Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 662-663 2013
(Arising out of S. L. P. (C) Nos. 32975-32976 of 2009)
Ms. Oswal Agro Mills Ltd. … Appellant
Versus
Punjab State Electricity Board and Others. … Respondents
JUDGEMENT
A. K. PATNAIK, J.
Leave granted.
2. The facts very briefly are that the
appellant owns a sugar mill
situated at Phagwara, and the respondent no.1-Board is supplying
electricity to the sugar mill.
In 1989, the appellant installed a TG
Set of 3187.500 KW capacity to meet some of its electricity demand and
applied for approval of its TG Set to the respondent no.1. By memo
dated 08.12.1992, the Chief Engineer, Commercial of the respondent
no.1 granted permission to the appellant for installation of 2 No. TG
Sets subject to some conditions.
On 09.12.1992, however, the Flying
Squad, Jalandhar of the respondent no.1 visited the sugar mill of the
appellant and checked the electricity connection at the sugar mill.
Pursuant to the report submitted by the Flying Squad, the Sub-
Divisional Officer (Suburban), Phagwara of the respondent no.1 issued
a demand notice dated 10.12.1992 to the appellant stating inter alia
that the TG Set and stand-by load had not been sanctioned by the
respondent no.1 and the appellant was liable for an excess
unsanctioned load of 4904.127 KW for load surcharge at the rate of
Rs.1,000/- per KW, which worked out to Rs.49,04,127/-.
3. The appellant made a representation to the Sub-Divisional Officer
(Suburban), Phagwara, and to the Chief Engineer, Commercial of
respondent no.1 against the demand of load surcharge of Rs.49,04,127/-
. When there was no response from the aforesaid two authorities of
the respondent no.1, the appellant filed a Writ Petition CWP No.370 of
1993 before the High Court of Punjab and Haryana at Chandigarh
challenging the demand of load surcharge of Rs.49,04,127/-.
The
Division Bench of the High Court held in its order dated 30.03.1993
that the respondent no.1 could charge for the excess load which was to
be the sum of the rated capacities of all the energy consuming
apparatus in the consumer’s installation, but from the order impugned
by the High Court or from the documents filed by the respondent no.1
before the High Court along with its written reply, there is nothing
to show that the TG Set having the capacity of 3187.5 KW was an energy
consuming apparatus.
The Division Bench further held in its order
dated 30.03.1993 that for the purpose of charging for the excess load,
the load of the stand-by machinery was to be excluded and, therefore,
the load to the extent of 2226.330 KW of the stand-by apparatus in the
order impugned before the High Court could not be included.
For the
aforesaid reasons, the Division Bench quashed the demand of load
surcharge of Rs.49,04,127/- leaving it to the respondent no.1 to pass
afresh appropriate order, if so advised, with liberty to the appellant
to challenge the same, if required.
4. Thereafter, by a fresh demand notice dated 01.06.1993, the Sub-
Divisional Officer (Distribution), Suburban Sub-Division, Phagwara,
raised the very same demand of Rs.49,04,127/- for the unauthorized TG
Set load of 3187.500 KW and stand-by load of 2226.330 KW totalling to
6520.155 KW at the rate of Rs.1,000/- per KW.
The appellant filed a
second Writ Petition CWP No.7299 of 1993 challenging the aforesaid
demand. The learned Single Judge, who heard and disposed of the writ
petition, held in his order dated 01.04.2009 that the finding of the
Division Bench of the High Court in earlier Writ Petition CWP No.370
of 1993 that the stand-by load of 2226.330 KW could not be included in
the demand for excess load was binding on the respondent no.1 and
hence the demand of excess load on account of the stand-by load could
not be raised again by the respondent no.1. Regarding the connected
load of the TG Set, the learned Single Judge of the High Court
referred to the earlier order dated 21.08.2008 of the learned Single
Judge in which it was recorded that the learned counsel for the
appellant had very fairly stated that he would accept the decision of
the Dispute Settlement Committee of the respondent no.1 and as the
Dispute Settlement Committee had decided the matter against the
appellant, the addition on account of the load connected on the TG Set
could not be faulted with. Aggrieved, the appellant filed Letters
Patent Appeal No.304 of 2009 before the Division Bench of the High
Court, but by the impugned order dated 01.05.2009 the Division Bench
dismissed the appeal after holding that there was no infirmity in the
findings returned by the learned Single Judge on the basis of the
statement made by the counsel for the appellant and the report
submitted by the Dispute Settlement Committee. The appellant filed a
Review Application RA No.6 of 2009 before the Division Bench, but by
the impugned order dated 31.07.2009 the Division Bench dismissed the
Review Application. Aggrieved, the appellant has filed this appeal by
way of special leave under Article 136 of the Constitution challenging
the orders of the Division Bench of the High Court in the Letters
Patent Appeal and the Review Application.
5. Learned counsel for the appellant submitted that the only ground on
which the learned Single Judge in CWP No.7299 of 1993 declined to
quash the demand for the excess connected load of the TG Set was that
the learned counsel for the appellant had agreed before the learned
Single Judge on 21.08.2008 that he would accept the decision of the
Dispute Settlement Committee of the respondent no.1 on this aspect of
the matter. He submitted that a reading of the order dated 21.08.2008
of the learned Single Judge would show that the learned counsel for
the appellant had only agreed to accept the decision of the Dispute
Settlement Committee of the respondent no.1 on the question
whether
with the aid of a device called a bus coupler, inter-transferability of load could be effected between the TG Set of the appellant and the energy supplied by the respondent no.1.
He submitted that the learned
counsel for the appellant, therefore, had not agreed before the
learned Single Judge on 21.08.2008 to accept the decision of the
Dispute Settlement Committee of the respondent no.1 with regard to the
legality of the demand for the excess load on account of the TG Set.
He further submitted that it will be clear from the memo dated
08.12.1992 issued by the Chief Engineer, Commercial, that the
respondent no.1 had permitted installation of the two TG Sets subject
to certain conditions and, therefore, the load of the TG Set had been
permitted/sanctioned by the competent authority of the respondent no.1-
Board and the appellant could not be charged any load surcharge at the
additional rate of Rs.1,000/- per KW for 3187.500 KW connected load of
the TG Set under the Commercial Circular No.12 of 1989.
6. Learned counsel appearing for the respondents, on the other hand,
submitted that the memo dated 08.12.1992 of the Chief Engineer,
Commercial of the respondent no.1 would show that the appellant was
permitted installation of 2 No. TG Sets subject to certain conditions
which were to be complied with by the appellant and if the conditions
were to be complied with, the appellant was liable for prosecution
under Section 58 read with Section 43 of the Indian Electricity Act,
1910 and the unauthorized TG Sets were to be disconnected after giving
24 hours notice and were not allowed to be run till its sanction is
obtained from the competent authority of the respondent no.1. He
submitted that the permission was only given for installation of TG
Set and not for the bus coupler and yet on 09.12.1992 when the Flying
Squad of the respondent no.1 entered the sugar mill of the appellant,
they found that the TG Turbo Bus and the supply of the respondent no.1
were electrically connected through LT Bus Coupler and there was inter-
transferability of load. He submitted that, therefore, the TG Set of
the appellant was found as unauthorized load for which the appellant
was liable for load surcharge at the additional rate of Rs.1,000/- per
KW. He submitted that the learned Single Judge and the Division Bench
of the High Court were, therefore, right in rejecting the challenge of
the appellant to the demand of Rs.26,77,797/- towards load surcharge
for the TG Set at the rate of Rs.1,000/- per KW.
7. The first question that we have to decide is whether on 21.08.2008 the
learned counsel for the appellant had agreed before the learned Single
Judge to accept the decision of the Dispute Settlement Committee of
the respondent no.1 on the legality of the demand of the unauthorized
load of the TG Set and, therefore, the learned Single Judge and the
Division Bench of the High Court were right in taking a view that the
appellant was not entitled to challenge the demand of load surcharge
for the authorized load in respect of the TG Set. The order dated
21.08.2008 of the learned Single Judge in CWP No.7299 of 1993, which
records the submission of the learned counsel of the appellant, is
extracted hereinbelow:
“Present: Mr. Rahul Sharma, Advocate
For the petitioner.
Mr. H.S. Riar, Advocate
with Mr. DPS Kahlon, Advocate
for the Respondents.
Arguments in part heard.
The dispute in this petition primarily relates to the question,
whether with the aid of a device called a bus coupler, inter-
transferability of load could be effected between the captive
generation apparatus of the petitioner and the energy supplied by the
respondent-board. This is a disputed question of fact.
At this stage learned counsel for the petitioner has very fairly
stated that he would accept the decision of the Dispute Settlement
Committee of the respondent-board on this aspect of the matter. Let
the Dispute Settlement Committee of the respondent-board, after
hearing both the parties, give an opinion on the question
whether the
bus coupler installed by the petitioner would permit inter-
transferability of the load between the Turbo Generator Set of the
petitioner and the PSEB.
Let representatives of both the parties
appear before the Dispute Settlement Committee in this regard on
28.08.2008.
The matter is adjourned for two weeks i.e. 8.9.2008. Copy of
this order be given to both the learned counsel under the signatures
of the Reader of this Court.
Sd/-
Ajay Tewari
Judge
August 21, 2008.”
8. It will be clear from the aforesaid order dated 21.08.2008 that the
learned Single Judge was of the opinion that the dispute between the
parties was on the question whether with the aid of a device called a
bus coupler, inter-transferability of load could be effected between
the captive generation apparatus of the appellant and the energy
supplied by the respondent no.1 and he was also of the opinion that
this dispute was on a question of fact and accordingly learned counsel
for the appellant had stated very fairly that he would accept the
decision of the Dispute Settlement Committee of the respondent no.1 on
this aspect of the matter. Hence, learned counsel for the appellant
had not agreed before the learned Single Judge of the High Court that
he would accept the decision of the Dispute Settlement Committee of
the respondent no.1 on the legality of the demand for the extra load
on account of the TG Set. In fact, we find from the proceedings of
the Dispute Settlement Committee that
the Dispute Settlement Committee
has also not decided on the legality of the demand for the extra load
on account of the TG Set,
but has only decided that with the aid of a
device called a bus coupler, inter-transferability of load could be
effected between the captive generation apparatus of the appellant and
the energy supplied by the respondent no.1.
In our considered
opinion, therefore, the legality of the demand for the extra load on
account of the TG Set should have been decided by the learned Single
Judge or the Division Bench after taking into account the finding of
the Dispute Settlement Committee that with the aid of a device called
a bus coupler, inter-transferability of load can be effected between
the TG Set of the appellant and the energy supplied by the respondent
no.1.
9. The next question that we have to decide is
whether the appellant is
liable for the demand of load surcharge for the unauthorized load in
the notice dated 01.06.1993 issued by the Sub-Divisional Officer of
the respondent no.1 keeping in view the finding of the Dispute
Settlement Committee of the respondent No.1 that with the aid of bus
coupler, inter-transferability of load can be effected between the
captive generation apparatus of the appellant and the energy supplied
by the respondent no.1 board.
The justification of the demand made by
the respondent no.1 is given in the demand notice dated 01.06.1993 of
the Sub-Divisional Officer of the respondent no.1 in which demand for
load surcharge has been raised.
Relevant extract from the demand
notice dated 01.06.1993 containing the justification of the demand is
extracted hereinbelow:
“1. Total load running on PSEB System as checked by enforcement staff
on 9.12.92: 1106.325 KW.
2. As agreed by your representative Sh. Ramesh Chand who was present
at the time of spot checking, the TG Set load which also includes the
running stand bye load which was taken on the basis of details of load
given to the Board as per A/A form along with test reports submitted
earlier and not on the basis of R.C. Set Capacity: 3187.500 KW
Stand by Load on T.G. Set: 2226.330 KW
Total: 6520.155 KW
In addition to above, as per checking of enforcement staff on 9.2.92
and your representative Sh. Ramesh Chander Sharma present at the time
of checking the total load was accepted so this load is unauthorized.
It is also made clear that under PSEB Circular No.12/89 General
Condition 14 and as per 8.. of Tariff Schedule, the standby load until
sanctioned by the Board is unauthorized. Your attention is invited to
your registered letter No.2922 dt. 26.8.89 addressed to Member
Commercial, PSEB, Patiala in which you had mentioned that new schedule
of tariff for Sugar Mills would tend to increase difficulties and also
admitted that keeping this in view approximately Rs.35/40 lacs
required to be deposited for running the 4434 KW on T.G. Set, expenses
of which are not bearable. Keeping this in view the Board has issued
Special instruction to the sugar mills vide Circular No.CC23/90 along
with some condition, the compliance of which is not fulfilled by you.
As a result of this a load of 4904.127 KW was declared unauthorized
after checking by the XEN Enforcement on 9.12.92. Keeping in view the
unauthorized load you are requested to deposit Rs.49,04,127/- as per
Board Circular No. CC 12/89 clause No.2 C 23/90 @ Rs.1000/- per KW.
Since it is your 2nd default you have already deposited Rs.33,347/- on
23.5.91 towards first default.”
10. It is apparent from what has been extracted from the demand notice
dated 01.06.1993 of the Sub-Divisional Officer of the respondent no.1
that the unauthorized load comprised the TG Set load 3187.500 KW and
the standby load of 2226.330 KW.
So far as the standby load of
2226.330 KW is concerned, the demand for unauthorized load has been
set aside by the learned Single Judge by the order dated 01.04.2009 in
CWP No.7299 of 1993 and the order dated 01.04.2009 has not been
challenged by the respondents either before the Division Bench of the
High Court or before this Court.
In fact, we find that the Sub-
Divisional Officer of the respondent no.1 has issued a fresh demand
notice dated 12.06.2009 to the appellant pursuant to the order dated
01.04.2009 of the learned Single Judge in CWP No.7299 of 1993
restricting the demand of Rs.26,77,797/- for the unauthorized load on
account of the TG Set.
Hence, we are to examine
whether the reasons
given in the demand notice dated 01.06.1993 of the Sub-Divisional Officer of the respondent no.1 for the unauthorized load of the TG Set are legal.
11. From the aforesaid extract of the demand notice dated 01.06.1993 of
the Sub-Divisional Officer of the respondent no.1, we find that the reason
for the demand for unauthorized load for the TG Set is that respondent No.1-
Board has issued special instruction to sugar mills vide Circular
No.CC23/90 along with some conditions, compliance of which have not been
fulfilled by the appellant and as a result the load on account of TG Set
was declared unauthorized after checking by XEN Enforcement on 09.12.1992.
We have examined the Circular No.CC 23/90 and we find that by the said
Circular issued by the Chief Engineer, Commercial of the respondent No.1,
all concerned were informed that respondent no.1 has decided to regularize
the load of the sugar mills fed from TG Sets after recovering ACD worked
out according to the capacity of TG Sets. In para 3 of the Circular, the
working details for regularizing load of sugar mills from the supply of
respondent no.1-Board and TG Sets have been given and at the end of the
Circular it is mentioned that necessary action for regularizing total load
of the sugar mills may be taken accordingly. Pursuant to the said
Circular, the appellant applied for regularization of load of two TG Sets
and by memo dated 08.12.1992 issued by the Chief Engineer, Commercial of
the respondent no.1, the appellant was permitted to install two TG Sets
subject to certain conditions.
The memo dated 08.12.1992 issued by the
Chief Engineer, Commercial of the respondent no.1 is extracted hereinbelow:
“PUNJAB STATE ELECTRICTY BOARD
From
The Chief Engineer / Commercial,
Tariff & Billing Directorate, PSEB,
The Mall, Patiala 147001
To,
M/s Oswal Agro Mills Ltd.
Sugar Divn. G.T. Road,
Phagwara (Pb.)
Memo No.64192/Com/54/Indl./Jall.
Dated 8.12.92
Sub: Permission for installation of 2 no. TG Sets of
3730 KVA & 500 KVA capacity.
Reference your letter regarding permission for installation of 2 No.
TG Sets.
You are hereby permitted to install 2 No. TG sets of 3750 KVA Capacity
of make Jyoti Vadodars, 420 Volts of 1500 RPM KVA Tg Set of Crompton
make 400 volts & 375 RPM, subject to the following conditions:-
i. All relevant provisions of the I.E. Rules, 1956 shall be
complied with by you and test report of the installation shall
be furnished.
ii. That the Generating set will be operated whenever called upon to
do so by the Pb. State Elecy. Board for meeting your demand or
for giving suitable relief to the Board’s system by meeting the
demand of the other consumers also, depending upon the
prevailing situation.
iii. Full proof arrangements to be approved by SE/DS concerned shall
be provided to avoid mixing of Board’s supply with that to be
generated by the generating sets. It shall be ensured that the
nature of the PSEB supply is isolated ruing change over to TG
sets supply.
iv. That after obtaining receipts of this permission you will give
notice not less than 7 (seven) days to the concerned District
Magistrate in terms of Section 30 of the Indian Elecy. Act, 1910
intimating the nature and purpose of supply.
v. That the separate notice of not less than 7 (days) shall also be
given to Chief Electrical Inspector to Govt. Punjab as laid down
in Section 30 of the Indian Electricity Act, 1910. Notice shall
also be accompanied by the following documents:-
a. Particulars of the Electrical installation and plan
thereof.
b. A copy of the notice sent to the District Magistrate.
c. An attested copy of the consent received from the Punjab
State Electy. Board.
d. Original Challan of the prescribed inspection fee under the
following Head of Account;
-043 – Taxes and Duties on Electricity fee under the Indian
Electricity Rules.”
e. Test report from Licensed Wiring Contractor in token of
his having carried out the job and tested the installation
for safety.
f. A single line key diagram indicating the arrangement of
connecting the generator installation to the existing
electrical installation.
vi. That suitable energy meter shall be installed to comply with
the requirement of Rule-6 of Punjab Electricity Duty Rules 1958.
The meter shall be got tested from the nearest PSEB laboratory.
vii. That in case you fail to comply with the above provision you
shall make yourself liable for prosecution under Section 58 read
with Section 43 of Indian Electricity Act, 1910. The
unauthorized T.G. Sets shall be disconnected after giving 24
hours notice and shall not be allowed to run till its sanction
is obtained from the competent authority. In case you do not
disconnect the TG Sets or apply for regularization of TG Sets
your connection shall be disconnected after giving 24 hours
notice in writing for contravening the provisions of the said
Act and Clause 19 of the PSEB, abridged conditions of supply.
Supply in such cases shall not be restored unless you disconnect
the TG Sets and furnish test report for sanction electric
installation or comply with the above provisions.”
Thus, on 09.12.1992 when the Flying Squad, Jalandhar, of respondent no.1
visited the sugar mill of the appellant, the Chief Engineer, Commercial of
respondent no.1 had already permitted installation of TG Sets in the sugar
mill of the appellant. If the appellant had refused to comply with the
conditions mentioned in the Circular No.CC 23/90 for regularization of the
load of the sugar mill fed from the TG Sets, the Chief Engineer,
Commercial, would not have granted such permission in the memo dated
08.12.1992. Alternatively, even if the appellant had refused to comply
with some conditions in the Circular No.CC 23/90, the Chief Engineer,
Commercial did not consider such refusal to disentitle the appellant for
regularization of the installation of the TG Set and permitted the
installation of the TG Sets by the memo dated 08.12.1992.
12. We further find from the aforesaid extract from the demand notice
dated 01.06.1993 that for the unauthorized load, a demand has been made at
the rate of Rs.1,000/- per KW in accordance with Clause 8-b of the Schedule
of Tariff applicable to the sugar mill of the appellant as notified in the
Commercial Circular No.12/89. Clause 8-b of the Schedule of Tariff as
notified in the Commercial Circular no.12/89 is extracted hereinbelow:
“SCHEDULE OF TARIFF:
i. Schedule L.S. – Large Industrial Power Supply 1 to 7.
8. ……………..
‘8-b. If the connected load of a consumer exceeds the sanctioned
connected load, the excess load shall be unauthorized load. Such
excess of the connected load shall be charged load surcharge at an
additional rate of Rs.1000/- per KW for each subsequent default.”
It will be clear from Clause 8-b of the Schedule of Tariff that if the
connected load of a consumer exceeds the sanctioned connected load, the
excess load shall be unauthorized load and such excess connected load shall
be charged at additional rate of Rs.1000/- per KW for each subsequent
default.
If, therefore, any load is sanctioned by the appropriate
authority of respondent no.1-Board, such load cannot be held to be unauthorized load or excess load liable to surcharge at the rate of Rs.1000/- per KW.
As we have already found, on 08.12.1992, the Chief
Engineer, Commercial, has sanctioned or permitted or regularized the
installation of two TG Sets and hence the load of 3187.500 KW of the TG Set
detected on 19.12.1992 was a sanctioned load and was not an unauthorized
load for which the appellant can be charged load surcharge at the rate of
Rs.1000/- per KW under Clause 8-b of the Schedule of Tariff.
13. Once we hold that the load of the TG Sets was sanctioned and
authorized, the appellant could not be held liable for load surcharge under
clause 8-b of the Schedule of Tariff for the load of the TG Set, even if by
the aid of bus coupler, inter-transferability of load could be effected
between the TG Set of the appellant and the energy supplied by the
respondent no.1-Board.
For the consumption of energy from the supply of
the respondent no.1, the appellant was liable for every unit of energy
consumed to the respondent no.1.
For demand of energy, the appellant being
a sugar mill was also liable for demand charges with minimum contract
demand of not less than the capacity of the distribution transformer(s)
installed by the appellant and not 60% of the connected load as stated in
the Commercial Circular Nos.12/89 and 23/90.
What the learned Single Judge
and Division Bench of the High Court failed to appreciate is that the
appellant was separately liable for energy charges and demand charges to
the respondent no.1 for consumption of energy and demand of energy
respectively under the Schedule of Tariff and the levy of load surcharge at
the additional rate of Rs.1000/- per KW was only meant for a load of the
consumer which was unauthorized or not sanctioned and if a particular load
of a consumer is sanctioned or authorized, load surcharge at additional
rate of Rs.1000/- per KW could not be levied under Clause 8-b of the
Schedule of Tariff.
14. Learned counsel for the respondents vehemently submitted that the
permission to install the TG Sets granted by the memo dated 08.12.1992 by
the Chief Engineer, Commercial of the respondent no.1 was subject to
various conditions mentioned in the memo dated 08.12.1992 and these
conditions have not been fulfilled by the appellant.
Learned counsel for
the respondents is right that since the permission to install the TG Sets
was granted by the memo dated 08.12.1992 subject to various conditions, the
load of the TG Sets installed could not be said to be sanctioned or
authorized if the conditions in the memo dated 08.12.1992 were not
fulfilled.
It was, therefore, open to the respondents to treat the load of
the TG Set as unauthorized on the ground that the conditions in the memo
dated 08.12.1992 permitting the installation of the TG Sets were not
fulfilled.
But neither in the first demand notice dated 10.12.1992 nor in
the second demand notice dated 01.06.1993 of the Sub-Divisional Officer of
the respondent no.1 raising the demand for unauthorized load for the TG
Set, there is any mention that the demand for unauthorized load was being
raised because the appellant had not fulfilled the conditions mentioned in
the memo dated 08.12.1992 of the Chief Engineer, Commercial of the
respondent no.1.
In the demand notice dated 10.12.1992 of the Sub-
Divisional Officer of the respondent no.1, the only reason given for
raising the demand for unauthorized load was that the TG Set load “has not
yet been sanctioned by the Board”. After the High Court quashed the first
demand notice dated 10.12.1992 in CWP No.370 of 1993, leaving it to the
respondent no.1 to pass afresh an appropriate order, the Sub-Divisional
Officer issued the second demand notice dated 01.06.1993, but in this
lengthy second demand notice also it has not been stated that the demand
for unauthorized load for the TG Set was being made because the appellant
has not fulfilled the conditions mentioned in the memo dated 08.12.1992 of
the Chief Engineer, Commercial of the respondent no.1. In fact, in the two
demand notices dated 10.12.192 and 01.06.1993 no reference at all has been
made to the memo dated 08.12.1002 of the Chief Engineer, Commercial of the
respondent no.1.
15. In the result, these appeals are allowed.
The impugned orders of the
learned Single Judge and the Division Bench of the High Court are set aside
and the demand raised against the appellant in the
demand notice dated
01.06.1993 and the demand notice dated 12.06.2009 for unauthorized load of the TG Set is quashed.
The parties shall bear their own costs.
..……………..……………………….J.
(A. K. Patnaik)
...…………..………………………..J.
(Sudhansu Jyoti Mukhopadhaya)
New Delhi,
January 23, 2013.
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