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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.6145 OF 2010
JHARKHAND STATE ELECTRICITY
BOARD AND OTHERS …..APPELLANTS
VERSUS
M/S RAMKRISHNA FORGING
LIMITED .….RESPONDENT
J U D G M E N T
Vineet Saran, J.
The respondent is a small scale industry. For
running its industry, it had a contract
demand/sanctioned load of electricity of 4000 KVA from
the appellantsJharkhand State Electricity Board (for
short ‘the Board’). The request of the respondent for
reduction of such sanctioned load to 1325 KVA having
been refused, the respondent filed a writ petition before
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the High Court of Jharkhand, which has been allowed.
Aggrieved by the said judgment of the High Court, this
appeal has been preferred by the Board.
2. The brief facts, relevant for the present case,
are that the respondent, which is a small scale
industry, had entered into an agreement with the Board
on 14.04.2004 for High Tension (H.T.) connection of 325
KVA load. The respondent thereafter applied for
enhancement of load from 325 KVA to 1325 KVA, which
was allowed by the General ManagercumChief
Engineer of the Board on 14.03.2006. The respondent
again applied for enhancement of load from 1325 KVA
to 3500 KVA, which was sanctioned by the Board on
26.12.2006. On a further request of the respondent,
the load was again enhanced by 500 KVA to 4000 KVA.
For each enhancement of load, fresh agreements to that
effect were entered into between the respondent and the
Board, the last one being on 07.07.2007 for supply of
4000 KVA load. The respondent alleges that after the
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enhancement of load, it was facing major trippings as
well as continuous load shedding which was affecting
the costly machineries and, therefore, the respondent
decided to reduce the load from 4000 KVA to 1325 KVA.
Accordingly, the respondent filed an application, on
20.09.2007, before the authority of the appellantsBoard for such reduction. Vide its order dated
08.11.2007, the Electrical Superintending Engineer
rejected the said application of the respondent for
reduction of load from 4000 KVA to 1325 KVA informing
the respondent that from the date of enhancement of
supply of load, an agreement (dated 07.07.2007) would
be enforced for a period of three years and treating it to
be a case of determination of agreement, and quoting
the Clause 9B of the agreement, it was provided that
the agreement could not be permitted to be determined
prior to the completion of initial period of three years
from 07.07.2007 and that the respondent will have to
pay the minimum guarantee charges and other charges,
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even if the respondent decides to terminate the
agreement.
3. Challenging the said order of the Board dated
08.11.2007, the respondent filed Writ Petition No.6651
of 2007, which has been allowed by the High Court vide
its judgment dated 23.07.2008, primarily on the ground
that the proviso contained in Regulation 9.2.1 of the
Jharkhand State Electricity Regulatory Commission
(Electricity Supply Code) Regulations, 2005 (for short,
‘the Regulations of 2005’), providing for no reduction of
load to be allowed by the Distribution Licensee before
expiry of the initial period of agreement was
discriminatory, arbitrary and against the public policy.
Challenging the aforesaid judgment, this appeal has
been filed.
4. We have heard Shri Anup Kumar, learned
counsel appearing for the appellants and Shri N.P.
Singh, learned Senior Counsel appearing for the
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respondent, assisted by Shri Devashish Bharuka,
AdvocateonRecord for the respondent.
5. It is noteworthy that after the initial
agreement dated 14.04.2004, which came into effect
from 16.04.2004 whereby the contract demand of 325
KVA was allowed in favour of the respondent, the
Jharkhand State Electricity Regulatory Commission (for
short, ‘the Commission’) in exercise of power conferred
by Section 181(2)(x) read with Section 50 of the
Electricity Act, 2003, framed the Jharkhand State
Electricity Regulatory Commission (Electricity Supply
Code) Regulations, 2005, which came into effect from
28.07.2005.
6. The submission of the learned counsel for the
appellantsBoard, is that in terms of Regulation 9.2.1 of
the Regulations of 2005, which relates to the reduction
of contract demand/sanctioned load, no reduction of
load could be allowed before the expiry of the period of
agreement which, according to the appellants, would be
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07.07.2007 when a fresh agreement was executed for
enhanced load of 4000 KVA. Learned counsel for the
appellants has thus submitted that the application for
reduction of load filed by the respondent on 20.09.2007,
which was well within the period of three years from
07.07.2007, was rightly rejected by the Board vide its
order dated 08.11.2007, as it was in conformity with
the provisions of the Regulations of 2005.
7. Per contra, learned Senior Counsel appearing
for the respondent has submitted that the agreement
was initially entered into on 14.04.2004 and thereafter
even though technically fresh agreements may have
been executed for enhancement of load of the
respondent, but the same were only
extension/amendment of the initial agreement dated
14.04.2004, and the terms of each of these agreements
were identical, with the only change being that of the
increased contracted load. It has been contended by
the learned Senior Counsel for the respondent that the
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Regulations do not permit execution of a fresh
agreement in case of enhancement of load, and the
enhancement agreements would merely be
supplementary agreements in continuation of the initial
agreement dated 14.04.2004 and cannot be treated as
fresh agreement because it is the same electricity
connection, which was granted by the agreement dated
14.04.2004, in which there have been amendments
from time to time for increase of load, and merely
executing a fresh agreement for enhancement of load
cannot be termed as fresh agreement for the purpose of
Regulations of 2005. It has, thus, been submitted that
the application of the respondent for reduction of load
dated 20.09.2007 has to be treated as after a period of
three years from the date of initial agreement dated
14.04.2004 and thus, the application of the respondent
ought to have been allowed and/or should be deemed to
be allowed in terms of the provisions of Regulations of
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2005. In this regard, reliance has been placed on
Regulations 2(l), 9.1 and 9.2 of the Regulations of 2005.
8. For the ready reference, the relevant
provisions of the Regulations of 2005 are reproduced
below:
“2. Definitions. 2.1 In these regulations,
unless the context otherwise requires:
(a)…..
(b)…..
(c)…..
……...
(l) “Contract Demand” means
demand in Kilowatt (KW) or Kilo Volt
amperes (KVA) or H.P (Horse Power)
mutually agreed between the Distribution
Licensee and the consumer as entered
into agreement or agreed through other
written communication.
(m)…..
(n)…..
9. Enhancement and Reduction of
Contract Demand/Sanctioned Load. –
9.1 Enhancement of Contract Demand
/Sanctioned Load
9.1.1 The application for enhancement of
Contract Demand/Sanctioned Load shall
be made in the prescribed form and in the
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manner as specified in new service
connection in Clause 5 of these
Regulations.
9.1.2 The application for enhancement of
load shall be disposed of in the manner
and within the time frame as prescribed
for new service connection in Clause
6.2.11 of these Regulations.
Provided that the application for
enhancement of Contract
Demand/Sanctioned Load may be
outright rejected by the distribution
licensee if the consumer is in arrears of
licensee’s dues and the same have not
been stayed by a court of law or the
Commission.
9.2 Reduction of Contract
Demand/Sanctioned Load.
9.2.1 The application for reduction of
Contract Demand/Sanctioned Load shall
made in the prescribed form specified for
the new service connection.
Provided that no reduction of load shall
be allowed by the Distribution Licensee
before expiry of the initial period of
agreement.
9.2.2 The application for reduction of load
shall be accompanied by
(i) Details of modification, alteration and
removal of electrical installation with
completion certificate and test report of the
Licensed Electrical contractor.
(ii) Any other reason for reduction of load
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(iii) Details of generator if any installed by
the consumer with safety clearance
certificate from competent authority as
applicable.
9.2.3 The Distribution Licensee shall
consider the application verify the same
and communicate in writing its decision on
reduction of Contract Demand/Sanctioned
Load in writing within 30 days of the
application.
Provided that if the distribution licensee
rejects or refuses the reduction of Contract
Demand/Sanctioned Load it shall do so
after affording the consumer reasonable
opportunity of being heard in the matter
and after communicating in writing the
reasons for such refusal.
9.2.4 If the decision of the application for
reduction of Contract Demand/Sanctioned
Load is not communicated by the licensee
within 30 days of the application, the
consumer shall send a notice to the
licensee requesting for disposal in the
matter and if the decision is still not
communicated within 15 days of the
notice. The reductions of Contract
Demand/ Sanctioned Load shall be
deemed to have been sanctioned, from the
16th day after the issue of notice to the
licensee by the consumer.
9.2.5 The reduction of Contract
Demand/Sanctioned Load shall come into
effect from the first day of the month
following the month in which the reduction
of load has been sanctioned or have been
deemed to be sanctioned.
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9.2.6 After the sanction of the reduction of
Contract Demand/Sanctioned Load the
consumer shall execute a supplementary
agreement and the licensee shall
recalculate the Security Deposit excess
Security Deposit if any shall be refunded
by way of adjustment in the minimum
number of succeeding bills of the
consumer.”
(emphasis supplied)
9. The communication dated 08.11.2007 of the
Electrical Superintending Engineer of the Board,
refusing the prayer of the respondent for reduction of
load, is reproduced below:
“Sub: Regarding the reduction of
load from 4000 KVA to 1325
KVA in respect of M/s R.K.
Forging Ltd. Conn. No. HJAP185
Ref: Your letter No. R.K.F.L/III and IV
182/0708 dated 05.10.2007.
With respect to the above, you have
applied for reduction of C.D from
4000KVA to 1325KVA. It is to inform you
that C/9B of agreement may kindly be
seen.
‘C/9B The consumer shall not be at
liberty to determine this agreement before
the expiration of three years from the
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date of commencement of the supply of
energy (4000KVA w.e.f. 12.07.2007).
The consumer may determine this
agreement with effect from any date after
the said period on giving to the Board not
less than twelve calendar months’
previous notice (this has charged not less
than 6 Month Notice vide Secretary,
Jharkhand State Electricity Board
Notification No.5058 dated 20.08.2002) in
writing in that behalf and upon the
expiration of the period of such notice.
This agreement shall cease and
determine without prejudice to any right
which then have accrued to the Board
herewith provided always that the
consumers may at any time with the
previous consent of the Board transfer
and assign this agreement to any other
person and upon subscription of such
transfer, this agreement shall be binding
on the transferee and Board and take
effect in all respects as if transferee had
originally been party in place of the
consumer who shall henceforth be
discharged from all liabilities under or in
respect thereof.’
Hence your request for reduction
cannot be done as per agreement.”
10. Heard learned Counsel for the parties and
have carefully gone through the record.
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11. From perusal of the communication dated
08.11.2007, it is clear that the application of the
respondent for reduction of load has been rejected in
terms of Clause 9(B) of the agreement, treating the date
of commencement of the agreement to be 7/12.07.2007
and only by considering the provision of determination
of the agreement, which could not have been without
giving notice of less than 12 calendar months. It is
clear that the said communication/order does not
consider the provisions of the Regulations of 2005 with
regard to reduction of load, but only treats the
application for reduction of load to be an application for
determination of the agreement.
12. Chapter 9 of the Regulations of 2005 deals
with the enhancement and reduction of contract
demand/sanctioned load. Regulation 9.1 deals with
enhancement of contract demand/sanctioned load,
whereas Regulation 9.2 deals with the reduction of
contract demand/sanctioned load.
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13. Just as the consumer has the liberty of
getting its load enhanced under Regulation 9.1, the
reduction of contract demand/sanctioned load can also
be prayed for and decided in terms of Regulation 9.2.
The proviso to Regulation 9.2.1, no doubt, provides that
no reduction of load shall be allowed before expiry of the
initial period of agreement, which is three years in the
present case. The question would be whether the initial
agreement is to be considered for such purpose, or the
subsequent agreements.
14. Regulation 9.2.6 of the Regulations of 2005
provides for execution of a supplementary agreement for
reduction of contract demand/sanctioned load of the
consumer. Similarly, for enhancement of load also, even
if a fresh agreement may have been executed between
the parties, the same could be treated as nothing but a
supplementary agreement of the initial agreement by
which the electricity connection was granted for a
particular load. Clause 2(l) of the Regulations also
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defines “contract demand” to be demand mutually
agreed in the agreement or agreed through other written
communication, meaning thereby that for variation of
the contract demand execution of a fresh agreement is
not essential and the same can be done otherwise also
by mere written communication.
15. It is noteworthy that the Jharkhand State
Electricity Board (‘the Board’) is a monopoly supplier of
electricity which has laid down its own terms and
conditions, regarding which the consumer has no say or
choice but to sign on the dotted lines, if it wants of get
electricity load varied for running its industry. The
Board is an instrumentality of the State. It has to be fair
and reasonable. If the Regulations provide for contract
load to be varied even through a written
communication, then in our considered view, in all
fairness, though fresh agreements may have been
executed at the stage of enhancement of load of the
same electricity connection, the same cannot be treated
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as anything but an extension/amendment or
modification of the initial agreement granting the
electricity connection, which in the present case would
be the agreement dated 14.04.2004. On the dictates of
the Board, the consumer may have been required to
sign fresh agreements for each enhancement of load,
but the enhancement being for the same electricity
connection which still continues, it would merely be
amendment of the initial agreement. This would also be
in consonance with the provisions of the Regulations of
2005, which have to be liberally interpreted in favour of
the consumer.
16. Reverting to the order dated 08.11.2007,
which was impugned in the writ petition, we are of the
opinion that the Board has gone wrong in treating the
application dated 20.09.2007 of the respondent for
reduction of load to be that for determination of the
agreement under Clause 9B of the agreement, which
application, in fact, ought to have been considered
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under Regulation 9.2 of the Regulations of 2005.
Further, we are unable to accept the submission of the
learned Counsel for the appellant that the application of
the respondent for reduction of load was within the
period of three years, because as we have discussed
hereinabove, the agreement to be considered in the
present case is the initial agreement dated 14.04.2004
and not the subsequent agreement dated 07.07.2007.
17. The judgments of this Court rendered in
Bihar State Electricity Board, Patna and Others v.
M/s. Green Rubber Industries and Others, (1990) 1
SCC 731, Orissa State Electricity Board v. Orissa
Tiles Limited, (1993) Supp. 3 SCC 481, Andhra Steel
Corporation Ltd. and Others v. Andhra Pradesh State
Electricity Board and Others, (1991) 3 SCC 263 and
Jharkhand State Electricity Board & Others v Laxmi
Business and Cement Company Private Limited and
Another, (2014) 5 SCC 236 as have been relied upon by
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learned counsel for the parties, are distinguishable on
facts, in as much as they all relate to minimum
guarantee charge, and that too under the old Electricity
Act of 1910, as is so in the first three cases.
18. In view of the aforesaid, we are of the opinion
that the application of the respondent dated 08.11.2007
ought to have been allowed by the Board in terms of
Regulation 9.2 of the Regulations of 2005, treating the
application to be beyond the period of three years from
the date of the execution of the initial agreement dated
14.04.2004, by which the electricity connection of the
respondent had been initially granted.
19. While dismissing the appeal, we are not going
into the question as to whether the provisions of
Regulation 9.2.1 are discriminatory, arbitrary and
against the public policy, as has been held by the
Jharkhand High Court vide its judgment dated
23.07.2008.
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20. The appeal is, accordingly, dismissed. No
order as to costs.
21. The application of the respondent dated
20.09.2007 for reduction of contract load/sanctioned
load from 4000 KVA to 1325 KVA would be deemed to
have been allowed under the provisions of Regulation
9.2 of the Regulations of 2005, and the respondent shall
be entitled to all consequential benefits.
………..………………………………..J
(L. NAGESWARA RAO)
………..……………………………....J
(VINEET SARAN)
New Delhi
April 30, 2021.
