  that the  consumer  is thereby deprived of the assistance of an expect which may be required in  technical matters.  We do  not agree.  When the consumer is  represented by  a lawyer,  he can certainly get such assistance as may be needed from a technical expert. It is stated  by the Board’s learned counsel that the provision was deleted  as there  was  frequent  misuse  of  the  same. Whatever may  be the  reason for deleting the provision, the existing part  of the  clause enables  the  consumer  to  be represented by an advocate. That is sufficient safeguard for the consumer. 44.  Learned counsel  for the  consumer  contends  that  the agreement with the Board is in the standard form and signing of the  same by  the consumer  will  not  prevent  him  from questioning it.  He places  reliance on certain observations in Pawan  Alloys &  Casting Pvt.  Ltd., Meerut  versus  U.P. State Electricity  Board and Others (1997) 7 S.C.C. 251. The question in that case arose on the withdrawal of development rebate to  the new  industries for  a period of three years. The court  held that  the principle  of promissory  estoppel applied on  the facts  and circumstances  of the case and by entering into  the standard  agreement containing  provision for revision  of "rate  schedule" from  time  to  time,  the consumer had  not given  up his  claim for  the rebate for a period of  three years  as per  the promise  held out by the Board. That case has no bearing here. VIII.  CONCLUSION 45.  In the result, we uphold the judgment and decree of the High Court  in   C.C.C.A.No. 38  of 1982  and dismiss  Civil Appeal No.  2558 of 1988. We allow Civil Appeal Nos. 7139 to 7144 of 1997 and set aside the judgment of the Full Bench of the High Court. The Writ Petitions and Writ Appeals shall be disposed by  the High  Court in  the light of this judgment. The parties will bear their respective costs.