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CASE NO.: Appeal (civil) 2247  of  2001 Appeal (civil)  2248     of  2001

PETITIONER: M/S. K. D. INDUSTRIES

       Vs.

RESPONDENT: BIHAR STATE ELECTRICITY BOARD & ORS.

DATE OF JUDGMENT:       21/03/2001

BENCH: S. Rajendra Babu & S.N. Variava.

JUDGMENT:

S. N. VARIAVA, J. L...I...T.......T.......T.......T.......T.......T.......T..J Leave granted.

   In  these  Appeals the only question urged before us  is whether  low  tension  industrial   users  are  entitled  to exemption  from payment of minimum guarantee charges as  per the  Industrial Policy framed by the Government of Bihar  in 1995.   In  the Appeal arising from SLP 17210 of 2000  other questions  are  also raised.  However they are  not  pressed before  us.  The relevant portions of the Industrial  Policy read as follows:

"9.4 PRIORITY TO INDUSTRIAL CONNECTION

   With  a  view  to  facilitating timely start  up  of  an industrial project, over-riding time bound priority would be given to L.T./H.T.  Industrial connection.

9.5 POWER TARIFF

   Power tariff would be reviewed and simplified to provide power  at  tariff  comparable with  neighbouring  states  to industrial units.

9.6 POWER INCENTIVE

   - exemption from payment of minimum guarantee charge for new industrial units having connected load upto 500 KVA

   - exemption from Electricity Duty for 5 years on captive power  generation  upto  25 MW for own  consumption  to  new industrial units.

   -  loads upto 99 H.P.  to be made available on L.T.  for new connection to industrial units.

   -  special  arrangements for expeditious  clearance  for rebate for non supply of power to industrial undertakings."

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   Pursuant  to  this  Policy   the  Respondents  passed  a Resolution  dated 11th October, 1996.  The relevant  portion reads as follows:

   "The  Board  in its 443rd meeting, vide  Resolution  No. 6917,  has decided to implement the directive issued by  the State Government under Section 78A of the Electricity Supply Act,  1948  by  Resolution No.  3493 dated 3.9.1996  of  the Department of Energy.

   Accordingly, the following benefits will be given to the consumers:

   1.   Units which come into production during 1.4.1993 to 31.8.2000    and    the      defined    units    undertaking expansion/diversification,  whose connected load is upto 500 (five  hundred)  KVA, are exempted from payment  of  Minimum Guarantee (Minimum Base Charge) for five years from the date of connection."

   The  Appellants  in  both  these  Appeals  have  set  up industrial  units  in  the State of Bihar.  They  have  been given  low  tension connections.  However, in spite  of  the policy  decision granting exemption from payment of  minimum guarantee  charges they were forced to pay minimum guarantee charges.   Therefore,  they challenged the levy  of  minimum guarantee  charges.  Their Petitions came to be dismissed by the  single Judge of the High Court.  M/s.  K.D.  Industries also  filed  an  Appeal  which has  been  dismissed  by  the Division  Bench of the High Court at Patna.  The  Appellants have thus filed these Appeals.

   Mr.  Sinha submitted that Para 9.4 shows that the Policy applies  both  to  low  tension  as  well  as  high  tension industrial  connections.  He submitted that Para 9.6 had  to be read with Para 9.4.  He submitted that a joint reading of the  two paragraphs shows that the exemption is not just for high   tension   connections  but   also  for  low   tension connections.

   On the other hand, Mr.  Reddy submitted that low tension connections  are always referred to in terms of Horse  Power (H.P.), whereas high tension connections are always referred to   in  terms  of  KVA   basis.   He  submitted  that   the Government’s  Policy  granted  exemption,  from  payment  of minimum  guarantee charges, only to connections having  load upto  500 KVA.  He submitted that this itself made it  clear that it was only in respect of high tension connections.  He submitted  that  this was further clear from fact that  Para 9.6  itself provides that load upto 99 H.P.  was to be  made available  on  low tension for new connections.   He  relied upon  the  Tariff  Notification issued by  the  Bihar  State Electricity Board.  From this he pointed out that in respect of  high  tension  connections   "minimum  base  charge"  is collected,  whereas from low tension connections a  "minimum guarantee charge" is collected.

   We  have considered the submissions of the parties.  The question which arises for consideration is whether the State Government,  in its policy direction, was granting exemption from  payment  of  minimum guarantee charges  only  to  high tension connections or it was granting exemption even to low tension connections.  The Government would be the best party to  answer this question.  We have been shown an Order dated 10th  September,  1997 in C.W.J.C.  No.  3241 of  1997.   In

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this case also the question was whether under the policy the low  tension  connections  were  exempted  from  payment  of minimum  guarantee  charges.   The  Court  called  upon  the Additional  Advocate General to seek clarification from  the Government.    The  Government  then   clarified  that   the Industrial  Policy did not make any distinction between high tension  and  low  tension   connections.   The   Government clarified that subject to other conditions of the Policy all units  having  connected loads upto 500 KVA were covered  by the exemption.  The Government having so clarified it is now not  open  to contend that the Government’s Policy  did  not grant exemption to low tension connections.  Even otherwise, in  our view, the provisions of Paras.  9.4 and 9.6 have  to be  read  together.  A conjoint reading makes it clear  that the  Government  is  aware  that   there  are  low   tension connections  and high tension connections.  Whilst  granting exemption  the Government is not specifically excluding  low tension  connections.  Even in Para 9.6, when the Government wants  to  refer to low tension connections it  specifically does  so.   Thus  the  only conclusion can be  that  if  the Government  wanted  to exclude low tension connections  they would  have  specifically  done so.  The words used  in  the policy  direction  are "minimum guarantee  charges".   Thus, even  on basis of Mr.  Reddy’s submission this must apply to low  tension  connections.   We  see  no  substance  in  the argument  that low tension connections are only referred  to in terms of HP.  We have seen the Tariff Notification issued by  the  Respondents.   The   Tariff  Notification  contains conversion  tables for converting Kilowatts into  Kilovolts, Kilovolts  into Horse Power, Horse Power into Kilovolts etc. Therefore,  these are convertible terms.  This is clear from the  Tariff  Notification  which   inter  alia  provides  as follows:

   "LOW  TENSION  INDUSTRIAL  AND MEDIUM  POWER

   (SYMBOL :  LTIS)

1. Applicability:

   (i)  For  use of Electrical motors and other  industrial appliances and medium power of less than 80 HP.  If consumer desires  to  take  more than one LT connection in  the  same premises the total installed load shall be below 80 HP.  The use  of  Arc  Welding Set, Electric Motors in  Public  Water Works,  Flour Mills, Oil Mills, Dal Mills, Rice Mills,  Atta Chaki  Hullers,  Spellars, etc.  will also be covered  under this category.

   (ii)  Existing  consumer having load of 80 HP and  above will  be  charged at rates applicable to  HTS-1."  (Emphasis supplied)

   Thus  it  is  to be seen that  low  tension  connections having  loads  upto  80  Horse Power and  above  remain  low tension  connections  but  would then pay  charge  at  rates applicable to high tension connections.  It is this 80 Horse Power  which  has, in the Policy, been increased now  to  99 Horse  Power.  Even though they pay rates applicable to high tension connection, they are referred to in terms of HP.

   Faced  with this situation Mr.  Reddy submitted that the Respondents had not fully accepted the Government Policy and had  by  their  Resolution  dated 11th  October,  1996  only granted exemption to high tension connections.  He submitted

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that  this is made clear by the fact that in the  Resolution the  words used are "minimum base charge" and "for connected load  upto 500 KVA".  Mr.  Reddy relied upon Section 78A  of the   Electricity  Supply  Act,   1948  and  submitted  that Government  directions  were not necessarily binding on  the Respondents.   He  submitted  that   the  Respondents  could dispute  the direction issued by the Government.  He  relied upon  the  case  of Ester Industries Ltd.  v.   U.P.   State Electricity  Board reported in (1996) 11 SCC 199, wherein it is  held  that the State Government’s policy  direction  for grant  of developmental rebate at a specified rate to  newly set  up industries was not binding on the State  Electricity Board  and  that  the High Court could not  in  exercise  of powers  under Article 226 direct the Board to implement such direction.   He submitted that in this case the  Respondents had  chosen not to fully accept the policy direction of  the State Government and had accepted it only in respect of high tension  connections.  He submitted that the High Court  was right in refusing to grant any relief to the Appellants.

   We  see  no substance in this submission.  The Board  is accepting  the  Government’s  directions given to  it  under Section  78A  of  the  Electricity   Supply  Act.   In   its Resolution  it is granting exemption from payment of minimum guarantee  (minimum base charge).  The Respondents are  well aware  of the difference between low tension connections and high  tension  connections.   If, as is  claimed,  the  term "minimum  guarantee  charge"  is not used for  high  tension connections,  then they would not have used that term at all in  the Resolution if they wanted to restrict the  exemption to  high tension connections.  Advisedly they have used both the  terms  "Minimum Guarantee" and "Minimum  Base  Charge". This  itself shows that the exemption applied to both  types of  connections.   Respondents  have not  stated  that  such exemption  would not be granted to low tension  connections. In our view, the Respondents having adopted the direction of the  Government  are bound to comply with those  directions. So  long as the other conditions of the Police decision  are complied  with the exemption has to be for both high tension connections as well as low tension connections.

   In  this view of the matter, we set aside the Orders  of the  High Court and allow the Appeals on this point.  It  is not  disputed  that  Appellants are  otherwise  entitled  to exemption.    Thus  Respondents  must   now  repay  to   the Appellants  amounts  received as Minimum Guarantee  Charges, which  are in excess of payments due for actual consumption. Such  refund to be made within six weeks from today.  In the circumstances  of  the  case, there will be no Order  as  to costs.