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PETITIONER: MUNICIPAL CORPN. OF INDIA

       Vs.

RESPONDENT: ASIAN ART PRINTERS (P) LTD

DATE OF JUDGMENT23/09/1994

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) SEN, S.C. (J)

CITATION:  1995 AIR  196            1994 SCC  (6)  87  JT 1994 (5)   607        1994 SCALE  (3)919

ACT:

HEADNOTE:

JUDGMENT:                            ORDER 1.   Pursuant  to  the direction of the  Constitution  Bench contained in its judgment1 dated 9-9-1994, the bail petition was  posted  before us on 21-9-1994.  We  heard  Shri  Kapil Sibal,   learned  counsel  for  the  petitioner   and   Shri Natarajan, learned counsel for the respondent fully. 2.   We  are not inclined to enlarge the petitioner on  bail at  this juncture.  It is not necessary or advisable to  say more  than this at this stage.  The petition is  accordingly rejected. 3.   It  shall, however, be open to the petitioner to  renew his  request for bail before the Designated Court after  his defence evidence is adduced at the trial. 88 MUNICIPAL  CORPN.  OF DELHI v. ASIAN ART PRINTERS  (P)  LTD. (Jeevan Reddy, J.) The Judgment of the Court was delivered by B.P.  JEEVAN  REDDY, J.- Leave granted.  Heard  the  learned Attorney  General and Shri Ashwini Kumar for  the  appellant and Shri Harish Salve for the respondents. 2.   Common questions arise in these appeals.  For the  sake of convenience, we would refer to the facts in civil  appeal arising out of SLP (C) Nos. 14140-47 of 1991.  The appeal Is directed against the judgment and order of a Division  Bench of  the Delhi High Court dismissing the appeal preferred  by the  appellant,  Municipal Corporation of Delhi  (DESU)   as well  as the cross-objections preferred by  the  respondent. The  appeal and cross-objections were preferred against  the judgment  of a learned Single Judge of the Delhi High  Court dated  21-11-1990 allowing the petition  and a large  number of  similar  petitions  filed by the respondent   and  other consumers   under  Section  20 of the  Arbitration  Act  and referring  the dispute between the parties  to  arbitration. The  learned Single Judge directed further that pending  the arbitration proceedings before the Arbitrator, the  consumer

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shall  not be made to deposit the disputed amount.  It  was, however,  observed that in case it is ultimately  held  that the  consumer is liable to pay the said disputed amount,  he shall pay the same with interest @ 12% p.a. 3.   The  respondent is a consumer of electricity.   He  had applied for Mixed Load (HT) Connection for  ’non-industrial’ purposes.   The dispute between the parties is with  respect to the calculation of the tariff amount/consumption  charges payable by the respondent each month.  In short, the dispute pertains to interpretation of the relevant tariff  condition in  the  tariffs  notified under Section 283  of  the  Delhi Municipal  Corporation Act by the Municipal  Corporation  of Delhi (DESU) for the year 1990-9 1. The same are supplied to us,  as a printed booklet, by the learned Attorney  General, appearing for the appellant.  We shall briefly refer to  the relevant provisions therein. 4.   Under  the sub-heading ’premises’,  three  expressions, viz., ’premises’, ’industrial premises’ and  ’non-industrial premises’  are  defined.   The  respondent’s  premises   are admittedly ’non-industrial premises’.  Under the sub-heading "General  Conditions  of  Applications",  besides  providing certain  general  conditions,  a few  more  expressions  are defined.   Clause  (i) of the General Conditions  says  that supply  of  electricity  in  all cases  is  subject  to  the execution  of agreements including compliance of  commercial formalities.   Clause  (ii)  says that  "these  tariffs  are subject to the provisions of the ’Conditions of supply’  and ’Scale  of miscellaneous charges’ relating to the supply  of electricity  issued by the Undertaking or  any  modification thereof as are enforced from time to time and the Rules  and Regulations  made  or  any order issued  thereunder  or  any subsequent amendments or modifications thereof so far as the same  are  applicable".  Clause (iii) says  that  all  loads above 100 KW under any category of supply shall be given  on HT  Clause (iv) clarifies that "the  minimum  charges/demand charges  exclude  meter rent, electricity  taxes  and  other charges  which shall be charged separately as in force  from time  to  time  depending upon the  character  of  service". Clauses (v)  89 to   (viii)   define  the  expressions   ’connected   load’, ’sanctioned  load’, ’contract demand’ and  ’maximum  demand’ respectively.   Clause  (ix)  provides  that  wherever   the contract demand has been given in KW, the contract demand in KVA for tariff purposes shall be determined by adopting  the power  factor as 0.85. For the purpose of tariff rates,  the consumers  are  divided into domestic,  non-domestic,  mixed load  HT, small industrial power (SIP) and large  industrial power (LIP) categories.  Besides the above, separate  tariff rates  are  notified for agriculturists  and  certain  other consumers  with  whom  we  are not  concerned.   So  far  as domestic  supply is concerned, the character of  service  is single  phase  230  V  or three  phase  400  V.  The  tariff prescribed  is what may be called ’single part tariff’.   It is  @ 27 per cent per unit on first 100 units per month,  32 paise per unit on next 100 units per month and 75 paise  per unit on all consumption above 200 units per month.  This is, of  course, subject to minimum charges  prescribed  therein. In  the case of non-domestic LT supply, different rates  are fixed which we need not refer to. 5.   Now  coming  to  the Mixed Load HT with  which  we  are concerned, this is "available to consumers having  connected load  (other  than  Industrial  Loads)  above  100  KW,  for lighting,  fan,  heating and power appliances  in  all  Non- Domestic  establishments  as  categorised  in   Non-Domestic

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(Mixed  Load HT) tariff’, The character of service is AC  50 cycles, 3 phase, II KV The tariff mentioned under clause (c) and the ’minimum bill’ mentioned in clause (d)    may now be set out in full from page 13 of the booklet*:               "(c) Tariff.               Demand Charges:               Rs 40.00 per month per KVA or part thereof  of               the  committed load (as per load in  the  test               report)               Plus               Energy Charges:               67 paise per unit;               The  above shall be without prejudice  to  the               minimum  demand as laid down in (d) below  and               adjustment  clause  at (xviii)  under  General               Conditions of Application.               (d) Minimum Bill:               The  amount of the demand charges  based  upon               the KVA of billing demand." 6.   It is the interpretation of above two clauses  (c)  and (d)  which falls for consideration in these appeals.  Though it  is  not  strictly  relevant for  the  purpose  of  these appeals,  it has become necessary to notice the tariff  rate prescribed for large industrial power category inasmuch as a decision  rendered  by this Court with reference to  a  note appended to the LIP tariff *  We are referring to the pages of the booklet  because  of the confusing manner in which the several tariff  conditions are  enumerated.  This is being done to avoid any  confusion or mix-up between tariffs applicable to ’Mixed Load HT’  and the tariffs application to ’Large Industrial Power’(LIP). 90 rates  (affirming the decision of the Delhi High  Court)  is made the sheetanchor of the respondents’case which has  been upheld  by  the  learned Single Judge and  affirmed  by  the Division  Bench of the Delhi High Court in the orders  under appeal herein.  In the case of Large Industrial Power  (LIP) also, the character of service is AC 50 cycles, 3 phase,  11 KV.  The tariff for LIP category is mentioned in clauses (c) and  (d) occurring at page 16 of the booklet.  They read  as follows:               "(c) Tariff:               Demand Charges:               Rs 40 per month per KVA or part thereof of the               committed               load (as per load in the test report)               plus               Energy Charges:               (i)   First  5,00,000  units per month  at  85               paise per unit.               (ii)  All above 5,00,000 units per month at 84               paise per unit.               Subject to:               a maximum overall rate of Rs 1.10 per KWH only               for bona fide use of supply without  prejudice               to  minimum payment as laid down in  item  (d)               below  and adjustment clause at (xviii)  above               under General Conditions of Application.               (d) Minimum Bill:               The  amount  of demand charges will  be  based               upon  the  KVA of the committed load  (as  per               load in the test report)."               A  Note is appended to the  above  provisions.               It is applicable to furnaces only.               It reads:

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             "Note.-In  the  case of  furnaces,  the  above               tariff  and stipulations of LIP will  also  be               applicable with further provision of clause of               Minimum Consumption Guarantee @ Rs 340 per KVA               or  part thereof per month." (Printed at  page               18 of the booklet.) 7.   Now  coming back to the tariff rate for the Mixed  Load HT (other than industrial load) with which we are  concerned herein clauses (c) and (d) set out hereinbefore (at page  13 of  the booklet) provide for a two-part tariff.   The  first part  comprises  of demand charges and the  second  part  of energy  charges.  The demand charges are calculated @ Rs  40 per month for KVA or part thereof of the committed load  (as per  load in the test report) while the energy  charges  are calculated @ 67 paise per unit.  In other words, the  tariff amount  shall be determined as an amount which is the  total of  demand  charges plus- energy charges.  This  is  evident from the word ’plus’ occurring between the two items,  i.e., between  demand charges and energy charges.  Having  so  set out  the  above formula, clause (c) further says  that  "the above  shall be without prejudice to the minimum  demand  as laid  down  in (d) below and adjustment  clause  at  (xviii) under  General  Conditions of Application".   It  is  agreed between  the parties that the adjustment clause  at  (xviii) under General Conditions of Application is not relevant  for our purposes.  Now  91 what  do the words "the above shall be without prejudice  to the minimum demand as laid down in (d) below" signify?   The words   "without  prejudice"  indicate  that   the   formula indicated in clause (c) is unaffected by what is stated in clause (d).  Clause (d) reads: "Minimum Bill: The amount  of the demand     charges   based  upon  the  KVA  of   billing demand." 8.   The  main dispute between the parties  revolves  around the  meaning  and purport of clause (c).  According  to  the respondent-consumers,  it says "first ascertain  the  demand charges @ Rs 40 per month per KVA; then ascertain the energy charges @ 67 paise per unit actually consumed; if the energy charges are less than the demand charges, demand charges  in full are  payable; if the energy charges and demand  charges are equal, only the demand charges are payable; if, however, the energy charges exceed the demand charges, then only  the energy charges are payable inasmuch as  demand  charges  get merged with energy charges". 9.  On  the  other hand, the  appellant-supplier  says  that clause (c) provides for  a two-part tariff; both the  demand charges  and energy charges have to be calculated  according to  the formula prescribed in clause (c) and then both  have to be added together; the total so arrived at is the  tariff charges  payable by the consumer; this is the plain  meaning of the clause as disclosed by the  use  of the  word  ’plus’ between demand charges and energy charges. 10.  It  would be seen immediately that  the  interpretation placed  by  the respondent-consumers on clause (c)  has  the effect of completely overlooking        and  nullifying  the expression ’plus’ in clause (c). According to the respondents’ interpretation, it ceases to be a two-part tariff. It indeed amounts  to  rewriting  the  clause.  If  the   respondents’ interpretation  is  to be accepted, the clause  should  read like this:               "Demand Charges:               Rs 40.00 per month  per KVA or part thereof of               the  committed load (as per load in  the  test               report)

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             or               Energy Charges:               67 paise per unit,               whichever is higher." 11.  We  do not think that such a course is  permissible  to us.  When clause (c)     says  that the charges payable  are demand  charges plus energy charges, it means just that;  it cannot  mean demand charges or energy charges  whichever  is higher.   The words in clause (c) to the effect  "the  above shall  be without   prejudice to the minimum demand as  laid down  in  (d)  below..." make no  difference  to  the  above understanding.   Clause  (d) carries  the  heading  "Minimum bill".   It reads: "The amount of the demand  charges  based upon  the KVA of billing demand." This only means that  even in  case there is no consumption, the minimum bill shall  be the  demand  charges  based upon the   KVA  of  the  billing demand.  It may be reiterated that according to clause  (c), the  formula prescribed therein (demand charges plus  energy charges) is "without prejudice to the minimum demand as laid down in (d) below".  In 92 the  face of these words, it is not possible to read  clause (d)  as modifying or cutting down the meaning or purport  of the  formula contained in clause (c).  Clause (d)  does  not purport to do any such thing.  All that it says is that  the demand  charges  based upon the KVA of  the  billing  demand shall  at  any  rate represent the minimum  bill.   We  are, therefore, of the opinion that clause (c) of the Mixed  Load HT  is not capable of any other interpretation than the  one placed by us and that it admits of no ambiguity  whatsoever. The language is clear and not susceptible of any  reasonable doubt. 12.  The case of the respondent-consumers is based not  upon the  language  of  clauses  (c) and (d)  but  entirely  upon certain observations made     by  the Division Bench of  the Delhi High Court in Gulab Rai v. Municipal Corpn. of  Delhi1 and  the  decision of this Court in Ashok  Soap  Factory  v. Municipal Corpn. of Delhi2 affirming the same on appeal.  It has,  therefore,  become  necessary  to  examine  the   said decisions  in particular the decision of this Court  closely to  ascertain  their  ratio and  the  principles  enunciated therein. For the sake of convenience, we shall refer to  the decision of this    Court in Ashok Soap Factory2. 13. The challenge in the writ petitions (filed in the  Delhi High   Court)  was  to  the  resolution  of  the   Municipal Corporation of Delhi whereby it    approved the proposal  of the  Delhi  Electricity Supply Committee (DESC)  to  enhance "minimum  consumption guarantee charges" from Rs 40 per  KVA to   Rs  340 per KVA in respect of  arc/induction  furnaces. Arc/induction furnaces   are necessarily units having  Large Industrial Power connections. Arc  furnaces          consume electricity in bulk, i.e., in very large quantities. Many of these   furnaces  were  indulging  in   several   fraudulent practices and were  showing very low consumption than  their capacity and working warranted. It had  become necessary  to check  these  malpractices which were  causing   substantial financial loss to the Corporation. With a view to remedy the situation, the demand charges in the case of furnaces  alone was raised from     Rs  40  per  KVA to Rs 340  per  KVA  by virtue of the note referred to above. In     the case of all other  LIP  service-holders, the said  enhancement  was  not applicable. It is the said enhancement which was  questioned by the furnace holders in writ petitions filed in Delhi High Court. The contentions raised by  them, as may be culled out from the judgment of this Court in Ashok Soap Factory2,  are

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the following: (1)  The decision to increase minimum charges, i.e.,  demand charges   is  contrary  to  Section  21(2)  of  the   Indian Electricity  Act,  1910. Without the approval of  the  State Government,  no  such enhancement could have  been  effected (vide paras 16 and 17). The contention was rejected by  this Court  in  paragraphs  22  and 23  holding  that  where  the licensee is the local authority, the said requirement is not attracted. (2)  The minimum guarantee charges can only be levied  under the  proviso  to Section 22 of the Indian  Electricity  Act, 1910. In other words, the licensee 1    AIR 1990 Del 249: 42 (1990) DLT 121 2    (1993) 2 SCC 37  93 can only charge that amount which will give him a reasonable return  on  the  capital  expenditure  and  covers  standing charges incurred by it in order to meet the possible maximum demand.  The Corporation has failed to satisfy that the said enhancement from Rs 40 to Rs 340 was required for the  above purposes  (vide para 18).  This contention was  rejected  in paragraphs  24 and 25 by pointing out that none of the  writ petitions  can invoke Section 22 inasmuch as the proviso  to said  section "talks about a separate supply unless  he  has agreed  with  the licensee to pay him  such  minimum  annual sum".   This Court pointed out that in the case before  them "there  is  no  question  of  any  separate  supply  or  any agreement  in  relation to minimum annual  sum"  and  hence, Section 22 is wholly inapplicable. (3)  The  third  contention was based on Article 14  of  the Constitution  of  India.  It was argued  that  singling  out furnaces  from out of the class of LIP consumers amounts  to invidious  discrimination and is, therefore, bad (para  32). This contention was also rejected. 14.  What   is   significant   to   notice   is   that   the interpretation  of  the  tariff condition  relating  to  LIP category   prescribed in clauses (c) and (d) at page  16  of the booklet  was not in issue in the said writ petitions  or in the appeals before this Court.  Neither party raised  any contention  as  to  the method  of  calculating  the  tariff charges in the case of LIP consumers.  The only question was as  to  the  validity of the said Note  which  enhanced  the minimum  consumption guarantee in the case of furnaces  from Rs 40 per KVA to Rs 340 per KVA.  This Court, however, while dealing with the second contention aforementioned and  after rejecting  the  said contention made the  following  further observations, with respect to the meaning and purport of the two-part  tariff  provided in the case of LIP  category,  in paragraph 26: (SCC pp. 46-47)               "In the present case, on facts, the  challenge               is to the tariff.  As stated above, the tariff               is  the two-part tariff system.  The  two-part               tariff system is comprised of two charges  (i)               minimum  consumption guarantee charges  called               demand charges and (ii) energy charges for the               actual amount of energy consumed.  Under  this               system an LIP consumer pays minimum  guarantee               consumption  charges at the rate fixed by  the               DMC.  If the LIP consumer does not consume the               specified  minimum quantity of electricity  or               no  energy  at  all even then he  has  to  pay               minimum consumption guarantee charges.  But in               case  the consumer consumes  more  electricity               than  the minimum, then the consumer pays  the               electricity charges for the actual consumption

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             of electricity beyond the minimum  consumption               guarantee  charges,  in  such  a  manner  that               minimum  consumption  guarantee  charges   are               merged  in  the  total  bill  for  electricity               consumed.   In  other  words,  if  a  consumer               consumes  more  than  the  specified   minimum               quantity  of electricity then, in  effect,  he               will  pay  for electricity which  is  actually               consumed  by  him.   As  stated  earlier,  the               appellants  have  obtained  licences  for  the               supply of electricity to a sanctioned load  of               more than               94               100  KW and they fall in the category  of  LIP               and the two-part tariff is applicable to them.               For   the  period  1985-86  to   1988-89   the               respondents   had  fixed  rates   of   minimum               consumption  guarantee charges at the rate  of               Rs4O per KVA for 1000 KVA and Rs38 per KVA for               consumption above 1000 KVA." 15.  It  is  the  above observations which  were  made  with reference  to the tariff condition relating to LIP  category (occurring at page 16 of the booklet that are relied upon by the respondent-consumers as concluding the issue relating to interpretation  of clauses (c) and (d) applicable to  "Mixed Load  HT", non-industrial connections (occurring at page  13 of  the  booklet) as well.  We do not find  it  possible  to agree  for  more  than one reason.   Firstly,  the  relevant tariff   condition  (tariff  condition  applicable  to   LIP category,  printed  at  page  16  of  the  booklet)  is  not correctly  quoted  (in para 7 of the  judgment).   The  all- important  word  ’plus’ in between the  Demand  Charges  and Energy  Charges  is  omitted  in  the  tariff  condition  as extracted in para 7. This may be because the  interpretation of  the  tariff condition was not in issue in  the  appeals. Apparently, the said clauses (c) and (d) were taken from the High Court judgment in Gulab Rail where too the said clauses are  extracted  with  the same  significant  omission.   The tariff  conditions   clauses (c) and (d)   as  extracted  in paragraph (7) of the judgment of this Court read thus:  (SCC p. 41)               " ’ (d) Tariff                               Demand Charges               First 1000 KVA of billing Rs 40.00 per KVA  or               part               demand for the month thereof               All above 1000 KVA of billing Rs 39.00 per KVA               or part               demand for the month               thereof               First 5,00,000 units per month at 85 paise per               unit.               All above 5,00,000 units per month at 84 paise               per unit.               Subject to:               a  maximum  overall rate of Rs 1. IO  per  KVA               without  prejudice to the minimum  payment  as               laid  down  in item (g) below  and  adjustment               clause   at   (xvii)   above   under   General               Conditions of Applications.’               Item  (g) of the said tariff  prescribes  that               the  minimum bill would be the amount  of  the               demand  charges based upon the KVA of  billing               demand Item (g) reads as under:               ’(g) Minimum Bill               The  amount of the demand charges  based  upon

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             the KVA of bill               demand.’ " 16.  Not  only is the all-important word ’plus’  is  missing but  the small sub-heading ’Energy charges’ is also  missing before  the  words  "First 5,00,000  units  per  month...... Evidently,  the observations in para 26 are coloured by  and based upon the said accidental incorrect rendering of the 96 LIP consumers for the year 1991-92.  In the tariffs notified for  the said year, the words "subject to a maximum  overall rate  of  Rs  1.10 p per KVA ..." occurring  in  clause  (c) applicable  to  LIP category were deleted.  In view  of  the said deletion, it was held by the Division Bench in Texmaco3 that  unlike during the previous year, for the year  1991-92 demand  charges are payable in addition to  energy  charges. The following two paragraphs from the judgment are apposite:               "For  the immediately preceding year, for  the               large   industrial   power  users   like   the               petitioners  tariff  was,  inter  alia,  being               charged  on the basis of demand  charges  plus               energy charges.  For the year 1990-91, it  was               further  prescribed that the  maximum  overall               rate would be Rs 1. IO per KWH.  The effect of               the  tariff for the year 199091 was  that  the               consumers  had to pay at least minimum  demand               charges.   In case the consumption  was  below               the  sanctioned load but was in excess of  the               connected  load,  then it is  in  effect,  the               actual consumption of which payment was  being               made.               The position in the year viz. 1991-92 is  same               to  the extent that there is a levy of  demand               charges  plus  energy charges.  In  this  year               also,  the  minimum  payable  is  the   demand               charges  if the energy is not consumed  up  to               the  connected load.  The only  difference  in               this  year is that whereas for the year  1990-               91, there was maximum overall rate of Rs 1. IO               per KWH, this year that maximum has been  done               away with. The effect may be that in  addition               to the demand charges, the energy charges have               also to be paid." (emphasis added) 20.  It  is thus clear from the decisions of the Delhi  High Court  that  its earlier decision in Gulab Rail  was  mainly because  of the said words of I ceiling’; when  the  ceiling was removed, it was held that in addition to demand  charges energy  charges are also payable.  We may reiterate  in  the case of tariff condition applicable to ’Mixed Load HT’, with which we are concerned in these appeals, there are no  words of  ceiling.  We must, however, hasten to add that  we  must not  be  understood as holding or affirming  that  the  said words of ’ceiling’ to mean that only the highest of the  two charges  (demand  charges  and  energy  charges)  alone   is payable.  We need express no opinion on the said question in these appeals for the simple reason that that question  does not fall for our consideration. 21.  For  all  the above reasons, it must be held  that  the observations in paragraph 26 in Ashok Soap Factory2 have  no application  to  the  tariff condition  with  which  we  are concerned  because  of  the substantial  difference  in  the language   employed  in  the  relevant   tariff   conditions considered  in  that  decision  and  the  tariff  conditions concerned  in  these appeals.  No relief can be  granted  to the.  respondent-consumers herein on the basis of  the  said

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observations.  The same comment holds good for the  decision of the Delhi High Court in Gulab Rail. 22.  Now the very reference to arbitration by the Delhi High Court   in  these  and  other  connected  matters   pertains precisely to the interpretation of 97 the  tariff  condition  occurring in  clauses  (c)  and  (d) applicable  under ’Mixed Load HT’ category.  Since  we  have answered   the   question  on  merits,  the   reference   to arbitration  must be deemed to have become  unnecessary  and infructuous.   The restraint order/stay order passed by  the High  Court pending disposal of the arbitration  proceedings also falls to ground and is vacated herewith. 23.  The appeals are accordingly allowed and the judgment of both  the teamed Single Judge and the Division Bench of  the Delhi High Court affirming it  which are the  subject-matter of  these  appeals  are set aside.  The appellant  shall  be entitled  to their costs.  Appellant’s costs assessed at  Rs 20,000 consolidated.