BIHAR STATE ELECTRICITY BOARD & ORS.versusMIS. BHOLA RAM STEEL PVT. LTD. & ORS.

                        [2016] I S.C.R. 499



          BIHAR STATE ELECTRICITY BOARD & ORS.                          A
                                 v.
          MIS. BHOLA RAM STEEL PVT. LTD. & ORS.
                   (Civil Appeal No. 585 of2016)
                        JANUARY 28. 2016                                B

           [M.Y. EQBAL AND ARUN MISHRA, JJ.]
      Electricity - Benefit under Industrial Policy I 995 - Of
exemption from payment of minimum guarantee charges - To the
industrial units having connected load of 500 KVA - Industrial unit/
consumer in question entered into an agreement for a contract
                                                                        c
demcnd of 500 KVA - Entitlement to the exemption - Held: As per
the readings in Maximum Demand Indicator (MDI) Meter!Trivector
Meter, the· consumer availed electricity in excess of the contracted
load which was in contravention of the agreement - Therefore, the
appellant-Board was well within its right to realize the amozint as     D
per tariff Notifications, in view of clause 16.5 of the Notification
dated 21.06.1993 issued u/s. 49 of Electricity Act, 1948 - The
consumer is not entitled to benefit of exemption - Electricity Act,
1948 - s. 49.
        Allowing the appeal, the Court                                  E
      HELD: 1. As per the readings recorded by the MDI meter/
Trivect< . meter, it is apparent that consumer has availed and
drawn electricity in excess of the contracted load in contravention
of th~ ;reement with the Electricity Board. The reading of MDI
meter 1s indicator of total connected loads, the total load deman.ded   F
and availed of during the course of actual consumption of energy.
In the facts of instant case, it is apparent that for six months in
the year 1999-2000 the MDI meter has recorded excess load.
Thus the High Court has erred in the facts of the instant case in
holding that it has not been established in the instant case that
the c<mnected load was more than 500 KVA. [Para 14] [504-D-E)           G

      Orissa State Electricity Board & Am: v. !PI Steel Ltd. &
      Ors. (1995) 4 SCC 320: 1995 (3) SCR 684; Bhilai
      Rerollers & Ors. v. MP. Electricity Board & Ors. (2003)
      7 SCC 185: 2003 (2) Suppl. SCR., 787 .- relied on.
                                                                        H
                                499
500                   SUPREME COURT REPORTS                   (2016] I S.C.R.



 A          2. Merely in an inspection in January, 1999 the connected
      load was found to be of 495 HP when for six months in a subsequent
      period of April, 1999 to March, 2000 maximum demand has
      increased beyond the contracted load of 500 KVA and it is not
      disputed that it was more than 110% of the contract load. Thus
      as per clause 16.5 of the notification dated 21.06.1993 issued
 B
      under the Electricity Supply Act, 1948 the Electricity Board was
      well within its rights to realize the amount as per tariff notification.
      The High Court has erred in holding in the facts of the case that
      there can be no correlation with the maximum demand and the
      connected load. [Para 16] [507-D-F]
 c        3. The High Court has also proceeded on irrelevant
    consideration while it has observed that entrepreneur has stepped
    up production, which will result in economic development,
    generation of employment and income and higher consnmption
    is better for the State of Bihar. This was not a question to be
 D gone into by the High Court. The High Court was required to
    consider the reliability of the MDI meter and frequent violation
    of contract demand and the tariff notification dated 21.6.1993.
   ·There is material on record indicating that the connected load
    has been exceeded as reflected in the meter reading. [Para 16]
    [507-F-G]
 E
         4. The plea taken that there was defect in the meter and
   they were changed in January, 2000 and again in March, 2000
   has no legs to stand. However MDI meter readings for earlier
   periods too indicated demand exceeding 500 KVA and in the
   month of November 1999, the meter was found to be in order
 F and maximum demand exceeded contract demand. Once
   maximum load drawn had exceeded the contracted load, in the
   fact of the case, it can safely be held that there is violation of the
   permissible connected load. The recording in MDI meter is more
   credible and reliable than the stand of the industry that the meter
 G was faulty, set up just to escape from the liability. [Para 16] [507-
   H; 508-A-B]
                               Case Law Reference
      1995 (3) SCR 684                       relied on.         Para 15
 H    2003 (2 ) Suppl. SCR 787               relied on.         Para 15
 BIHAR STATE ELECTRICITY BOARD v. M/S. BHOLA RAM                              501
                  STEEL PVT. LTD.

       CIVIL APPELLATE JURISDICTION: Civil Appeal No. 585 of                  A
2016
      From the Judgment and Order dated 13.11.2009 of the High Comt
of Judicature at Patna in LPA No. 1613 of 2000.
       Moh it Kumar Shah for the Appellants.
     S. D. Sanjay, Devashish Bharuka, Abraham Mathews for the                 B
Respondents ..
       The Judgment of the Court was delivered by
       ARUN MISHRA, J. I. Leave granted.
        2. The appeal has been preferred aggrieved by the judgment and        c
order passed by the High Court of Judicature at Patna in the writ petition
and the appeal, thereby quashing the demand raised by the appellant for
the year 1999-2000. Mis. Bhola Ram Steel Pvt. Ltd. filed a writ application
that it was an industrial unit to manufacture iron and steel structure and
section like bar roll, place angle, channel, square, tor and round, general
fabrication and annulling of she.els it applied as HTIS consumer for a        D
connected load of 500 K VA. The competent authority sanctioned a
load of 500 KVA vide letter dated 24.2.1998. The respondent-industry
commenced production w.e.f. 28.3.1998. The appellant averred that on
23.1.1999 the premises of the respondent were inspected. Connected
load was found to be 495 HP. Appellant submitted that as per the Industrial   E
Policy of 1995 announced by the State Government, Resolution dated
3.9.1996 was passed by the Energy Department of the State Government
to grant exemption from payment of minimum guarantee charges to the
industrial unit having connected load of 500 KVA and accordingly in
exercise of power under section 78 of the Electricity Supply Act, 1948
issued directives to the Electricity Board for grant of such incentives.      F
The industrial units commencing production between 1.4.1993 and
31.8.2000 were to be exempted from payment of minimum guarantee
charges for a period of 5 years from the date of commencement of
 production.
      3. The inaximum demand indicator in the Trivector meter had             G
wrongly shown more than the contracted demand of 500 KVA. The
industry also submitted that the meter stopped functioning in the month
of January, 2000. lt was replaced on 9.2.2000, again the meter was
found to be faulty and again replaced on 21.3.2000. Thus the readings of
the meter could not be relied upon.
                                                                              H
502                   SUPREME COURT REPORTS                    [2016] I S.C.R.


 A          4. The impugned bill was served on the respondent in May, 2000
      which had been questioned in the writ application filed by the industry.
            5. It was contended on behalf of the Electricity Board that an
      agreement entered into on 2.3.1988 for a contract demand of500 KVA.
      Appellant installed transformer of 750 KVA. During the financial year
 B    1999-2000 i.e. from April, 1999 to March, 2000 maximum demand of
      the respondent has exceeded the contract demand of 500 KVA in as
      many as six months. In the month of March, 2000, maximum demand
      reached al I time high of 621.06 KVA. Since it was more than 110% of
      the existing contract demand of 500 KVA the contract demand as per
      clause 16.5 of the tariff notification dated 21.6.1993 has been taken to
 c    be 621.06 KVA.
            6. The maximum demand which is the actual demand of the
      consumer can never be more than the connected load when expressed
      in terms of the KVA. The industry has increased its connected load
      without information to the Board. Thus it has crossed the maximum limit
 D    ofcon11ected load i.e. 500 KVA and could not be said to be entitled for
      exemption from payment of minimum charges.
             7. It was also contended by the Board that on 29.9.1999 meter
      test was conducted and it was found to be correct and maximum demand
      recorded was found to be 508.20 KVA. It was again checked on
. E
      8.12.1999. Maximum demand in the month of December, 1999 was
      recorded as 616.20 KVA which was not disputed by the industry.
             8. The Single Bench quashed the demand on the ground that on
      account of consumption of electricity in excess of contract demand,
      connected load automatically gets altered, has not been established by
 F    the Board. The benefit of exemption from annual minimum guarantee
      charges could not be denied to the industry. It was not established by the
      Board that the connected load was more than 500 KVA. The Division
      Bench has affirmed the order on the ground that greater consumption of
      power wi II result in economic development, generation of employment
 G    and income and it is better for the State of Bihar. If the industry has
      exceeded the connected load or has consumed electricity in excess, it
      could not be deprived of the benefit of power incentives. It also opined
      that no evidence on record indicated that the consumption was beyond
      the connected load. Aggrieved thereby, the Bihar State Electricity Board
      is in appeal before us.
  {
   BIHAR STATE ELECTRICITY BOARD v. MIS. BHOLA RAM                               503
           STEEL PVT. LTD. [ARUN MI,SHRA,·J.]

         9. It was submitted on behalf of the Electricity Board that             A
  maximum demand indicator has recorded the actual consumption. The
  High Court has erred in quashing the demand. Reliance has been placed
. upon Clause 16.5 of the notification of 1993 issued under section 49 of
  the Indian Electricity Act, 1948. It was submitted on behalf of the indu~try
  that there was no correlation between the connected load and contract
                                                                                 B
  demand and the maximum demand recorded by the indicator. At the
  time of inspection the connected load was found to be 495 KVA. Thus
  as per the industrial policy of 1995 when connected load of 500 KVA
  has not exceeded at any point oftime, the High Court has rightly quashed
  the demand which was raised.
        I 0. The fact is not in d·ispute that the contract demand san.ctioned    c
 was 500 KVA as is apparent from the agreement entered into between
 the parties.
        11. The basis of claim is notification dated 11.10.1996 issued by
 the .Bihar State Electricity Board pursuant to Industrial Policy of the
 State Government of .1993 and 1995, relevant portion is extracted               D
 hereunder:-
        "The industrial units which commence production or engage in
        defined expansion/diversification in between the period 01.04.1993
        to 31.08.2000 and whose connected ·electricity load is upto 500
        KVA will be exempt(!d from payment of minimum guarantee                  E
        (minimum base charges) for a period of five years from the date
        of connection."
         12. Before dilating further it is appropriate to take note of clause
· 16.5 of the statutory notification of2 l .06. l 993 issued under section 49
 ,pf the Indian Electricity (Supply) Act, 1948. Clause 16.5 is extracted         F
  hereunder:
        "If during any month in a financial year (April to March next
       year) the actual maximum demand of a consumer exceeds 110
       percent of the contract demand then the highest demand so
       recorded shall be treated as the contract demand for that financiar       G
       year and the minimum base charges, both in respect of maximum
       demand and energy charge shall be payable on that basis."
        13. The installed load means a sum of the rated inputs of the
 electrical apparatus installed on the consumer's premises. Connected
 load means that part of the load of consumer supplied by the Supply             H
504                   SUPREME COURT REPORTS                     (2016) I S.C.R.


 A    Undertaking and contract demand means demand fixed by the agreement
      that the consumer may not exceed except according to the conditions of
      the tariff.
          14. lt is not in dispute that the maximum demand indicator meter
   hereinafter referred to as MDI meter was installed which is a device to
 B measure the maximum demand at a particular half an hour cycle of
   running of the machinery in the factory; meaning thereby it measures
   the maximum demand of the electrical energy in the cycle of half an
   hour in a month. The electricity actually consumed is recorded in the
   MDI meter. The demand in the instant case has been raised by the
   Electricity Board on the basis of reading recorded by the MDI meter.
 c The MDI meter has recorded the consumption of energy in excess of
   the contracted load on the basis of which demand has been raised. There
   was excess drawal of electrical energy than the actual permitted load.
   The MDI meter is also called Trivector meter. As per the readings
   recorded by the MDI meter it is apparent that consumer has availed and
 D drawn electricity in excess of the contracted load in contravention of the
   agreement with the Electricity Board. The reading of MDI meter is
   indicator of total connected loads, the total load demanded and availed
   of d.uring the course of actual consumption of energy. In the facts of
   instant case it is apparent that for six months in the year 1999-2000 the
   MDI meter has recorded excess load. Thus we find that the High Court
 E has erred in the facts of the instant case in holding that it has not been
   established in the instant case that the connected load wa~ more than
   500 KVA.
             15. This Court in Orissa State Electricity Board & Anr. v. !Pl
      Steel Ltd & Ors. (1995) 4 SCC 320 has noted how a trivector meter
 F    works and efficacy of MDI meters. It has been followed by this Court
      in Bhilai Rerol/ers & Ors. " MP Electricitv Board & Ors. (2003) 7
      SCC 185. This Court in Bhilai Rero//ers (s~pra) has referred to MDI
      meters and the decision of Orissa State Electricity Board (supra).
      Relevant portions are extracted hereunder: ·
 G           "16. We have carefully considered the submissions on behalf of
            parlit:s on either side. This Court, in the decision reported in Orissa
            SEB case ( 1995) 4 SCC 320 though in dealing with the rights of
            the Electricity Board for enforcing payment of maximum demand
            charges and minimum monthly charges noticed about the utility.of'
 H          MDI meter also called "trivector meter" and observed as
BIHAR STATE ELECTRICITY BOARD v. MIS. BHOLA RAM                         SOS
         STEEL PVT. LTD. "[ARUN MISHRA, J.]

   hereunder at para 10: (SCC pp. 326-27)                               A
   "Every such consumer is provided with two lneters. One is called
   the 'trivector meter' and the other is the normal meter which
   records the total quantity of energy consumed over a given period
   -which is ordinarily a month. The meter which records the total
   consumption requires no explanation or elaboration since we are B
   all aware of it. It is the other me,ter which requires some
   explanation. Now every large-scale consumer knows the amount
   of energy required by him and requests for it from the Board. If
   the Board agrees to supply that or any other particular amount of
   energy, it makes necessary arrangements therefor by laying the
   lines to the extent necessary and installing other requisite
                                                                          c
   equipment. It is obvious that if a factory uses energy at a particular
   level/load and for a particular period, it consumes a particular
   quantity of energy. The trivector meter records the highest level/
   load at which the energy is drawn over any thirty-minute period in
   a month while the other meter records the total consumption of D
   energy in units in the month. Let us take the case of the respondent
   to illustrate the point. The maximum demand in his case is up to
   but not exceeding 7778 KVA. That is his requirement. In the
   normal times, he is entitled to draw energy at that level/load. That
   is his maximum demand under the agreement. But he may not
   always do so. Say, in a given month, he draws energy at 6000 E
   KVA level only, even then he has to pay the minimum charges as
   stipulated in the agreement.But ifhe draws and consumes energy
   exceeding eighty per cent of the energy, he pays demand and
   energy charges for what he utilises. Now, let us notice how the
   trivector meter i.e. the meter whiduecords the maximum demand F
   works; the meter is so designed that it only records the maximum
   load/level at which energy is drawn over any thirty-minute period
   in a month. It only goes forward but never'g(ies back until it is put
   back manually. To be more precise, suppose 'the.respondent has
   drawn energy at 7770 KVA for a thirty-minute period on the first
   day of the month, the meter will record that figure and will stay G
   there even if the respondent consumes at 7000 or lesser KVA
   level during the rest of the month. From this circumstance, however,.
   one cannot jump to the conclusion that it is an arbitrary way of
   levying consumption charges."
                                                                        H
506             SUPREME COURT REPORTS                     (2016] 1 S.C.R.



 A    17. The provisions contained in sub-section (7) of Section 26 of
      the Indian Electricity Act, 1910 envisage the installation of
      additional meters and checking apparatus, in addition to the meter
      for ascertaining the amount of energy supplied and quantity
      consumed. By and large it seeJns to be that the utility of MDI
      meter to record effectively and correctly the drawal of power at
 B
      a continuous block period of30 minutes in a month by a consumer
      has come to stay as a reasonably safe method with due credibility
      and recognition in the field and appears to be· in vogue even at the
      global level. The question as to whether it can also safely be relied
      upon as the basis for investigating and determining the excess
 c    quantity ofload said to have been availed of by a consumer over
      andibove the contracted load as per the agreement is concerned,
      in our view admits of no doubt and we could find no reasonable or
      tenable and valid obje.ction to exist so far as its relevance, utility
      and purpose of determination are concerned. If the reading by
      such a device installed could provide a sound basis and yardstick
 D
      as accepted by this Court in the decision noticed supra for adjudging
      liability to pay the maximum demand charges/minimum monthly
      charge, it should in our view be considered to be equally efficacious
      forthe purpose on hand also in adjudging the issue as to whether
      the consumer has at any given point of time, in contravention of
 E    the agreement with the Board, availed and drawn electricity in
      excess of the contracted load.
      18. Electrical motors are designed to run up to a stipulated capacity
      of horse power. At the same time as disclosed from the
      communication from Bhilai Steel Plant (an undertaking of the Steel
 F    Authority oflndia: a Government oflndia enterprise) brought on
      record, so far as the motors used in rolling mills are concerned,
      they are said to have an overload capacity in the range of2 to 2.5
      times their rated capacity and at times even about 3 times, but
      only for a very short duration and at any rate such a situation
      cannot be sustained like that continuously for a duration of 30
 G    minutes. Hence, it is stated that an MDI meter which measures
      the demand in KW and integrating over a period of 30 minutes
      should/will register a demand value in KW which is eith_er less
      than or equal to the motor-rated KW. Therefore, if in these cases,
      MDI meter disclosed such higher rate of demand, it would be
 H    futile for the appellants to contend that there was no overdrawal
-A




      BIHAR STATE ELECTRICITY BOARD v. M/S. BHOLA RAM                               507
               STEEL PVT. LTD. [ARUN MISHRA, J.]

           in excess of the contracted load, since such excess drawal stands        A
           substantiated by the actual overdrawal in excess from the readings
           of MDI meter and the motor-rated KW as claimed by the
           appellants are not either genuine or correct. The object of the
           appellant in making reference to lock rotor test also does not seem
           to be relevant since the said test could, it appears, on_ly help to
                                                                                    B
           determine the capacity of the motor and not of the total connected
           load or the total load demanded and availed of during the course
           of actual consumption of energy."
             16. This Court has in Bhilai Rerollers (supra) held thatthe reading
     of the MDI meter could provide a sound basis and yardstick to pay
     maximum demand charges and for adjudging the issue as to whether the           c
     consumer at any given point of time ofthe·agreement has availed and
     drawn excess electricity. This Court has also indicated that lock rotor
     test is normally held to determine the capacity of the meter and not the
     total connected load or the total load demanded and availed of during the
     course of actual consumption of energy. Merely in an inspection in             D
     January, 1999 ifthe connected load was found to be of 495 HP when for
     six months in a subsequent period ofApril, 1999 to March, 2000 maximum
     demand has increased beyond the contracted load of 500 KVA and it is
     not disputed that it was more than 110% of the contract load. Thus as
     per clause 16.5 of the notification dated 21.06.1993 issued under the
     Electricity Supply Act, 1949 in our opinion the Electricity Board was          E
     well within its rights to realize the amount as per tariff notification. We
     find that the High Court has erred in holding in the facts of the case that
     there can be no correlation with the maximum demand and the connected
     load. Similarly the High Court has proceeded on irrelevant consideration
     while it has observed that entrepreneur has stepped up production, which       F
     will result in economic development, generation of employment and
     income and higher consumption is better for the State ofBihar. This was
     not a question to be gone into by the High Court. The High Court was
     required to consider the reliability of the MDI meter and frequent violation
     ofcontract demand and the tariff notification dated 21.6. I 993. There is
     material on record indicating that the connected load has been exceeded        G
     as reflected in the meter reading. It could not be due to wrong recording
     of meter or short circuit etc. as MDI meter records excess capacity
     drawn over a continuous period of30 minutes' duration during a month.
     The MDI meter's method is well recognized and widely accepted one.
     The plea taken that there was defect in the meter and they were changed        H
508                     SUPRfME COURT REPORTS                  (2016] 1 S.C.R.



 A    in January, 2000 and aga ... 111 March, 2000 has no legs to stand. However
      MDI meter readings for earlier periods too indicated demand exceeding
      500 KVA and in the month of November 1999, the meter was found to
      be in order and maximum demand exceeded contract demand. Once
      maximum load drawn had exceeded the contracted load, in the fact of
      the case, it can safely be held that there is violation of the permissible
 B
      connected load. The recording in MDI meter is more credible and reliable
      than the stand of the industry that the meter was faulty, set up just to
      escape from the liability.
             I 7. In the circumstances we have no hesitation in setting aside
      the orders passed by the' Single Bench and Division Bench of the High
 c    Court. The impugned demand is held to be legal and valid. Let the
      outstanding amount calculated as on today, be paid as per norms of the
      Board within a period of six weeks from today. The appeal is allowed.
      The impugned judgment and orders are set aside and writ petition is
      dismissed. l'a11ie,· to bear their own costs.
 D    Kalpana K. Tripatll)                                        Appeal aJI01red.