BIHAR STATE ELECTRICITY BOARDversusHOTEL SATKAR PVT. LTD. AND OTHERS

              BIHAR STATE ELECTRICITY BOARD                                      A
                            v.
             HOTEL SATKAR PVT. LTD. AND OTHERS

                          SEPTEMBER 24, 1996
                                                                                 B
           [K. RAMASWAMY AND G.B. PAITANAIK, JJ.)

       Indian Electricity Act, 19lo-Discontinuance of supply of
electricity-Wl1ether Electlicity Board justified in making demands on the
basis of contract demand in the absence of agreement between pa1ties-Pa1ties
agree to inter-dete1111ination of dispute for the period upto Febma1y 1984 by
                                                                                 c
an officer not below rank of Chief Engineer to be nominated by Govem-
ment-Clzief Engineer detennining the amount payable on the basis of actual
consumption-Held : Decision of Chief Eligineer is binding 011 the pwties.

       The respondent filed a Writ Petition challenging the legality of notice   D
u/s. 24(1) of the Yndian Electricity Act 1910 for disconnection of electricity
supplied to the Respondent by the appellant Board on the ground of
non-payment of bills amounting to Rs. 3,01,449.30 upto March 1979 sub-
mitted by the Board to the respondent. The respondent's contention was
that in the absence of any contract entered into with the appellant Board,
charge could be levied only on the basis of actual consumption and not on        E
basis of contract demand. It was further contended that the bills submitted
by the appellant'being disputed, no notice could have been issued u/s. 24(1)
and the matter could only have been referred to be Electrical Inspector for
a decision u/s. 24(2) of the Act. The High Court accepted the contentions
of the respondent and quashed the notice of demand and issued a man-             F
damns to the appellant Board not to disconnect the supply line so long as
the dispute was not resolved in accordance with law.

      On appeal preferred by the Board, this Court, issued certain interim
directions regarding payment of bills on the basis of actual consumption.        G
On 9th May, 1984, the appellant Board disconnected the supply of
electricity as the respondent failed to pay the bills issued by the Board. On
an application filed by the respondent, this Court by its order dated
28.5.1984, on the agreement and joint submissions of both parties, directed
that the correct amount payable be determined by an officer, not below the
rank of Chief Engineer to be nominated by Government. Subject to the             H
                                      673
    674                   SUPREME COURT REPORTS (1996) SUPP. 6 S.C.R.

A respondent undertaking that the amount so determined shall be eaid
    within a week and compliance therewith, this Court directed the Board to
    restore the supply of electricity. Such payment however was to be without
    prejudice to the rights and contentions raised in the appeal. The Chief
    Engineer nominated by the Government, after hearing the parties came to
    the conclusion that for the period from 1st April 1977 to February 1984,
B
    the respondent was liable to pay a sum of Rs. 9,68,335.67 on the basis of
    actual consumption of energy and giving credits for amounts actually paid,
    the outstanding dues till February 1984 worked out to Rs. 3,84,559.33.
    Objections were filed by the respondent to the report of the Chief Engineer.

C           Disposing of the appeal, this Court

           HELD : 1. The Respondent could not seek to wriggle out of the Chief
    Engineer's report submitted pursuant to this Court's order dated 28.5.1984
    which has been passed on the agreement of both parties,.on the ground that
    it was without prejudice to the contentions in the appeal.,[678-E-Gr
D
          2. Though initially the dispute related to bills sub-milted upto 1979 on
    the date the Court pas_sed the order i.e. on 28.5.1984, the controversy was in
    respect of the amount charged till February 1984 and not the original
    amount which was the subject matter ofthe Writ Petition. ~679-B-C]
E
          3. The Chief Engineer had determined the liability not on the basis
    of contract demand but on the basis of actual consumption. [679-D·E]

          4. The fact that the dispute regarding the bills raised upto 1979 had
    been referred to the Chief Inspector under section 24(2) of the Electricity
F   Act must be considered in the light of subsequent developments and any
    order that may be passed by the Electrical Inspector cannot over-ride the
    ultimate decision taken by the Chief Engineer in determining the liability
    of the respondent. [679-G-H, 680-A·B]

G           CIVIL APPELLATE JURISDICTION: Civil Appeal No. 921. of
    1980.

         . From the Judgment and Order dated 7.9.79 of the Patna High Court
    iii C.WJ.C. No. 1710of1979.

H           Pramod Swarup and Praveen Swarup for die ~llant.
  BIHARSfATEELECIRICITYBDv. HOTELSATKAR(P)LID.(PAITANAIK,J.)675
                  I
      S.B. Sanyal and P.P. Singh for the Respondents.                       A

      The Judgment of the Court was delivered by

      PATTANAIK, J. This appeal is directed against the judgment of
Division Bench of the Patna High Court dated 7th September, 1979 in Civil   B
Writ Jurisdiction Case No. 1710 of 1978.

       The respondent filed the writ petition challenging the legality of the
 notice served by the appellant issued in exercise of power under Section
 24(1) of the Indian Electricity Act, 1910 (hereinafter referred to as 'the
 Act') inter alia on the ground that a bona fide dispute exists between the c
 licensee and the consumer of electric energy and as such the provisions of
 Section 24(1) of the Act will not apply. The case of the respondent -
 consumer is that the appellant has been supplying energy to the respondent
 hotel but the said respondent has not entered into any agreement and
 therefore the appellant is entitled to be charged on the basis of the actual D
 consumption and not on the basis of any contract demand. The appellant,
 however, submitted bills in respect of the energy consumed on the basis of
 the contract demand which the respondent did not pay and for such default
 in payment of the amount charged under the bills the appellant issued
 notice of discontinuance under Section 24 of the Act. According to the
 respondent's case the bills submitted by the appellant being disputed, no E
 notice could have been issued by the appellant under sub-section (1) of
·section 24 and the matter can only be referred to the Electrica:l Inspector
 for a decision as provided under sub-section (2) of Section 24. The appel-
 lant disputed the aforesaid stand of the respondent and submitted that the
 respondent having failed to pay the bills raised by the appellant in respect F
 of the energy consumed, the appellant was fully justified in issuing notice
 under Section 24(1) of the Act and there is no illegality in the same. The
 High Court by the impugned judgment came to the conclusion that no
 agreement had been entered into between the licensee, namely, the Bihar
 State Electricity Board and the consumer, the respondent. It further came G
 to the concluSion that in the absence of any agreement between the parties
 the Board w~ not entitled to raise the bills on the basis of the contract
 demand and can only charge on the basis of the actual consumption of
 energy. Finally, the High Court came to the conclusion that there existed
 a bona fide dispute between the licensee and the consumer, and therefore,
 until that dispute is resolved by a determination made by the Electrical H
    676                   SUPREME COURT REPORTS (1996) SUPP. 6 S.C.R.

A   Inspector under sub-section (2) of Section 24, the licensee was not entitled
    to issue notice of disconnection in exercise of power under sub-section (1)
    of Section 24 of the Act. The High Court, therefore, q!lashed the notice of
    demand and the threat of disconnection and issued a mandamus to the
    licensee not to disconnect the supply line so long as the dispute is not
B resolved in accordance with law. The High Court also further held that
    until the dispute is finally resolved, the consumer would be liable to be
    charged on the basis of actual consumption of energy. The amount of
    accumulated arrear which was indicated in the notice of disconnection to
    the licensee was Rs. 3,01,449,30 upto March, 1979 which demand was
    quashed by the High Court by the impugned judgment. This Court on 1st
C May, 1981 directed that the respondents shall pay the amount due on the
    bills submitted to them by the appellant for the consumption and future
    bills will be paid by the respondents from time to time on the basis of
    actuals and such submission of bills and payment will be without prejudice
    to the rights and contentions of the parties. By another Order dated 5th
D May, 1982 this Court further indicated that for the time being the Board
    will not collect any energy charges by the application of the multiplier of
    the two. Thereafter, as the respondent failed to pay the bills issued by the
    Board, the supply of electricity to the respondent was disconnected on 9th
    of May, 1984. The respondent, therefore, approached this Court by filing
    an application for necessary direction to th.e Boa.rd to restore the connec-
E tion of electricity supply and to injunct the Board from disconnecting the
  · supply without permission of this Court during the pendency of the appea~
    which was registered as C.M.P. No. 23405 of 1984. In the said application
    it was alleged that the appellant Board went on giving inflated bills based
    on erroneous conclusion on the basis of 315 KVA of maximum contract
F demand which has already been quashed by the Patna High Court and
    which is contrary to the interim orders issued by this Court as stated
     earlier. This application was disposed of by this Court with the following
     direction:

             "Counsel for both the parties have jointly submitted before me that
G            the parties are agreeable that the correct amount payable by the
             respondent in the appeal by way of charges for actual consumption
             of electric energy as per tariff rates applicable may be determined
             by any officer not below the rank of Chief Engineer nominated by
             the Secretary, Department of Energy, Govt. of India. This sugges-
             tion appears to me just and fair which is accordingly accepted and
H
  BIHARSfATEELECfRICITYBDv. HOTELSATKAR(P)LTD.[PATIANAIK,J.)677

        the Secretary, Department of Energy will forth with nominate any A
        one officer underhim of the rank indicated above to go into the
        question as to what amount, if any, remains payable upto date by
        the Hotel Satkar (P) Ltd. to the Bihar State Electricity Board,
        Patna by way of consumption charges taking into account actual
        consumption. Such determination will be made after hearing both
        the parties of their representatives at Delhi or atPatna as will be B
        convenient to the officer nominated by the Secretary, Department
        of Energy. The entire process or determination of the amount
        should be completed within four weeks from today. The Respon-
        dent shall file an undertaking during the course of the day today
        to pay to the Bihar Electricity Board within one week from the C
        date of such determination of the exact amount by the Officer
        nominated by the Secretary, Department of Energy. Subject to the
        fulfilment of this condition the Bihar State Electricity Board is
        hereby directed to restore forthwith the electric connection to the
        respondent Hotel Stakar (P) Ltd. If the respondent Hotel Stakar
        fails or defaults in the payment within one week of determination D
        of the amount due, it will be open to the Bihar State Electricity
        Board to disconnect electric connection. The payment to be made
        by the Respondent in pursuance of this order will be without
        prejudice to the rights and contentions raised in the appeal pend-
        ing before this Court."
                                                                               E
       Pursuant to the aforesaid order of this Court the Chief Engineer,
Central Electricity Authority was nominated by the Secretary, Department
of Power Ministry of Energy to go into the question as to what amount, if
any, remains payable upto date by the respondent. The said Chief Engineer
heard the parties and gave opportunity to present their respective case and    F
after analysing all the relevant papers and docm:pents produced before him,
came to the conclusion that for the period from April 1977 to February
1984 the respondent is liable to pay the appellant a sum of Rs. 9,68,335.67
for the energy consumed on the basis of actual consumption and out of the
said amount the consumer has paid a total of Rs. 5,83,776.34 and, therefore,
the outstanding dues till February 1984 work out to Rs. 3,84,559.33. On        G
behalf of the respondent an objection to the aforesaid report of the Chief
Engineer has also been filed in this Court.


     Mr. Pramod Swarup, learned counsel appearing for the appellant
contended that in view of the agreement between the parties this Court         H
    678                  SUPREME COURT REPORTS (1996) SUPP. 6 S.C.R.

A having passed the order on 28th May, 1984 requiring an officer not below
  the rank of Chief Engineer be nominated by the Secretary, Department of
  Energy, Govt. of India to go into the entire controversy and the said Chief
  Engineer having gone into the controversy and having determined the
  liability of the respondent, the parties are bound by the same and it is no
B longer necessary to examine the legality of the conclusion arrived at by the
  Patna High Court. Mr. Sanyal, learned senior counsel appearing for the
  respondent on the other hand contended that the report submitted by the
  said Chief Engineer is patently erroneous, and therefore could not bind
  the respondent for liability as found and further the judgment of the Patna
  High Court is unassailable. The learned counsel further contended that the
C very order of this Court dated 28th May, 1984 indicates that payment to
  be made by the respondent will be without prejudice to the rights and
  contentions raised in appeal pending before this Court. Mr. Sanyal, further
  contended that the aforesaid order passed by this Court was in relation to
  a fresh demand having been raised by the Board during the pendency of
D the appeal and disconnection of the electric supply for non-payment of the
  same and it would not cover the demand for the period which was the
  subject matter in the writ petition before the Patna High Court and which
  is the subject matter of appeal in this Court.

          Having considered the rival submissions and having applied our mind
E   to the relevant documents and several orders passed by this Court we are
    of the considered opinion that this Court was persuaded to pass the order
    of 28th May, 1984 on the agreement of the parties to get the controversy
    examined by an officer not below the rank of Chief Engineer to be
    nominated by the Secretary, Department of Energy, Govt. of India. The
F   said Chief Engineer having examined the documents produced before him
    by the parties concerned and having determined the entire liability upto
    February, 1984 the respondent cannot wriggle out of the said order on the
    ground that the said order was without prejudice to the contentions to be
    raised in the appeal. As it appears, the controversy between the parties
    was, whether the Board was justified in raising demands on the basis of the
G   contract demand in the absence of any agreement between the parties and
    the High Court had ordered that demand can be raised only as per the
    actual consumption of energy. It further appears from the materials on
    record that the meters which had been installed to record the consumption
    of energy were only suitable for 5 Amp. and had their dials calibrated to
H register consumption corresponding to loads of 100 Amp., 200 Amp., 300
  BIHARSfATEELECfRICfIYBDv. HOTELSATKAR(P)LTD.[PATIANAIK,J.]679

Amp. or 400 Amp. It further transpires that though initially the dispute A
related to the bills which had been submitted upto the year 1979 but during
the pendency of the appeal in this Court when fresh bills were also
submitted by the Board and the respondent did not pay the same, the
appellant took action of disconnection and respondent, therefore, ap-
proached this Court for necessary direction for reconnection. It is on B
consideration of all these materials and on the agreement between the
parties this Court passed the order on 28th May, 1984 requiring the entire
controversy to be re-examined by any officer not below the rank of Chief
Engineer to be nominated by the Secretary, Department of Energy, Govt.
of India. Thus on the date this Court passed the order on 28th May, 1984
the controversy between the parties was in respect of amount charged till C
February, 1984 and not the original amount which was the subject matter
of the writ petition. This being the position and the matter having been
duly scrutinised by an officer of the Government of India and amount
having been arrived at and the parties having agreed the controversy to be
re-examined by such officer it is not permissible for the respondent to D
contend that they are not bound by the decision thus arrived at. So far as
the merits of the objections to the report of the Chief Engineer is con-
cerned we find that the said Chief Engineer has not determined the liability
on the basis of contract demand but on the basis of the actual consumption
of energy. Mr. Sanyal's argument, however, was that in terms of sub-section E
(2) of Section 24 of the Act when the matter has been referred to the
Electrical Inspector and the said Electrical Inspector has determined the
dispute in favour of the respondent, such statutory determination cannot
be given a go-bye unless and until it is annulled by any superior authority.
He further contended that multiplying factor as applied by the Chief
                                                                             F
Engineer is not at all applicable to the facts an~ circumstances of the
present case when there was no defect with the meter at any point of time.
We find ourselves unable to accept these objections raised by Mr. Sanyal
appearing for the respondent. In respect of the dispute with regard to the
liability of the respondent to make the payment as per the bills raised upto
1979 no doubt had been referred to the Electrical Inspector under sub-sec- G
tion (2) of Section 24 of the Act. But during the pendency of the appeal
in this Court when further bills were raised by the appellant and for
non-payment of the same the electrical connection was disconnected and
respondent challenged the same and ultimately agreed before this Court
to get the entire controversy examined by an independent officer of the H
    680                   SUPREME COURT REPORTS (1996) SUPP. 6 S.C.R.

A   Government of India and this Court ultimately passed the order on 28th
    May, 1984, the entire eontroversy with regard to the liability of the respon-
    dent to pay for the energy consumed was before the Chef Engineer and
    consequently any order passed by the Electrical Inspector under sub-sec-
    tion (2) of Section 24 cannot override the ultimate decision taken by the
    Chief Engineer in determining the liability of the respondent. The objec-
B
    tions of Mr. Sanyal, therefore cannot be sustained.

          In the aforesaid premises the impugned judgment of the Patna High
    Court stands reversed and the liability of the respondent as determined by
    the Chief Engineer for the energy consumed upto February 1984 becomes
C   enforceable. The respondent would be liable to pay in accordance with the
    said determination after adjusting the amount already paid. The appeal is
    disposed of with the aforesaid direction. There will be no order as to costs.

    R.D.                                                    Appeal disposed of.