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CASE NO.: Appeal (civil)  2335 of 2006

PETITIONER: Oswal Woolen Mills Ltd.

RESPONDENT: Punjab State Electricity Board & Anr.

DATE OF JUDGMENT: 28/04/2006

BENCH: S.B. Sinha & P.K. Balasubramanyan

JUDGMENT: J U D G M E N T

[Arising out of SLP (Civil) Nos.1398-1442 of 2005] WITH  CIVIL APPEAL NOS. 2334 OF 2006 [Arising out of SLP (Civil) Nos,15357-15358 of 2005]

S.B. SINHA, J :

       Leave granted.

       The appellant is a mill represented by its authorized representative.   For the purpose of its working, it at all material times was and still is a  consumer of electrical energy.  It had for the said purpose taken electrical  connection from the respondent-Board.  The connected load is 6664 KW.  In  terms of the tariff framed by the Board, the  Appellant  herein (Company)   comes under the category of ’general industry’. The Board on or about   21.01.1991  issued   a  circular  whereby  it proposed to levy surcharge @ 17  = % on the actual consumption of electricity in respect of those industrial  consumers who had  been  sanctioned load exceeding 5000 KW or  sanctioned contract demand exceeding 5000 KVA and had supply from  a 11  KV line.  The said circular stipulated that surcharge would continue to be  levied till conversion of supply to 33 KV or higher voltage by the  consumers.  It is, however, not in dispute that a letter was issued to the  company intimating that for installation of 66 KV Sub Station, a site plan  was required to be supplied.

       Yet again by circular dated 30.05.1991, it was stipulated :

       "Continuation to CC No.5/91 dt. 21.1.91 vide  which it was decided  to levy surcharge @ 17% on  general industrial consumers having sanctioned  load/demand exceeding 5000 KW/KVA and running at  11 KV till conversion of supply to 33 KV or higher  voltage.  The matter has been reconsidered by the Board  and it has been decided that the surcharge @ 17 =% shall  be levied on such consumers who do not switch over  their supply system to 33 KV and higher voltage in line  with the following provisions :

i)      A lead time of 12 months may be given to all the  existing consumers having load/demand above  5000 KW/KVA and running at 11 KV to convert  supply to higher voltage within stipulated period.  

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This period includes the time spent on getting  estimated cost of works, deposit of charges with  the PSEB and erection of 33 KV or higher voltage  works by the consumer as well as by the PSEB .   The time schedule for different activities involved  for erection/completion of higher voltage works  shall be fixed by the load sanctioning authority,  and any slippage/evasion in adhering to the laid  down targets on the part of the consumer shall  attract levy of surcharge @ 17 =%.  In case after  the stipulated period, the higher voltage works of  the consumers are ready but the works of the  PSEB are not ready, surcharge shall not be levied  and also likewise if the Board’s works of higher  voltage are ready but the consumers are not ready  this surcharge shall be leviable      

       The validity of the said circular dated 21.01.1991 came to be  questioned by the company in a writ petition, filed before the High Court,  which was marked as CWP No.7069 of 1991.  In the meanwhile, the said  circular letter was modified by the Board, in terms whereof it was stipulated  that a time of 12 months extendable  upto the maximum of 18 months was to  be  granted to all the existing consumers having load above 5000 KW/KVA  and running at 11 KV to convert supply system to higher voltage.   

       Another letter dated 19.09.1991 was issued by the Board intimating it  that electric supply had to be converted to 66 KV and hence the company  was required to show the place of installation of 66 KV sub-station, failing  which a penalty @ 17 =% would be levied.  A further letter was issued by  the Board demanding a sum of Rs.34 lacs towards the tentative cost of  conversion.  The writ petition filed by the company, however, was disposed  of stating :

"\005In the short reply filed on behalf of the Electricity  Board, it is stated that from the petitioners 17 =%  surcharge collected will be adjusted in the subsequent  bills.  It is further mentioned that there would be  conversion from 11 KV to 33 KV or 66 KV.  Certain   formalities are to be observed by both the parties in that  connection and one year’s time has been given to the  petitioners to comply with the directions.  However,  it is  made clear that the period of one year would start from  the pointing out of feasible point for installation of sub  station at the factory premises by the Board."

                       [Underlining is ours for emphasis]

       Yet again, without complying with the said directions, a demand was  made by the Board from the company for depositing the said amount of  Rs.34 lacs.  On or about 14.02.1992, the company replied to the said letter  stating that the matter was pending adjudication before the civil court and  furthermore no other feasible point had been pointed out by the officers of  the Board so far.  A site plan was again sought for from the company by the  Board by a letter dated 13.05.1992, wherein it was stated :

       "Your kind attention is drawn to above references  and it is requested that the site plan and site for the  construction of 33/66 KV Sub grid must be shown to the  undersigned within 7 days and according to the  instructions of the Board  required amount may be  deposited so that further action may be taken otherwise

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17 =% surcharge will be levied."

       In exercise of its powers under Sections 46 and 49 of the Electricity  (Supply) Act, 1948, (for short, ’the Act’) the Board made a tariff which  came into force with effect from 01.02.1994.  Section (B) of the said tariff  refers to the schedule thereof the relevant portion of which reads as under  :

                "Schedule of Tariff

               Schedule LS.-Large Industrial Power Supply

1.      Availability

(i)     This tariff shall apply to consumers having  industrial connected load above 100 KW.  Their  contract demand shall not be less than 100 KVA  (85 KW).

(ii)    No consumer availing supply of energy at high  tension 11000 volts and  above (33 KV and above  for Arc furnace) shall increase his connected load  without approval of the Board.  The consumer  availing supply at high tension shall indicate the  rating capacity of all the step-down transformer(s)  installed in his premises and shall not increase the  capacity of such step-down transformer(s) without  prior approval of the Board."           

Clause 3 of the Schedule of Tariff reads as under :

       "(A) General Category

a)      Consumers with connected load less than  1000  KW                                 153 Paise/Unit

b)      Consumers with connected load 1000 KW and  above :

Demand Charges                   Rs.90/KVA PLUS Energy Charges                  128 Paise/Unit Maximum overall rate            163 Paise/Unit

(B)     Power Intensive Units

a)      Consumers with connected load less than 1000 KW                          158 Paise/Unit

b)      Consumers with connected load 1000 KW and  above

Demand Charges                  Rs.90/KVA PLUS Energy charges                  133 Paise/Unit Maximum overall rate            168 Paise/Unit

       The energy charges under category (A) and (B)  above shall be without prejudice to the Monthly  Minimum Charges leviable under item 7 of this Schedule  L.S.

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Note  (i)       \005

(ii)    Surcharge of 17 =% on the above tariff shall be  leviable for all the Arc furnace load consumers  which are being given supply at 11 KV."

       From note (ii) of the aforesaid tariff, it is, therefore, evident that  surcharge @ 17=% thereupon was leviable only for all the Arc Furnace load  consumers which were being given supply at 11 KV.  Moreover, these other  mills which were liable to bear the specified surcharge were specifically  mentioned in the tariff notification.  It is also not in dispute that prior to  issuance of the said notification, executive orders had been issued levying  such surcharge.    The said executive order, however, was later on made part   of the tariff.   

       However, on 26.07.1991, a notification was issued under Sections 46  and 49 of the  Act inter alia stating :

"(b)    For consumers with connected load of 1 MW and  above

Demand Charges                  Rs.60/- per KVA                 Plus                                    Plus Energy charges                  Rs.83 paise/unit

       Subject to max. rate of 107 P/Unit without  prejudice to the MMC under item \026 7 of this Schedule \026  LS

i)      \005

ii)     Surcharge of 17 =% on the above tariff shall be  leviable for all the Arc furnace load consumers  which are being given supply at 11 KV.

iii)    \005"            

       Questioning the said demand, admittedly, a suit was filed by the  company. The trial court  as also the appellate court on the basis  of the  materials brought on record came to the conclusion that the Board could  levy such surcharge only with effect from 13.05.1992.            

       By reason of the impugned judgment the High Court opined :

       "Learned counsel for the appellant could not point  out any clause in the circular which stipulates the  modification or suppression of the earlier circular dated  21.01.1991 and 03.05.1991.  In the absence of any  supersession of notifications, I am unable to hold that  such notification stood superceded by virtue of a fresh  notification dealing with revision of tariff for general  category consumers as well as contemplate levy of  surcharge for the ARC furnace load consumers.  There is  no clause in the said circular that surcharge will be  leviable only on the ARC furnace.  Still further, such  argument was not raised before the courts below.   Therefore, it is apparent that levy of surcharge by  notification dated 21.01.1991 and 03.05.1991 was never  superceded."     

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                A limited notice was issued by this Court on the special leave petition  filed by the company as to whether revision of tariff issued as per the memo.  No.10061/10761/CC/T/2/Rev./Vol.XIII dated 01.02.1994 was applicable to  the company  or not.  The Board has also approached this Court in regard to  the question as to whether the one year period should be calculated from  13.05.1992 or from the date of issuance of the notification.

       Two questions, thus, arise for our consideration in these appeals : (i)  Whether the High Court is correct in holding that in view of the fact the  matter relating to payment of surcharge was governed by circulars, which    having  not been  superseded by the  notification dated  21.01.1991 and  03.05.1991 the impugned demand was valid in law; and (ii) what would be  the proper interpretation of the judgment of the Division Bench of the  Punjab and Haryana High Court dated 29.01.1992  

        The Board is a creature of the statute.  It is constituted in terms of  Section 5 of the Act.  It is incorporated and  can sue and be sued in its own  name in terms of Section 12 thereof.  Section 46 of the Act provides for the  Grid Tariff  and  Section 49 thereof empowers the Board to make provision  for the sale of electricity by it to persons other than the licensees.   While  exercising  the said power the Board would be governed by the general  terms which may be issued by the State in terms of Section 79 of the Act.   Surcharge by way of additional rate or penalty can be levied only in terms of  a tariff notification.  Such a power, therefore, can be exercised by the Board  only in exercise of its statutory power and not by reason of an executive  power.  In terms of a circular letter issued by the Board, therefore, neither  any surcharge nor any penalty could be levied.   

In the year 1991, indisputably, the said circular letter dated  21.01.1991  was followed by the tariff notification issued in terms of  Sections 46 and 49 of the  Act.  The subsequent circular letter dated  03.05.1991 was, however, not followed by any notification making the tariff  applicable with retrospective effect.   

We have noticed hereinbefore that the tariff notification dated  26.07.1991 speaks of levy of such surcharge  inter alia on Arc furnaces.   Similar is the position in regard to the  notification dated 01.02.1994.  The  Board, therefore, could levy surcharge only in terms of the notification and  not by reason of any circular letter.  As in the notification, it has clearly been  stated that 17 =% surcharge on the above tariff should be leviable for all the  Arc furnace load consumers which were being given the supply at 11 KV,  the High Court clearly fell in error in arriving at the finding that by reason of  the said notification, the circular letters dated 21.01.1991 and 03.05.1991  were not superseded.  The Board being a statutory authority, its power to  issue bills for consumption of the electricity would be governed solely by  the tariff notification.  It being a statutory authority must act within the four- corners of the statute.  

       The High Court, therefore, in our opinion was clearly wrong in  arriving at the finding that the earlier notifications dated 21.01.1991 and  03.05.1991 were not superseded.  The High Court failed to pose unto itself  the correct question, namely, as to whether after issuance of the tariff  notification, the Board could levy any surcharge @ 17 =% on the tariff  on  those consumers who did not have Arc furnace.   The High Court, therefore,  misdirected itself in law in passing the impugned order.

       The question which falls for consideration is from which date the

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period of one year could have started.  Although on the basis of the  aforementioned finding, the Company could have contended that from  13.05.1991, no surcharge could have been levied, but it did not raise such a  contention before the High Court.

       We have seen that herein also a limited notice was issued.  

       It is not in dispute that for the purpose of giving effect to the offer  made by the Board in terms of its letter dated 30.05.1991, no surcharge  could have been levied immediately.   A  Division Bench of the High Court,  as noticed hereinbefore, by an order dated 29.01.1992 clearly stated that the  period of one year would start from the date when the feasible point is  pointed out.     

        The observation of the High Court in the earlier writ petition was in  the nature of a direction.

       The submission of Mr. Ranjit Kumar, the learned Senior Counsel  appearing on behalf of the Board, in this behalf, cannot be accepted.   Normally the period should be counted from the date of issuance of the  notification and not from the date of the High Court’s judgment. The High  Court, however, made observations, whereupon both the parties acted.  The  said observations were made in terms of the affidavit affirmed on behalf of  the Board itself.

       The High Court’s direction leads only to one conclusion that the cut- off date would be considered to be one in futuro, i.e., a date after 29.01.1992  alone was required to be fixed.   

       Once the final notice by the Board had been issued, the negligence on  the part of the consumer to point out the actual site had not been condoned  by the courts.     

       The High Court’s observations might be incorrect; but then the same  was accepted.   As indicated hereinbefore, the parties acted thereupon.  The  period of one year in terms of the judgment of the High Court, therefore,  was to start from the date when the feasible point for installation of Sub  Station at the factory premises by the Board was pointed out.  Selection of a  site for the purpose of drawing 33 KV line was not an empty formality.   Several factors including the convenience of the Board were required to be  taken into consideration. In some cases probably compensation for  acquisition of land was required to be paid.

       All the courts had arrived at a finding of fact, having regard to the  Board’s letter dated 03.12.1992 that the final notice in terms of the said  circular had been given only on 13.05.1992.  The company had contended  that actual feasibility was found out on 28.05.1994, but as noticed  hereinbefore, the court did not accept  its  plea that even the date of the said   notice could not have been considered to be the date for the purpose of the  starting point of the period of  one year.           

       For the reasons aforementioned, although Mr. R.K. Jain, the learned  Senior Counsel appearing for the company, may be right in his submission  that the Board has no jurisdiction to levy surcharge after 29.01.1992, but as  the said contention had not been raised and furthermore as notice was issued   by the court on a limited question, we are of the opinion that the company is  liable to pay the surcharge with effect from 13.05.1992.  We may  furthermore notice that the actual amount of surcharge payable from that  date has already been paid by the company to the Board.  However, in view

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of our findings aforementioned, there cannot be any doubt that the surcharge  @ 17 =% was not required to be paid in terms of the tariff  notification  dated 01.02.1994.   

       For the reasons aforementioned, the Civil Appeals arising out of  S.L.P. (Civil) Nos. 1398-1442 of 2005 preferred by the Company are  allowed to the aforementioned extent and the Civil Appeals arising out  S.L.P. (Civil) Nos. 15357-58 of 2005 preferred by the Board are dismissed.   In the facts and circumstances of the case, the parties shall pay and  bear  their own costs.