Supreme Court of India
BIHAR STATE ELECTRICITY BOARD & ANR.versusDHANAWAT RICE AND OIL MILLS
- Citation
- 1989 INSC 15
- Decided
- 17 January 1989
- Disposal
- Appeal(s) allowed
- Bench
- G L OZA
Holding
The consumer is liable to pay the annual minimum‑guarantee charges but is entitled to a proportionate reduction based on periods of non‑supply, and the Chief Engineer shall assess that reduction.
Summary
The Bihar State Electricity Board (BSEB) entered into a supply agreement with Dhanawat Rice and Oil Mills containing clauses for a constant supply of electricity, a minimum‑guarantee payment and a provision for proportionate reduction if supply was prevented by causes beyond the Board’s control. The Board billed the consumer for the annual minimum‑guarantee for the years 1973‑74 to 1982‑83, but the consumer claimed a reduction, arguing that frequent tripping, load‑shedding and power‑cuts meant the Board had not supplied ‘constant’ electricity as required. The Patna High Court held that because the Board failed to supply constant power, the consumer was not liable for any minimum‑guarantee charges. On appeal, the Supreme Court held that clause 1 does not require uninterrupted supply and that the consumer remains liable for the minimum‑guarantee but is entitled to a proportionate reduction for periods of non‑supply under clause 13, with the Chief Engineer tasked to assess the reduction. The Court set aside the High Court’s order, directed the Chief Engineer to determine the reduction, and ordered that supply not be disconnected pending assessment.
Issues considered
- Whether clause 1 of the electricity supply agreement obliges the Board to provide continuous (uninterrupted) supply or merely a constant supply as defined by voltage, cycles, phases and wires.
- Whether the consumer is liable to pay the annual minimum‑guarantee charges when the Board fails to supply electricity due to tripping, load‑shedding or other circumstances beyond its control.
- Whether clause 13 entitles the consumer to a proportionate reduction of the minimum‑guarantee bill and who has the authority to determine such reduction.
Legislation cited
- Electricity (Supply) Act, 1948s. 18, s. 26, s. 28, s. 29, s. 49, s. 54, s. 60
Subjects
electricity supplyminimum guaranteeproportionate reductioncontract interpretationconstant supplyload sheddingpower cutElectricity (Supply) Actclause 13
Judgment
BIHAR STATE ELECTRICITY BOARD & ANR.
A
v.
DHANAWAT RICE AND OIL MILLS
JANUARY 17, 1989
B [G.L. OZA AND K.N. SAIKIA, JJ.]
Electricity (Supply) Act, 1948: Sections 18, 26, 28, 29, 49, 54 &
60-Agreement to supply electrical energy-Clauses 1, 4 and 13 of the
agreement-Provision for constant supply of electricity-Constant supply
whether continuous supply-Minimum annual guarantee payment-
Tripping, load-shedding and power cut-Failure to supply continuous
c electricity-Circumstances beyond control of Electricity Board--Co.n-
sequent non-consumption by consumer upto the level of minimum
guarantee-Consumer entitled to proportionate reduction.
Clause 1, of the agreement arrived at between the consumer-
0 respondents and the appellant-Electricity Board, provided for constant
supply of electrical energy to the consumers. Clause 4 provided that
even if the consumer does not consume electricity above the minimum
guarantee then it will be incumbent upon the consumer to pay annual
minimum charges. Clause 13 provided for the contingency that if the
consumer is prevented from receiving or using the electrical energy due
E to strikes, riots, fire, floods, explosions, act of God or any other case
reasonably beyond the control of the Board or if the Board is prevented
from supplying such electrical energy owing to any of the causes
mentioned then the consumer was entitled to a proportionate reduction
of the annual minimum guarantee bill as determined by the Chief
-
Engineer.
F
The respondents were served with the bills for annual minimum
guarantee for the years 1973-74 to 1982-83 by the Electricity Supply
Division. The respondents tiled their claims, under clause 13, with the
Chief Engineer denying their liability to pay any such charges because
the Board did not supply constant supply as provided in clause 1. It was
G alleged that during the period in question due to trippings, load-sheding
and power-cut the respondents suffered a great loss. The Chief En- ~
gineer negatived the claims of the respondents.
A batch of writ petitions was filed in the High Court, challenging
the order of the Chief Engineer. Although in these petitions relief
H sought was proportionate reduction of the annual minimum guarantee
168
BIHAR STATEELEC. BOARD v. DHANAWATRICE& OIL MILLS 169
~- bills but in view of the interpretation of clauses I, 4 and 13 the High A
Conrt quashed the demand made by lhe Electricity Board by holding
that under clause I it was incumbent for the Electricity Board to supply
constant electricity supply and that the consumers will be liable to pay
annual minimum guarantee charges only if the Board supplies the
power as provided in the agreement but the consumer does not utilise B
, ~ the power.
In these appeals by Special Leave, it was contended on behalf of the
appellants that the 'constant supply' mentioned in clause 1 cannot mean
~----.; 'continuous supply'. The respondent-consumers could not deny the
liability to pay annual minimum guarantee bills if the Electricity Board
could not supply power for all the 24 hours due to circumstances beyond c
the coutrol of the Electricity Board. In case of shortage of supply due to
"I, circumsta11ces beyond the control of the Board the consumers were
entitled to a proportionate reduction under clause 13 of the agreement.
Allowing the appeals, the Court, D
HELD: 1. The High Court was not right in coming to the conclu-
sion that the respondents were not liable at all to pay the annual
minimum guarantee charges. [175C]
A
1.1. The High Court in its judgment clearly stated the hours E
every year in dispute when the power was not supplied and on this basis
the respondent-consumers will only be entitled to proportionate reduc-
lion as ordinarily the consumers are expected to have continuous power
supply. Clause 13 clearly provides for the proportionate reduction of
J the annual minimum guara.ntee bills. [175D]
2. Clause 1 talks of constant supply of electrical energy providing
F
for voltage, cycles, phases and wires. It does not talk of either of con-
tinuous or non-continuous or intermittent supply. [ t 73E]
3. The Respondent consumers are entitled to a proportionate re-
duction of the minimum guarantee bill. The inability of the Electricity G
Board. to supply electrical energy due to power cut or any other
circumstance beyond its control as per the demand of the consumer
-4- according to the contract will be reflected in :md considere«J as a
circumstance beyond the control of the consumer which prevented it
from consuming electricity .as per the contract and to the extent it
wanted to consume. [l 73G] H
170 SUPREME COURT REPORTS [1989] 1 S.C.R.
Northern India Iron & Steel Co. etc. v. State of Haryana & Anr.,
A
[1976] 2 S.C.R. 677, followed.
4. The Chief Engineer of the Electricity Board shall accordingly
assess the proportionate reduction of the annual minimum guarantee
bills in respect of disputed years on the basis of non supply as indicated
B in the High Court Judgment. [175D-E]
4.1. Pending assessment, the power supply of the consumers will
not be disconnected on the ground of failure to pay the annual minimum
guarantee bills. [175E]
C 4.2. The Electricity Board will be entitled to take recourse to the
normal procedure if the consumers fail to pay after the proportionate
reduction is made and fresh demand is made. [175E-FI
Amalgamated Electricity Co. Ltd. v. Jalagaon Borough Munici-
pality, [1976] 1 SCR 636; Mis. Man Industrial Corporation v.
D Rajas than State Electricity Board and others, AIR 1986 Rajasthan 137
and Mukand Iron and Steel Works Ltd. v. Maharashtra State Electricity
Board and another, AIR 1982 Bombay 580, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 156-
164 of1989.
E
From the Judgment and Order dated 24.7.1987 and 7.4.1988 of
the Patna High Court in C.W. J.C. Nos. 253, 266, 262, 255, 260 265,
555, 254of1986 and C.W.J.C. No. 17of1988 respectively.
Dr. Y.S. Chitale and Pramod Swamp for the Appellants.
F
N.R. Choudhary and L.R. Singh for the Respondents.
The Judgment of the Court was delivered by
OZA, J. Leave granted.
G
These special leave petitions have been filed against the judg- +
ment of the High Court of Patna by which several writ petitions were
disposed of. All these special leave petitions have been preferred in
this Court aggrieved by that judgment. The common question which
arises in all these SLPs is that under the agreement arrived at between
H the consumers and the Bihar State Electricity Board there is a clause
BIHARSTATEELEC. BOARD v. DHANAWATRICE&OILMILLS IOZA,J.) 171
4- of payment of minimum guarantee which indicates that even if the
consumer does not consume electricity above the minimum guarantee
A
that it will be incumbent upon the consumer to pay charges for energy
which is the annual minimum guarantee provided in the agreement
pertaining to Industrial units.
The relevant facts are that for the years 1973-74 to 1982-83 the B
.~·
bills for annual minimum guarantee were served on the appellants by
the Electricity Supply Division, Forbesganj and on receipt thereto the
appellants filed their claims as provided under clause 13 of the agree-
ment on the ground that appellant was not liable to pay any such
"-_)'· charges because the appellant did not supply constant electricity as
provided in the agreement during the period in question and there
were tripping, load shedding, and power-cut which resulted in a great
c
...,__ loss to the petitioners and as the supply was not in accordance with the
agreement liability to pay annual minimum guarantee bills could not
be fastened on the consumer. The Chief Engineer who was the author-
ity under the agreement negatived the claim and so they filed writ
petitions in the High Court. D
The High Court by the impugned judgment came to the con-
clusion that under clause I of the agreement it was incumbent for the
. J Electricity Board to supply constant electricity and the consumer will
be liable to pay annual minimum guarantee charges only if in spite of
the fact that the Board supplies power as contemplated in the agree- E
men! and the consumer does not utilise the power then the liability to
pay annual minimum guarantee charges will arise and on this basis the
High Court quashed the demands made for these years on the basis of
annual minimum guarantee as it found that power was not supplied
according to the agreement.
__j F
Learned counsel appearing for the Electricity Board contended
that cluase 1 of the agreement does not in any manner mean that there
should be a continuous supply. The term used in clause 1 of the agree-
ment only talks of constant supply of electrical energy a.t the pressure
of volts, cycles, 3 phase, 3 wire etc. but it does not talk of continuous
supply without any bteak and it therefore could not be contended that G
if there was no supply for a few minutes it will amount to failure on the
-+- part of the Electricity Board to provide constant supply. It was con-
tended that the constant supply cannot mean continuous supply. It
was also contended that clause 4 of the agreement clearly talks of the
payment of annual minimum guarantee charges and therefore it could
not be said that because of the power cut or situations beyond the H
172 SUPREME COURT REPORTS [1989] I S.C.R.
control of the Electricity Board if the power could not be supplied for
A
all the 24 hours every day the respondent consumer can deny the
liability to pay annual minimum guarantee bills. It was also contended
that in view of clause 13 of the agreement which provides that if there
was shortage of supply and that shortage resulted in short supply then
the consumer was entitled to a proportionate reduction of the annual
B minimum guarantee bill as determined by the Chief Engineer, Biha.r
State Electricity Board and consequently the respondent in this case
went to the Chief Engineer who ultimately decided on the basis of facts
that respondents were not entitled to any proportionate reduction and
it was because of this that the petitions were filed before the High
Court. It was contended that the learned Judges of the High Court ·
have failed to appreciate clause 13 of the agreement. Learf'\ed counsel
c also placed reliance Of'\ the decisions in Amalgamated Electricity Co.
Ltd. v. Jalgaon Borough Municipality, [1976] 1SCR636; Mis Northern >r·
India Iron & Steel Co. etc. v. State of Haryana & Anr. , [1976] 2 SCR
677; Mis Man Industrial Corporation v. Rajasthan State Electricity
Board and others, AIR 1986 Rajasthan 137 and Mukand Iron and Steel
D Works Ltd. v. Maharashtra State Electricity Board and another, AIR
1982 Bombay 580.
Learned counsel for the respondents on the other hand con-
tended that clause 1 provides for constant supply of power, the varia-
tions permitted have been indicated in this clause itself and it is COf'\-
E tended that it is only where the electricity Board discharges its duty to
supply power as contemplated in clause I and the CO!lS\lmer because of
his ·difficulties is not able to utilise power even upto the level of
minimum guarantee that the liability to pay annual minimum
guarantee bills could be fastened on the consumer but if the Board
fails to discharge its responsibilities as contemplated ip clause 1 of the
F agreement it could not compel the consumer to pay the annual
minimum guarantee. It was frankly conceded that in the petition itself
originally relief sought was proportionate reduction of the annual
minimum guarantee bills but in view of the interpretation of clauses I, 4
and 13 the High Court came to the conclusion that there is no liability
on the consumer to pay annual minimum guarantee bills as the Elec-
G tricity Board has failed to supply power as contemplated in clause I of
the agreement. Learned counsel however contended that the Chief
Engineer in his order has misunderstood the whole situation but before -+-
'.
the High Court the facts were not disputed and in each case average
hours of supply per year during the disputed period have been stated
which have not been disputed by the Electricity Board and if at all the
-~ H High Court judgment is not maintained the respondents are entitled to
.
BIHARSTATEELEC. BOARD v. DHANAWATRICE&OILMILLS (OZA,J.I 173
proportionate reduction of the annual minimum guarantee bills in the
A
light of the hours of supply per year which have been stated in the High
Court judgment and is not disputed.
Clause 1 of the agreemnt reads as under:
B
, "1. (a) The Board shall furnish to the consumer and the
consumer shall accept at the point of supply mentioned in
··-- the schedule hereto, on and from the date on which the said
premises shall be connected with the supply Distributing
mains and during the continuance of the agreement, a con-
stant supply of electrical energy at the pressure of ..... .
Volts, 50 cycles, 3 phases, 3 wires, alternating current c
system subject to standard variations as provided in Indian
Electricity Rules, 1956 or any other statutory modification
thereof as may be in force from time to time for the
purpose and upto ·the maximum specified (hereinafter re-
ferred to as the contract demand) and under the conditions D
laid down in the Schedule."
This clause talks of constant supply of electrical energy providing for
voltage, cycles, phases and wires. It is clear that it does not talk of
continuous supply nor does it talk of non-continuous or intermittent
supply. In fact this clause in our opinion is not very material for the E
decision of the case as the sole controversy pertains to interpretation
of clause 13.
Clause 4 of the agreement provides for the minimum guarantee
and there is no dispute that if the consumer is not able to utilise
electricity even upto the level of minimum guarantee; This clause pro- F
vides for payment of charges of minimum guarantee. "The real con-
troversy pertains to the interpretation of clause 13. In fact in Northern
India Iron & Steel Co. case. [19761 2 SCR 677 this Court had the
occasion to consider a situation of this kind where this Court on this
aspect of the matter has observed that where the Electricity Board fails
to supply power because of shortage of energy, power cut or any other G
circumstances as per demand of the consumer according to the con-
, tract it will be considered as a circumstance beyond the control of the
consumer which prevented it from consuming electricity as per the
contract.
Their Lordships observed as under: H
174 SUPREME COURT REPORTS [1989) 1 S.C.R.
A
"We are, therefore, of the view that the inability of +
the Board to supply electric energy due to power cut or any
other circumstance beyond its control as per the demand
of the consumer according to the contract will be reflected
in and considered as a circumstance beyond the control of
the consumer which prevented it from consuming elec-
B tricity as per the contract and to the extent it wanted to 1
consume. The monthly demand charge for a particular
month will have to be assessed in accordance with sub-
clause (b) of clause 4 of the tariff and therefore from a
proportionate reduction will have to be made as per sub- ~
clause (f). We hope, in the light of the judgment, there will
be no difficulty in working out the figures of the propor-
c . tionate reduction in any of the cases and for any period. In
case of any difference or dispute as to the quantum of the >r
demand charge or the proportionate reduction, parties will
be at liberty to pursue their remedy as may be available to
them in accordance with law."
D
It appears that reading clause 13 in the present case clearly provides
for the contingency and it provides for the failure on the part of the
supplier and also failure on the part of consumer in the circumstances
like strike, riot, fire, flood, explosion or act of God or any other -A.
reason beyond the control of either of the parties. Clause 13 of the
E agreement reads:
"If at any tirhe the consumer is prevented from receiving or ...
using the electrical energy to be supplied under this agree-
ment either in whole, or in part due to strikes, riots, fire,
floods, explosions, act of God or any other case reasonably
F beyond control or if the Board is prevented from supplying
or unable to supply such electrical energy owing to any or
all of the causes mentioned above then the demand charge
and guaranteed energy charge set out in the schedule shall
be reduced in proportion to the ability of the consumer to
take or the Board to supply such power and the decision of
G the Chief Engineer, Bihar State Electricity Board, in this
respect shall be final."
-t--
In view of this language of the clause clearly providing for the propor-
tionate reduction of the annual minimum guarantee bills it could not
be doubted that the High Court was not right in coming to the conclu·
H sion that the respondents were not liable to pay annual minimum
BIHARSTATEELEC. BOARD v. DHANAWATRICE&OILMILLS [OZA,J.] 175
guarantee bills at all. The judgment of this Court also clearly indicated A
that the respondents consumers are entitled to a proportionate reduc-
tion of the minimum guarantee bills. In clause 13 of the agreement this
is clearly stated that the authority competent to determine the propor-
tionate reduction is the Chief Engineer and it appears that it was
because of this that the respondents consumers approached the Chief B
Engineer for consideration. But it appears that the learned Chief
Engineer also did not clearly understand the meaning of clause 13. The
judgment of the High Court on which reliance is placed have only
followed the judgment referred to above.
In our opinion, therefore, the High Court was not right in com-
ing to the conclusion that the respondents were not liable at all to pay C
annual minimum guarantee charges. In fact they are only entitled to
the proportionate reduction. The judgment of the High Court clearly
states the hours every year.in dispute when the power was not supplied
and on this basis the respondents consumers will be entitled to propor-
tionate reduction as ordinarily the consumers are expected to liave D
continuous power supply. It is therefore directed that the Chief
Engineer of the Electricity Board on the basis of hours of non supply
as indicated in the High Court judgment and not disputed in the High
Court will assess the proportionate reduction of the annual minimum
guarantee bills in respect of disputed years indicated above and it is
also directed that until this is not done the power supply will not be E
disconnected on the basis of failure to pay the annual minimum
guarantee bills for the periods stl!ted above. However, after the prop-
ortionate reduction is made and fresh demand is made, Electricity
Board will be entitled to take recourse to the normal procedure if the
consumers fail to pay .
. .
In the circumstances no order as to costs.
F
T.N.A. Appeals allowed.
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