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PETITIONER: THE AMALGAMATED ELECTRICITY CO., LTD.

       Vs.

RESPONDENT: N. S. BATHENA

DATE OF JUDGMENT: 13/02/1959

BENCH: SARKAR, A.K. BENCH: SARKAR, A.K. IMAM, SYED JAFFER SUBBARAO, K.

CITATION:  1959 AIR  711            1959 SCR  Supl. (2) 213  CITATOR INFO :  F          1974 SC 314  (16)

ACT:        Arbitration-Arbitration   clause  in  electricity   licence-        Whether  binding  on  consumer  of   electricity-Electricity        (Supply)  Act, 1948 (54 of 1948), s. 57, cl.  XVI  of  Sixth        Schedule.

HEADNOTE: The  arbitration  clause  incorporated by s.  57(1) of  the Electricity (Supply) Act, 1948, in a licence granted by  the Government  for  the  supply of  electrical  energy  to  the consumers  is not available for adjudicating upon a  dispute between the licensee and the consumer, for the licence is an engagement  between the licensee and the Government and  the arbitration  clause  in it refers only to  disputes  between them.  Section 57(1) does not make the arbitration clause  a statutory provision by virtue of which disputes between  any and every person may be referred to arbitration.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 361 of 1958.  Appeal  by special leave from the judgment and order  dated December  11,  1957,  of  the Mysore  High  Court  in  Civil Revision  No.  702 of 1956, against the judgment  and  order dated  August  10, 1956, of the Court  of  the  Second-Extra Assistant  Judge, Belgaum, in Misc.  Appeal No. 36 of  1955, arising out of the order dated September 1, 1955, of the 1st Joint  Civil  Judge, Junior Division,  Belgaum,  in  Regular Civil Suit No. 197 of 1955. M.   M. Gharekhan and I. N. Shroff, for the appellant. D.   D. Chawla and G. Gopalakrishnan, for the respondent. B.   Sen and T. M. Sen, for the intervener (Attorney-General of India). 1959.  February 13.  The Judgment of the Court was delivered by SARKAR, J.-This is an appeal from the judgment passed by the High  Court  at Bangalore on a petition  in  revision.   The question is whether a certain suit should be stayed under s.

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34 of the Arbitration Act, 1940. 214  The  appellant  carries  on  business  as  a  supplier   of electrical  energy in Belgaum.  It obtained a  licence  from the  Government  under s. 3 of the Indian  Electricity  Act, 1910, authorising it to supply the energy in that area.  The respondent,  who  is  the plaintiff in  the  suit,  obtained supply  of electricity from the appellant.   The  respondent felt that he was being overcharged by the appellant for  the electricity  so supplied.  He thereupon filed a suit in  the Court  of the Civil Judge, Belgaum, on or about the  8th  of June,  1955, claiming a refund of the amount paid in  excess of what he thought was the legitimate charge.  The appellant then  applied under s. 34 of the Arbitration Act for a  stay of  the suit on the ground that the matter was referable  to arbitration under the provisions of the Electricity (Supply) Act, 1948.  The application was dismissed by the Civil Judge and  his  decision  was confirmed  by  the  Extra  Assistant Sessions  Judge on appeal and lastly, by the High  Court  in revision.  The appellant has now come to this Court. The  appellant  contends that this matter  is  referable  to arbitration under the provision contained in cl. XVI of  the Sixth Schedule of the Act of 1948.  A few of the  provisions of  these Acts will now have to be referred to.   Under  the Act of 1910 the business of supplying electrical energy  can be  carried  on only with the sanction  of  the  Government. Section  3  of that Act makes provision for the grant  of  a licence  for  supplying electrical  energy.   The  appellant obtained a licence in 1932. A  form of the licence is set out in the rules framed  under the  Act of 1910 and that form prescribes the maximum  limit which  a licensee is entitled to charge a consumer  for  the electrical energy supplied.  The Act of 1948 made a somewhat different  provision  with  regard  to  these  charges.   It provided by s. 57 as follows:- "S.  57.  (1) The provisions of the Sixth Schedule  and  the Table appended to the Seventh Schedule shall be deemed to be incorporated  in the licence of every licensee, not being  a local  authority, from the date of the commencement  of  the licensee’s next succeeding 215 year  of  account,  and from such date  the  licensee  shall comply  therewith  accordingly and any provisions  of,  such licence  or  of the Indian Electricity Act,  1910,  or’  any other  law,  agreement  or  instrument  applicable  to   the licensee shall, in relation to the licensee, be void and  of no  effect  in  so far as they  are  inconsistent  with  the provisions of this section and the said schedule and Table. (2)........................................................ This  section had therefore the effect of  incorporating  in the  licence the terms of these two Schedules  and  provided that  they  would prevail over the terms of  any  previously granted licence or the provisions of the Act of 1910, or any other  law, agreement or instrument inconsistent with  these Schedules.  The Sixth Schedule made new provisions about the charges  that  a licensee was entitled to  realise  for  the current  supplied.  Clause XVI of that Schedule  contains  a provision  for  arbitration  and  it is  on  that  that  the appellant relies.  That clause is in these terms: Any  dispute or difference as to the interpretation  or  any matter arising out of the provisions of this Schedule  shall be  referred  to  the arbitration  of  the  Authority."  The appellant   contends  that  the  dispute  covered   by   the respondent’s  suit  is  one of the kind  mentioned  in  this clause  and therefore must be referred to arbitration  under

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its terms. We will assume that the dispute is of the kind mentioned  in cl.   XVI of the Sixth Schedule.  We are however  unable  to see  that it is a dispute which is referable to  arbitration under that clause.  It is not the appellant’s case that  el. XVI  is  a  clause  in  any  contract  between  it  and  the respondent.   That being so, the only other way in which  it is possible for the appellant to contend that the respondent is  bound  to refer the dispute to  arbitration  under  this clause  is by showing that it is a statutory  provision  for arbitration.   No doubt if it were so, then in view  of  the provisions  of s. 46 of the Arbitration Act  the  ’appellant would  be entitled to apply for a stay of the suit under  s. 34 of that Act.  We are however wholly unable to agree  that cl.  XVI is such a statutory provision.  The only 216 statutory  provision  that we find on the  subject  is  that contained  in s. 57 and its effect is that the terms of  cl. XVI  and the other clauses in the Sixth Schedule are  to  be deemed  incorporated in a licence granted by the  Government under s. 3 of the Act of 1910 and the licensee is to  comply with the terms of that Schedule.  Therefore all that we  get is that the licence which is granted by the Government to  a supplier of electricity, like the appellant, is to contain a clause   that   certain  disputes  would  be   referred   to arbitration.   The  licence is an  ’engagement  between  the Government  and the licensee, binding the parties to  it  to its  provisions.  It is unnecessary to decide  whether  this engagement is contractual or statutory, for, in either  case it  is between the two of them only.  An arbitration  clause in  an  instrument  like  this can only  be  in  respect  of disputes  between  the parties to it.  Such  an  arbitration clause does not contemplate a dispute between a party to the instrument  and one who is not such a party.  We are  unable to  read  s. 57 as making cl. XVI in the  Sixth  Schedule  a statutory  provision by which certain disputes  between  any and every person have to be referred to arbitration. It was said on behalf of the appellant that the licence is a statutory  document’  That, in our view, is a loose  way  of putting the thing.  By that the utmost that can be meant  is that  it is issued under the terms of a statutory  provision and  must  comply  with the provisions  thereof.   But  that cannot  convert it into a statutory provision for  reference to  arbitration  of  disputes irrespective  of  the  parties between whom the disputes may exist. In  our view, therefore, cl.  XVI of the Sixth  Schedule  of the  Act  of  1948 contains no  provision  for  arbitration, statutory or otherwise, for reference of the dispute of  the nature  we  have before us, between a licensed  supplier  of electricity and a consumer of it from him. In  the  result,  this appeal fails and  is  dismissed  with costs. Appeal dismissed. 217