27 May 1996
Supreme Court

(WITH C.A.NOS.1934, 1938, 1940-43 OF 1989,C.A.NO.8956/96 Vs



PETITIONER: (WITH C.A.NOS.1934, 1938, 1940-43 OF 1989,C.A.NO.8956/96



DATE OF JUDGMENT:       27/05/1996




JUDGMENT: [With C.A.  Nos.1934, 1938, 1940-43 of 1989, C.A.Nos of 1996 (arising out of SLP (C) Nos.11085, 10377, 11907, 9282, 9184, 8644, 7164,  9646, 9534,  9430, 11605,  10408, 10246, 10255, 10257, 10285,  10329, 15187,  14467,  11949,  11948,  10085, 11951, 9538,  9419, 9142,  9288 and  9259  of  1989,  17538, 17522, 17521,  17520, 17519,  17529,  17528,  17543,  17525, 17524, 17523,  17542, 17541, 17540-40A, 17539, 17536, 17535, 17534, 17533,  17532, 17531, 17530, 17527, 17526 of 1993, CC Nos.1269, 1084 and 1055 of 1989] Bihar State Electricity Board and others V. Parmeshwar Kumar Agarwala etc.etc.                       J U D G M E N T HANSARIA,J.      Theft of  electricity has  become so  chronic a disease that there  can be no doubt that all efforts must be made to curb the same; not only to make the State Electricity Boards viable, but  also to ensure regular supply of electricity to the lawful consumers at reasonable tariff. 2.   The facet  of theft  of electricity  with  which  these appeals are  concerned relates  to the mischief of consumers to tamper with the meters, first to slow it down and then to make the  same defective. The basic idea behind this is that the general  terms and  conditions governing  the  agreement between Electricity Boards and the consumers require that in such a  case reading  of the  meter shall  be based  on  the average reading cf previous three months, in which the meter ran correctly  and reading  was duly recorded. Section 26 of the Indian  Electricity Act, 1910, hereinafter the 1910 Act, is on  the subject  of "Meters"  and sub-section (1) of this section requires  that the  amount of  energy applied to the consumer shall  be ascertained  by means of a correct meter. Sub-section (6)  has provided  that where  any difference or dispute arises as to whether any meter is or is not correct, the matter  shall be decided, upon the application of either party,  by   an  Electrical  Inspector.  Further  steps  are required to be taken as per the opinion cd such Inspector. 3.   Confronted with the aforesaid position, the Bihar State Electricity  Board  (for  short,  the  Board)  found  itself



suffering heavy  financial  loss  to  the  tune  of  several crores. It,  therefore, arranged  a meeting  of the  General Managers -  cum -  Chief Engineers on 12.6.1982 and decided, inter alia,  that the  assessment of  the aforesaid  type of consumers, should  be made,  in  the  case  of  low  tension industrial consumers  at 30% load factor and in case of high tension industrial  consumers at 45% load factor, during the period their meters remained defective. 4.   On the  aforesaid decision  put to implementation, some consumers approached  the High  Court of Judicature at Patna by filing a writ petition (CWJC No.2250 of 1984) in which it was held  that  the  decision  dated  12.6.1982  having  far reaching consequences and having not been taken by the Board itself, could not be sustained. It was also pointed out that the power  to amend tariff lay with the Board in exercise of powers under  sections 46 and 49 of the Electricity (Supply) Act, 1948  to be  referred hereinafter  as the 1948 Act. The High Court, therefore, quashed the decision dated 12.6.1982. 5.   The Board thereafter issued a Notification on 16.2.1987 invoking its  power under sections 46 and 49 of 1948 Act and decided to  bill industrial  consumers in  the line  of  the decision taken earlier. The Notification reads as below :           "In view  of the  observations      of the  Hon’ble High  Court in  its      order  dated   25.8.86  passed   in      C.W.J.C.No.2250/84  filed   by  Sri      Vishnu Re-Rolling Mills against the      Bihar State  Electricity Board  and      others,  the  B.S.E.Board,  in  its      resolution  No.5873  taken  in  the      388th meeting  of the Board held on      23.1.1987,   after    taking   into      consideration all  the  aspects  of      the   matter,   has   decided   and      resolved to bill L.T.I.S. (meaning,      Law Tension   Industrial  Sector?)      consumers at  30% load factor, H.T.      (meaning, High  Tension)  consumers      at 45%  load factor, for the period      the  meter  remained  defective  or      non-working,   with   effect   from      12.6.92.           Accordingly,  it   is   hereby      notified  that  by  virtue  of  the      power conferred under sec.46 and 49      of the  Electric Supply  Act, 1948,      the Bihar  State Electricity Board,      has decided  to bill LTIS consumers      at 30% load factors, H.T. consumers      at 45%  load factors and commercial      consumers at  30% load  factors for      the period meter remained defective      or  non-working  with  effect  from      12.6.82." 6.   This notification  came to be challenged by a number of consumers and the judgments impugned in these appeals relate to the  view taken  by the High Court qua this notification. The High  Court has  quashed the  notification, not only the retrospective part  of it, but the whole of it, being of the view that the Board had no power to issue the same. In these appeals by  special leave,  the  Board  has  challenged  the legality of the view taken by the High Court. 7. Shri  Sibal, appearing  for the  appellant-Board, made  a submission, when the appeals were taken for hearing, that he was not  in a  position to  find fault with that part of the



judgment of  the High Court by which retrospective operation of  the  notification  has  been  set  aside.  He,  however, strenuously contended  that the  notification could not have been quashed  in its entirety by regarding the same as ultra vires. We  would, therefore, address ourselves to this stand only of Shri Sibal. 8.   The notification  having been  issued  in  exercise  of powers under  sections 46 and 49 of the 1948 Act the learned counsel first  referred us  to section 49 of this Act, which is on  the subject of "Effect of other lass". Tn sub-section (1) of this section, it has been stated that no provision of the Indian  Electricity Act,  1910  or  of  any  rules  made thereunder,  shall   have  any  effect,  so  far  as  it  is inconsistent with any of the provisions of 1948 Act. It was, therefore, urged  that in  case of  conflict between the two statutes,  namely,   1910  and   1948  Acts,  the  provision contained in  the latter  shall prevail. This legal position cannot assist  the Board,  as  what  has  been  provided  in section 70 cannot protect the notification, because the same is not a part of the provision of the 1948 Act, but has been issued with the and of the provision of this Act. 9. It  is because  of this that the learned counsel referred us to  section 49  of the  1948 Act and we were addressed on the width  of the  power given  to the Board by various sub- sections of  this section.  The one  which was  specifically mentioned is  sub-section (3),  which  has  laid  down  that nothing in  the foregoing  provisions of  the section  shall derogate from  the power  of  the  Board  to  fix  different tariffs for  the supply  of electricity  to any  person  not being a licensee, having regard to some objects mentioned in the sub-section and "any other relevant factors". 10. Shri  Sibal referred  us to  certain decisions  of  this Court in which the width of the power of the Board conferred by section  49 had come to be examined. These decisions are: (1)  New   Central  Jute   Mills  Co.  Ltd.  v.  U.P.  State Electricity Board, 1993 (Supp) SCC 581; and (2) Ferro Alloys Corporation Ltd. v. A.P. State Electricity Board, 1993(Supp) 4 SCC  136. In the first of these decision the view taken by a two-Judge Bench of this Court was that the expression "any other relevant   factors" appearing in section 49(3) was not to be  construed ejusdem  generis;  and  that  the  combined effect of  section 49 and the terms and conditions of supply was that  having regard  to the  nature of  supply and other relevant factors,  the Board  had the  power to  enhance the tariff rates.  What had happened in New Central Jute Mills’s case was  that the  U.P.  Electricity  Board  had  levied  a surcharge of  5.5 paise  per unit  of electricity  drawn  in excess of  the  permissible  70%  authorised  by  the  State Government. As  the State  Government had  imposed a  ban on drawing electricity  in excess  of 70% in exercise of powers under section  22-B of  the 1910  Act, it was contended that the Board had no legal authority to levy the surcharge. This contention was  not accepted  by pointing  out the agreement with the  Board being  silent on  this aspect, the Board was justified in invoking its power under section 49(3). 11. In  the second  of the  aforesaid decision,  this Court, while upholding  the validity  of section  49, approved  the condition imposed  by the  regulations framed  by the Board, which required a consumer to make security deposit, as under clause VI  of the Schedule to the 1948 Act, supply of energy by the  Board is  to be  made after  a written  contract  is executed with  sufficient security. Another provision of the Act noted  by the  Court also permitted Board to require any consumer to  deposit security  for payment  of  the  monthly energy bills.  The non-payment  of interest  by the Board on



the deposit  made was  approved as  none  of  the  concerned statutes created such an obligation. 12. Thus, these two decisions do not advance the case of the Board qua  the validity  of the  notification  (except  that different tariffs  could have  been charged  from  different industrial concerns,  which, as per the High Court, however, could not  have been  done) because in those cases the Board had done  nothing against  the terms and conditions on which it had  agreed to  supply energy, which the Board is said to be doing hereby force of the notification. 13. This takes us to the main objection of the High Court to the notification  which is  that it is inconsistent with the terms and  conditions of  the agreement entered into between the Board and the consumers. The submission of Shri Sibal on this facet  of the case was that clause 11 of the agreement, read  with   clause  14,  permits  the  Board  to  vary  the conditions which find place in clauses 3(c) and 6, which are the  two   clauses  said   to  have  been  violated  by  the notification. 14. To  appreciate this  submission, let  the aforesaid four cclauses be noted. These read as below:      "3.(a) *** *** ***      (b) *** *** ***      (c) Subject  to clause  6 appearing      hereinafter in  the  agreement,  in      the event  of any  meter ceasing to      register or  found to  be defective      or the Board’s employee having been      unable to  read meter.  the reading      during the period of each cessation      or defective  registration or  non-      reading  shall   be  based  on  the      average  reading  of  the  previous      three months,  in which  the  meter      ran correctly  and reading was duly      recorded. In  taking  such  average      due regard  shall be  given to  the      conditions of  working month  under      dispute  and  during  the  previous      three months. In case of failure to      take   reading   by   the   Board’s      employee, proper  adjustment  shall      be  made  when  actual  reading  is      taken next.      6. Should  the consumer dispute the      accuracy of any meter not being his      own property, the consumer may upon      giving  notice   and   paying   the      prescribed  fee   have  the   meter      officially tested  by the  Electric      Inspector, Government  of Bihar, in      accordance with  sub-section (6) of      Section   26    of    the    Indian      Electricity Act, 1910. In the event      of the  meter being  tested by  the      Electric Inspector,  Government  of      Bihar, and  found to  be beyond the      limits of accuracy as prescribed in      the Indian Electricity Rules, 1956,      or any other statutory modification      thereof as  may be  in  force  from      time to  time the  testing fee will      be  refunded   and  the  amount  in      respect of  the meter  readings  of      three months  prior to the month in



    which the  dispute has arisen or of      three months  as provided in clause      3(c) above,  as the  case  may  be,      will be adjusted in accordance with      the result  of the  test taken, due      regard being paid to the conditions      of working  during the  month under      dispute  and  during  the  previous      three months.      11. This  agreement shall  be  read      and construed  as  subject  in  all      respects to  the provisions  of the      Indian Electricity Act, 1910, rules      framed    thereunder     and    the      Electricity  (Supply)   Act,   1948      together  with  rules,  regulations      (if  any)  tariffs  and  terms  and      conditions    for     supply     cf      electricity   framed   and   issued      thereunder and  for the  time being      in force  as far  as the  same  may      respectively be  applicable and all      such provisions  shall  prevail  in      case    of    any    conflict    or      inconsistency between  them and the      terms  and   conditions   of   this      agreement.      14. The  Board shall  be at liberty      at any  time to  alter  the  demand      charges, energy  charges  including      fuel-surcharge     and      minimum      guarantee charges as set out in the      Schedule appended  hereto and  this      Schedule shall  be deemed as having      been  automatically   revised  with      effect  from  the  date  the  Board      enforces   new   tariff   for   the      consumer." 15. Shri  Ganguli, who  addressed us  on behalf  some of the respondents, urged orally, as well as in A submissions, that the  aforesaid   clauses  have  to  be  read  and  construed harmoniously.  To   this,  it  was  added  by  Shri  Sanyal, appearing for  other respondents,  that clause  11  has  not mentioned about any "notification". 16. Before  we advert  to the  effect produced by a combined 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, 1946,  which, when certified, become part of  the  statutory  terms  and  conditions  of  service between the  employer and  employees  and  they  govern  the relationship between  the parties,  as held  in  Workmen  v. Firestone Tyle  & Rubber  Co.Ltd., 1973 (1) SCC 813(832). We are inclined  to think  that similar  is the effect of terms and conditions,  on which  a State  Board supplies energy to the consumers. 17. We  may now  see what  clause 11  has provided.  It  has



stated that  the provisions 1910 and 1948 Acts together with the rules and regulations, if any, shall prevail, in case of any conflict or inconsistency between them and the terms and condition of  the agreement.  Nothing has  been mentioned in this clause  about any notification issued by the Board; and the agreements at hand being earlier in point of time to the impugned  notification,   we  are   of  the  view  that  the stipulation made  in the  notification cannot  override  the terms and conditions mentioned in clauses 3(c) and 6. 18. Clause  14  deals  with  alteration  of  various  energy charges and  states that  on the  charges being altered, the tariff shall  become realisable accordingly. This clause has dealt with : (1) demand charges: (2) energy charges; and (3) minimum guarantee  charges. The  expression ’demand charges’ means minimum  consumption guarantee charges. (See para 5 of Ashok Soap  Factory v.  Municipal Corporation of Delhi, 1993 (2) SCC  37). A perusal of this para also shows that for big consumers of  electricity, there  is two-part tariff system, i.e.  it   is  comprised   of  two  charges  :  (1)  minimum consumption guarantee  charges (called  demand charges); and (2) energy  charges for actual amount of energy consumed. In the Schedule to this present agreement a so, para 5(a) deals with demand  charge and  5(b) with  energy charge.  Rates of each has  also been  mentioned. Clause  14 has empowered the Board to alter rates of these charges. 19. In  Ashok Soap  Factory case,  this Court dealt with the power of  the Board  to alter  the rate  of  demand  charges (which had  been enhanced  from Rs.40/- per KVA to Rs.340/-) and the  same was  sustained, because  valid reasons existed for the  enhancement (theft  of  electricity  and  defective meters recording  extremely low  consumption causing loss of huge revenue)  and the  particular clause  in the  agreement (quoted in para 15) permitted increase in the rates. 20. Though  in the  case at  hand, the motivating factor for the issuance  of the  notification is  similar to the one as was in  the aforementioned case, we don’t think if clause 14 can be  pressed into service to sustain the notification, as present is  not a case of alteration of charges mentioned in the clause;  it really seeks to introduce an unknown mode of charging  for   energy,  which  is  not  visualised  by  the agreement entered  into between  the parties.  This apart, a harmonious reading  of clauses  3(c), 6  and  14  would  not permit us to say that clause 14 has overridden what has been provided in clauses 3(c) and 6. 21. This  is not  all, as  it has been held by this Court in M.P. Electricity  Board vs.  Bassantibai, 1988  (1) SCC  23, that section  26(6) of  the 1910  Act does not authorise the Electricity  Boards  to  issue  any  supplementary  bill  in respect of  the energy  consumed during  the pendency of the dispute with  an Electrical  Inspector.  We  have  mentioned about this  decision because  pursuant to  the notification, the Board  did submit supplementary bills to the respondent- consumers. It  seems to  us that  this action  was really in conflict with  the statutory  provision contained in section 26(6)  of   1910  Act,  as  interpreted  by  this  Court  in Basantibai’s case. 22. The only other point urged by Shri Sibal, which needs to be dealt  with, is relatable to the power of the Board under section 26  of the  1948 Act. We do not think the provisions of this section can assist the appellant Board in any way to sustain the  notification, as that section has only provided that the  Board shall  have, in  respect of the whole of any State, all  the powers  and obligations  of a licensee under the 1910  Act. This  section thus  provides no shield to the Board insofar as its present dispute with the respondents is



concerned. 23. For the reasons aforesaid, we are constrained to dismiss the appeals,  much though  we would  have liked  to lend our support to  the Board in its effort in effectively deal with theft of electricity caused by manipulation of meters, which is a known evil. Despite the laudable object which the Board sought to achieve by issuing the notification, we are of the view that the same has not been done in accordance with law. 24. The  appeals  are,  therefore,  dismissed,  leaving  the parties to bear their own costs throughout.