Holding

Clause 39 of the Terms and Conditions of Supply is a statutory provision, valid under Section 49 of the Electricity (Supply) Act, 1948, does not contravene the Electricity Act, 1910, and is not violative of Article 14; its orders remain subject to judicial review.

Summary

Hyderabad Vanaspathi Ltd. entered into two high‑tension electricity supply agreements with the Andhra Pradesh State Electricity Board (APSEB). After the Board discovered alleged pilferage, it disconnected supply and made a provisional and then a final assessment of loss under Clause 39 of the Board's Terms and Conditions of Supply (TCS). The company challenged the assessment, arguing that Clause 39 was purely contractual, ultra‑violus the Electricity Act, 1910 and the Electricity (Supply) Act, 1948, and violated Article 14 of the Constitution. The Supreme Court held that the TCS, including Clause 39, are statutory in character, validly exercised under Section 49 of the Supply Act, and do not contravene the earlier statutes or the Constitution; orders under Clause 39.10.6 and 39.11 remain subject to judicial review. Consequently, the Court dismissed the 1988 civil appeal, allowed the 1997 civil appeals, set aside the High Court Full Bench judgment, and remitted the writ petitions for disposal, awarding costs as indicated.

Issues considered

The nature of Clause 39 in the Terms and Conditions of Supply – whether it is statutory or merely contractual.
Whether Clause 39 is ultra vires Section 49 of the Electricity (Supply) Act, 1948 and the provisions of the Indian Electricity Act, 1910.
Whether Clause 39 violates Article 14 of the Constitution and the principles of natural justice.
Whether the finality clauses (39.10.6 and 39.11) oust the jurisdiction of courts and preclude judicial review.

Legislation cited

Electricity Act, 1910s. 20, s. 21(1), s. 21(4), s. 24, s. 26(6), s. 26(7)
Electricity (Supply) Act, 1948s. 49, s. 70, s. 78, s. 79
Indian Electricity Rules, 1956s. 4, s. 5, s. 6
Indian Penal Code, 1860s. 379

Subjects

electricity supplystatutory contractClause 39pilferagedisconnectionArticle 14natural justicejudicial reviewterms and conditions of supplyregulatory power

Judgment

A MIS HYDERABAD VANASPATHI LTD.
v.
ANDHRA PRADESH STATE ELECTRICITY BOARD AND OTHERS

APRIL I, 1998

B [S.C. AGRA WAL, S. SAGHIR AHMAD AND M. SRINIVASAN, JJ.]

Electricity (Supply) Act, 1948-Section 49-Electricity-Andhra
Pradesh State Electricity Board-Terms and Conditions ofSupply-Individual
agreements in writing with each consumer-Nature of-Held, Statutory in
C character.

Terms and Conditions ofSupply ofElectricity framed by Andhra Pradesh
State Electricity Board-Notified in B.P. Ms. No. 690 dated 171911975-
Clause 39 :

D Validity· of-Safeguards to prevent unauthorised user, pilferage or
malpractices, provided for-Plea that Clause 39 repugnant to the provisions
of the Act, rejected-Orders passed under, held, subject to judicial review-
Clause 39.10.6; Clause 39.11.

Plea that Clause 39 deviates from the provisions of the Electricity Act
E and the Rules, rejected-Held, the provisions in Clause 39 do not contravene
the relevant provisions of the Electricity Act as those provisions provide for
a different situation-Indian Electricity Act, 1910-Sections 20; 21(4); 26(6)
(b); 36; Clause VI (3), Schedule; Rules 4 to 6, Indian Electricity Rules.

Power to the officers to disconnect the supply immediately on a suspicion
F of malpractice-Held, not violative ofArticle 14 of the Constitution-Principles
ofNatural Justice not applicable in such cases-Constitution of India, 1950-
Article 14-Principles of Natural Justice-Administrative Law.

Aqjudicaiton of the matter by the officials of the board themselves-
G Held, the pri~ciple of Nemo Judex in Causa Sua not applicable-Principles
of Natural Justice not violated-Administrative Law-Bias.

Contract-Standard form-Signing of the agreement with the Board in
standard form-Plea that it will not prevent the consumer from questioning
it-Held, not acceptable.
H Maxims : Nemo Judex in Causa Sua-Applicability of
620
HYDERABAD VANASP.\THI LTD. '" A.P. STATE ELEC. BOARD 62 J

The aJlpellant in Chil AJIJleal 2558/1988 entered into two agreements A
with Andhra Pradesh State electricity Board fur SUJIJlly of High tension
JIOWer on 1/9/1970 and 27/8/73. In January, 1976 on insJlection of the
factoQ· Jlremises, pilferage of energy was discovered, punuant to which the
JIOWer supply was disconnected and a 11rmisional assessment of the loss was
made.
B
The said action was taken in Jlursuance of the powers confe1Ted on the
designated officials by Clause 39 of the 'Terms and Conditions of SupJlly'
which JlrDYidcs for safei,,'llards to prevent unauthorised user, pilferage or
malpractices relating to energy. Prosecution was launched under Section
379 I.P.C. read with Section 39 of the Indian Electricity Act, 1910 in the C
Court of the Chief Metropolitan Mai,,ristratc. The final <L~ses.~ment fixing the
loss was made at R~. 55,72, 511. 81 which was challenged by the appellant
in appeal which was dismissed. Thereafter, the appellant tiled a suit in the
Comi of Additional Chief Judge, City Civil Court fur a declaration that it
was not liable to Jlay any amount as penal damages. The suit was dismissed.
The appeal filed hefore the High Comi was also dismissed. The High Court D
held that the terms and conditions of supply on the basis of which the
agreements were entered into between the appellant and the Board did not
in any way contravene the provisions of either the Indian Electricity Act,
1910 or the Elcctiicity (Supply) Act, 1948. Agg1ievcd, the consumer preferred
the present appeal. E
Similarly some industrial undertakings had also entered into
agreements with the Board for supply of electricity. Consequent upon
disconnection of supply by the Board on ground of pilferage of electrical
energy, these undetiakings moved the High Court by way of writ 11etitions
in which similar questions as decided by the aforesaid .iudgement were F
raised. Interlocutory Orders refusing to grant interim relief to the petitioners
were passed. Appeals against these orders and the main writ petitions were
heard by the Full Bench. The Full Bench held that Clause 39 of the 'Terms
and Conditions of Supply' which prescrihed the procedure for ad.indication
of the dispute relating to pilferage or malpractice of energy and for final G
assessment of the additional charges was wholly 'itiated as !icing arbitrary
and violative of A11icle 14 of the Constitution and struck down the same.
Aggrieved, the Board filed Civil Appeals Nos. 7139-7144 of 1997.

On behalf of the consumers, it was contended that condition No. 39 in
the 'Terms and Conditions of Supply,' of electricity was purely contractual H
622 SUPREME COURT REPORTS (1998] 2 S.C.R.

A and ultra 'ires the pro\isions of the Indian Electticity Act, 1910 and Electricity
(Supply) Act, 1948. It was further contended that the Board could neither
define 'malpractices' nor presc1ihe an adjudicator~· machiner)· for assessing
and Je,·ying 11enal damages. The Bo;ml could impose only such conditions as
ma)· he found in an agreement hctween other ordinary licensees and
consumers.
B
On behalf of the Board, it was contended that the Boan• was 11e1forming
a ~1atutory obligation to supply elcct1icity and was empowered hy the prmisions
of Section 49 of the Electticity Suppl)' Act to impose such tcnns and conditions
as it thought tit. The conditions which had heen so imposed including condition
C numher 39 were statutory in character and were in no way contrary to the
provisions of either of the enactments.

Dismissing the appeal filed hy the consumer and allowing those filed
hy the Board, this Comi

D HELD : 1. The Terms and Conditions of Supply of electtity are statutory
in characte1: The Full Bench of the High Court was not tight in holding that
the te1ms and conditions of supply arc purely contractual. Section 49 of the
Electricity (Supply) Act, 1948 empowers the Board to prescribe such tc1ms
and conditions as it thinks fit for supplying electricity to any person other
than a licensee. The Terms and Conditions of Supply were made applicable
E to all consumers availing supply of electricity from the Board. The section
does not require the Board to enter into a contract with indhidual consumer.
Even in the absence of an indhidual contract, the Terms and Conditions of
Supply notified by the Board will he applicable to the consumer and he will
he bound by them. Probably in order to avoid any possible plea by the
F consumer that he had no knowledge of the Terms and Conditions of su11ply,
agreements in writing are entered into with each consume1: That will not
make the terms purely contractual. The Board in performance of a statutory
duty supplied energy on certain specific terms and conditions framed in
exercise of a statutory power. (634-G; 638-B-D)

G Punjab State Electricity Board v. Bassi Cold Storage, Kharar and
Anothe1; (1994) Supp. 2 S.C.C. 124 and Bihar State Electricity Board and
others v. Parmeshwar Kumar Agariva/a and Others, (1996] 4 S.C.C. 686,
relied on.

Workmen v. Firestone Tyre & Rubber Co. of India (P) Ltd., (1973) 1
H s.c.c. 813, cited.
HYDERABAD VA!'L\Sl'ATHI LTD.''· A.P. STXI'E ELF.C' BOARD 623
Shri lidva Ram Misra'" :\fanaging Committee, Shri .Jai A'arain College, A
(1972] 1 S.C.C. 623 and Executive Co111111ittee of raish Degree College,
Shandi and others v. Lakshmi \'arain and others, [1976[ 2 S.C.C. 58, held
inapplicable.

2. Clause 39 does not violate any prO\ision in the Supply Act. Section
.t9 empowers the Board to supply electricity on 'such terms and conditions B
as it thinks fit'. It may also frame uniform tariffs. It is the staturory duty
of the Board to arrange for the supply of elect1icit~· throughout the State and
for transmission and\ distl'ihution of the same in the most efficient and
economical manner. For that purpose it has necessa1ily got to prevent
unauthorised user, pilferage or malpractices by the consume1·s. While on C
the one hand, the Board has to recoup the loss suffered by such pilferage
or other mal1m1ctices, it has also on the other got to stop immediately the
continuation thereof. Hence the terms and conditions of supply have to
prmide for com11ensation as well as immediate disconnection. For ascertaining
the loss and fixing the compensation, uniform procedure has to he framed ~
and a machinery constituted. Clauses 39 is only doing that. (640-B-D) D
.Jiyajeerao Cotton Mills Ltd. & Another v. Madhya Pradesh Electricity
Board & Another, [1989) Supp. 2 S.C.C. 52; Relied on. Indian Exvress
Newspaper (Bombay) Pvt. Ltd. and others etc. etc. v. Union ofIndia & others
etc. etc., (1985) 1 S.C.C. 41 and Agricultural Market Committee v. Shalimar
Chemicals Works Ltd., [1997) 5 Supp. S.C.C. 516, held inapplicable. E
3. The provisions in Clause 39 of the Terms and Conditions of Supply
do not contravene the provisions of the Electricity Act. Clause 39 will come
into play whenever there is malpractice or pilferage on the part of the
consumer or a fraud played by the consuiner. The Electrical Inspector has
no Jurisdiction to deal with those matters. He can he approached only when F
there is a defective meter or any defect in wires, fittings, works or apparatus.
As regards Clause (VI) of the Schedule to the Electricity Act, it is not
applicable unless distribution mains have been laid down under the provisions
of Clause (lV) or Clause (V) and the supply of energy through those mains
or any of them has commenced. The difference or dis1111te referred to in sub- G
cl.(3) of Cl.(VI) will not cover fraudulent malpractice or pilferage. A perusal
,. of the said sub-clause makes it evident that the matter shall he referred to
an Electrical Inspector only in cases of defects mentioned therein and not
otherwise. [642-H; 643-A-D]

MPE.B. and others v. Smt. Basantibai, [1988] 1 S.C.R. 890; MP H
624 SUPREME COURT REPORTS [1998] 2 S.C.R.

A Elecl1icitv Board, .Jahalpur and others\', Harsh ffood Products and Anotl1e1~
(1996] 4 S.C.C. 522; Helwal Spi1111i11g ,\fills & Ors. v. l!.P State Electricity
8oard and rmothers. f 19971 S.C.C. 740 and Municipal Corporation of Delhi
'" Ajanta Iron & Steel Company (Pvt.) Ltd., (1990] 2 S.C.C. 659, referred
to.

B State of UP and others '" Hindustan Aluminium Corpn. And others,
(1979) 3 S.C.C. 229 and Andhra Pradesh Carbides Ltd. and another v.
Andhra Pradesh State Electricity Board, Hyderahad and others, A.LR (1986)
Andhra Pradesh 37; held ina1111licable.

C 4. The orders 11assed under Clause 39 of The Terms and Conditions
of Su11ply are subject to Judicial review. No doubt, Clause 39.10.6 provides
tha( the order on appeal shall be final subject to Clause 39.ll and not liable
to be questioned in any court of law. Similarly, Clause 39.11 makes the order
of the Chairman or his nominee final, not liable to be questioned in any court
of law. The jurisdiction of courts, however, cannot be taken away by the
D aforesaid clauses. (641-C-D)

5. When power theft wa5 found by the officials, immediate disconnection
of the su11ply was not \iolative of .\11icle 14 of the Con~1itution and principles
of Natural Justice would not a11ply. (645-E)

E 6 The 11rinci11le 'Nemo Judex in Cause Sua' will not a1>11ly in this case
as the officers have no person! lis with the consumers. They are similar to
Income Tax or Sales Tax Officials. There is nothing wrong in their
adjudicating the matter es11ecially when the consumers may be re11resented
by an Advocate and the fonnula for making 11rovisional assessment is fixed
F in the clause itself. [646-F)

Patel Parshotta111das Vanmalidas '" Gujarat Electricity Board and
another, A.I.R (1987); Gujarat 188, Approved. J.Mohapatra and Co. and
Another v. Stale of Orissa and Another, [1984) 4 S.C.C. 103; Stale of
G Karnataka v. Shree Rameshwara Rice Mills, Thirthahal/i, (1987) 2 S.C.C.
160; Krishna Bus Service Pvt. Ltd. '" State of Haryana and Others, (1985)
3 S.C.C. 711; Rattan Lal Sharma v. Managing Committee, Dr. Hari Ram (Co-
educational Higher Secondary School and Others, [1993) 4 S.C.C. 10; L.I.C.
ofIndia and Another v. Consumer Education & Research Centre and Others,
(1995) 5 S.C.C. 482 and Pawan Alloys & Casting Pvt. Ltd., Meerut v. U.P
H State Electricity Board and Others, (1997) 7 S.C.C. 251, held inap11licable.
HYDERABAD VANASPATHI I.TD.''· A.P. STATE ELEC. BOARD [SRINI\ASAN. J.[ 625

f'mrell v. .\fa_i.· (1946) All E.R 444 and Co111111issionl!I".\' o(Customs and A
F:t:cise Y. Cure & Deeley Ltd.. (1961) 3 All E.R. 641, referred to.

CIVIL APPELLATE JURISDICTION: Ci1il Appeal No. 2558 of
1998

From the Judgment and Order dated I 0.6.88. of the Andhra Pradesh B
High Court in C.C.C. A. No. 38of1982.

Civil Appeal Nos. 7139-7144 of 1977.

From the Judgment and Order dated 12.9.97. of the Andina Pradesh
High Court in W.P .No. 13185/88, 21388/95, W.A. Nos. 418/88, 456/89, 74.+/95 C
and W.P. No. 5549of1987.

Sunil Gupta, Ms. Manju Mishra and K.J. John for the Appellant in C.A.
No. 2558/88.

Shanti Bhushan, K Rajendra Chowdhary and Rakesh K. Sham1a for the D
Appellant in C.A. No and P.V.M Reddy 7139-44/97.

Rajendra Chowdhary, Rakesh K. Sharma, A. Subba Rao and Y. Raja
Gopala Rao for the Respondents.

The Judgment of the Court was delivered by E
SRINIVASAN, J.

I. Relevant facts.

The appellant in the earlier appeal of 1988 is a public limited company
engaged in the manufacture of Vanaspathi. It entered into two agreements F
with Andhra Pradesh State Electricity Board hereinafter referred to as 'Board'
on 1.9.1970 and 27.8.1973 for supply of High tension power. In January, 1976
the officers of the Board inspected the factory premises and noticed pilferage
of energy. The power supply was immediately disconnected and a provisional
assessment of the loss was made at Rs. 61.28.535/-. A prosecution was G
launched under Section 379 I.P.C. read with Section 39 of the Indian Electricity
Act, 1910, hereinafter referred to as the Electricity Act in the court of the Chief
Metropolitan Magistrate, Hyderabad. The Board also initiated proceedings
calling upon the appellant to file its objections to the provisional assessment.
The appellant denied the allegations made by the Board. After enquiry, the
final assessment was made fixing the loss at Rs. 55,72,511.81 Ps. The order H
626 SUPREME CO\JRT REPORTS [1998] 2 S.C.R.

A was challenged by the appellant in appeal but in vain. The appellant filed a
suit in the court of Additional Chief Judge, City Civil Court (Temp), Hyderabad
for a declaration that it was not liable to pay any amount as penal damages
and prayed for a direction for refund of the amount of Rs. 22.50 Jakhs
collected by the Board during the pendency of the assessment proceedings
B and for perpetual injunction restraining the defendants therein from
disconnecting the power supply.

2. The suit was contested by the Board. Several issues were raised
including one relating to the jurisdiction of the civil court. The trial court held
that it had jurisdiction to try the suit but negatived all the contentions of the
plaintiff and dismissed the smt. On appeal, a Division Bench of Andhra
C Pradesh High Court rejected the pleas of the appellant and dismissed the
same. The High Court held that the terms and conditions of supply on the
basis of which the agreements were entered between the appellant and the
Board did not in any way contravene the provisions of either the Electricity
Act or the Electricity (Supply) Act, 1948, hereinafter referred to as the Supply
D Act. It was also found that ample opportunity was given to the appellant
before the final order of assessment was made and that the enquiry held by
the officers of the Board was in no way vitiated. Aggrieved by the said
decision of the High Court the appellant preferred the said appeal on obtaining
Special Leave of this court.

E 3. The questions which were decided by the High Court in the aforesaid
proceedings were raised again in Writ Petitions under Article 226 of the
Constitution of India by some industrial undertakings which had also entered
into agreements with the Board for supply of electricity. When proceedings
were initiated by the Board against those industrial undertakings on the
ground of pilferage of electrical enerh'Y and supply was disconnected pending
F enquiry, those undertakings filed Writ Petitions challenging the validity of
such proceedings. In one of the writ petitions, an appeal was filed against an
Interlocutory Order refusing to grant interim relief to the petitioner therein.
When that appeal was admitted by a Division Bench the matter was placed
before a Full Bench for disposal as the Division Bench opined that the view
G taken by the Division Bench in the Civil Appeal referred to earlier was likely
to be in conflict with the •·possible view that the contractual obligation upon
the consumer of electricity that in case of a dispute as to the consumption,
the adjudication shall be by the officers of the Board shall be deviative of
Article 14 of the Constitution of India". Thus all the writ petitions and the
writ appeals against interlocutory orders were heard by a Full Bench of three
H Judges and disposed of by a common judgment dated 12.9.1997.
HYDERABAD VANASPATHI LTD. 1·. A.P. STATE ELEC. BOARD [SRINIVASAN. J.J 627
4. The Full Bench opined that the creation of the adjudicatory process A
by a contractual obligation in condition no_ 39 of the 'Terms and Conditions
~ of Supply' of electricity was wholly vitiated : The Full Bench observed that
though there is no bar against the Board to recover compensation for the loss
caused to it even when a consumer is prosecuted for the same offence under
the Act, the enquiry into and estimate of the loss should be made by an
independent and properly constituted body. Ultimately the Full Bench B
concluded its order as follows:

"" "In view of the above discussion, we have no hesitation to hold that
condition 39 of the conditions framed by the Board, to the extent it
prescribes the procedure for adjudication of the dispute relating to
pilferage or malpractice of energy and for final assessment of the
c
additional charges, is ultravires of Section 24, 26 (6) and Cl.IV(3) of
schedule of!he Act of 1910 and Sect. 49 of Act of 1948, and is wholly
vitiated as being arbitrary and violative of Article 14 of the Constitution
and is accordingly struck down. However, the contention of the learned
Advocate General that the Board is i:mpowered to regulate the supply D
'f of energy including the power of disconnection, on a prima facie
satisfaction or suspicion of a conduct amounting to malpractice or
pilgerage of energy, appears to lie unexceptionable. The Board is
certainly within its limits to discontinue supply of energy on ground
of including malpractice of pilferage of energy. The conditions in the
E
agreements in Appendix III & IV also contain stipulation of
disconnection of supply on suspicion of violation of conditions.
Thus, if an allegation is made of malpractice or pilferage against the
consumer and if the consumer denied the allegation and makes an
application to the Electrical Inspector, under sub-section (6) of Sec. 26
or Cl. IV (3) of the Schedule to the Act of 1910, and the Electrical F
Inspector, holds on preliminary facts, that he has no jurisdiction in the
matter, then the Board is empowered to take such step as it may deem
proper and appropriate including disconnection of supply and for
restoration of supply on certain conditions. This action of the Board,
is however, subject to the scrutiny by a court of law".
G
5. It is against the said judgment of the Full Bench the Board has filed
,. thi; Civil Appeals Nos. 7139-7144 of 1997. Aa the appeals have been heard
together as the contentions are common. For the sake of convenience, the
parties will be hereafter referred to as the Board on the one hand and the
consumers on the other. H
628 SUPREME COURT REPORTS (1998] 2 S.C.R.

A 6. The chief argument advanced on behalf of the consumers is that
condition number 39 in the ·Terms and Conditions of Supply' of electricity
which are purely contractual is ultravires the provisions of the Indian Electricity
Act, 1910 hereinafter referred to as the ·Electricity Act' and Electricity (Supply)
Act, 1948 hereinafter referred to as the 'Supply Act'. Alternatively, it is
B contended that even if the terms are statutory in nature, the condition is not
valid. Thirdly, it is argued that the said condition is violative of Article 14 of
the Constitution of India. Per contra, it is contended on behalf of the Board :._
that it is performing a statutory obligation to supply electricity and has been
empowered by the provisions of Section 49 of the Supply Act to impose such
terms and conditions as it thinks fit. The conditions which have been so
C imposed including condition number 39 are statutory in character and are in
no way contrary to the provisions of either of the enactments. The conditions
are also quite reasonable and cannot in any sense be termed arbitrary and
violative of the provisions of Article 14 of the Constitution of India.

IL RELEVANT STATUTORY PROVISIONS
D
7. Before adverting to the rival contentions, it is necessary to refer to
certain provisions in the two enactments namely Electricity Act and the
Supply Act. An Electricity Act was passed originally in 1903 but it was
repealed by the Electricity Act which amended the law relating to the supply
E and use of electrical energy. The said Act was not a complete Code on the
subject. It was apparently found to be inadequate for coordinating development
of electricity on regional basis. Hence, the Supply Act was enacted in 1948
to provide for rationalisation of the production and supply of electricity and
generally for taking measures conducive to electricity. While the earlier Act
deals with the supply and u5e of electric energy and the rights and obligations
F of the licensees, the later Act deals with statutory powers and functions of
the Central Electricity Authority, State Electricity Boards and Generating
companies. Section 70(1) of the later Act provides for giving an overriding
effect to its provisions in so far as tl1ere is any inconsistency therewith in
the provisions of the earlier Act or any Rules made thereunder or any
G instrument having effect by virtue of the said Act or Rules. The proviso to
sub-section ( 1) clarifies that nothing in the later Act shall be deemed to
prevent the State Government from granting, after consultation with the
Board, a licence not inconsistent with the provisions of the earlier Act to any
person in respect of such area and on such terms and conditions as the State
Government may think fit. Sub-s.(2) makes it clear that save as otherwise
H provided in the later Act the provisions of the Act shall be in addition to
HYDERABAD VANASPATHI LTD. v. A.P. STATE ELEC. BOARD [SRINIVASAN, J.j 629

and not in derogation of the earlier Act. A

8. Section 26 of the Supply Act is to the effect that the Board shall in
respect of the whole State haYe all the powers and obligations of the licensee
under the Electricity Act and the later Act shall be deemed to be the licence
of the Board for the purpose of the earlier Act. The first proviso to the Section
excludes the applicability to the Board, of Sections 3 to 11, sub-ss. (2) and B
(3) of Section 21, Section 22, sub-section (2) of Section 22A, Sections 23 and
27 or clauses (i) to (v), clause (vii) and clauses (ix) to (xii) of the Schedule
to the Electricity Act relating to the duties and obligations of a licensee. The
second proviso states that the provisions of clause (vi) to the Schedule to
the earlier Act shall apply to the Board in respect of that area only where C
distribution mains have been laid by the Board and the supply of energy
through any of them had commenced.

9. In view of the provisions of Section 26 of the Supply Act our
attention has been drawn by the learned counsel for the consumers to some
only of the provisions of the Electricity Act. Section 20 sets out the power D
T
of the licensee or any person duly authorised by the licensee to enter the
premises to which energy has been supplied and remove fittings, etc. in
certain circumstances and the procedure therefor. Sub-sections (I) and (4) of
Section 21 are in the following terms :

"Section 21(1). A licensee shall not be entitled to prescribe any
E
special form of appliance for utilizing energy supplied by him or save
as provided (in any conditions made under sub-s. (2) or) by Section
23, sub-s. (2), or by Section 26, sub-s.(7), in any way to control or
interfere with the use of such energy :
F
Provided that no person may adopt any form of appliance, or use the
energy supplied to him so as to unduly or improperly to (interfere
with-

(a) the safety or efficient working of licensee's electric supply lines
or other works ; or G
(b) the supply of energy by the licensee to any other person) .....

Section 21 sub-sectin (4) reads as follows :

.. (4) Where any difference or dispute arises as to whether a licensee H
630 SUPREME COURT REPORTS [1998] 2 S. C.R.

A has prescribed any applicance or controlled or interfered any
applicance or controlled or interfered with the use of energy in
contravention of sub-section (I), the matter shall be either referred to
an Electrical Inspector and decided by him, or, if the licensee or
consumer so desires, determined by arbitration.''

B Section 24(1) and (2) read as follows:-

·'( 1) Where any person neglects to pay any charge for energy or any
(sum, other than a charge for energy,) due from him to a licensee in
respect of the supply of energy to him, the licensee may, after giving
not less than seven clear days notice in writing to such person and
c without prejudice to his right to recover such charge or other sum by
suit, cut off the supply and for that purpose cut or disconnect any
electric supply-line or other works, being the property of the licensee,
through which energy may be supplied, and may discontinue the
supply until such charge or other sum, together with any expenses
incurred by him in cutting off and re-connecting the supply, are paid,
D but no longer.
(2) Where any difference or dispute (which by or under this Act is
required to be determined by an Electrical Inspector, has been referred
to the Inspector) before notice as aforesaid has been given by the
licensee, the licensee shall not exercise the powers conferred by this
E section until the Inspector has given his decision:
PROVIDED that the prohibition contained in this sub-section shall not
apply in any case in which the licensee has made a request in writing
to the consumer for a deposit with the (Electrical Inspector) of the
amount of the licensee's charges or other sums in dispute the deposit
F of the licensee's further charges for or for energy as they accrue, and
. .A
the consumer has failed to comply with s11ch request.)
Section 26(6) is in the following terms :
"Where any difference or dispute arises as to whether any meter
referred to in sub-section ( l) is or is not correct, the matter shall be
G decided, upon the application of either party, by an Electrical Inspector;
and where the meter has, in the opinion of such Inspector ceased to
be correct, such Inspector shall estimate the amount of the energy
supplied to the consumer or the electrical quantity contained in the
supply, during such time, not exceeding six months, as the meter shall
H not, in the opinion of such Inspector, have been correct; but save as
HYDERABAD VANASPATHI LTD.''· A.P. STATE ELEC. BOARD !SRINIVASAN, J.) 631

aforesaid, the register of the meter shall, in the absence of fraud, be A
conclusive proof of such amount or quantity :

PROVIDED that before either a licensee or a consumer applies to
the Electrical Inspector applies to the Electrical Inspector under this
sub-section, he shall give to the other party not less than seven days,
notice of his intention so to do". B

.
10. Learned counsel has also drawn our attention to Sections 35 and 36
of the said Act as well as Rules 4 to 6 of the Indian Electricity Rules framed
under the Act. Section 35 deals with the constitution of the Advisory Board
and Section 36 deals with the appointment of Electrical Inspector. Rules 4 to
6 provide for the qualifications of Inspectors etc. We are not extracting those C
provisions as they are unnecessary in this case. In the course of arguments
our attention has also been drawn to Rule 27 which provides for Model
conditions of supply as contained in Annexure VI.

11. Apart from the above, strong reliance is placed on Clause VI of the
T
Schedule to the Act which deals with requisition for supply to owners or D
occupiers of any premises situate within the area of supply of a licensee. Sub-
clause (1) and sub-clause (3) of Clause VI read as follows :-

VI. Requisition for supply to owners or occupiers in vicinity

(1) Where, (after distributing mains have been laid down under the E
provisions of Clause IV or Clause V and the supply of energy through
those mains or any of them has commenced,) a requisition is made by
the owner or occupier of any premises situate within (the area of
supply) requiring the licensee to supply the energy for such premises
the licensee shall, within one month from the making of the requisition, F
(or within such longer period as the (Electrical Inspector) may allow)
supply. and, save in so far as he is prevented from doing so by
cyclones, floods, storms or other occurrence beyond his control
continue to supply, energy in accordance with the requisition.

G

(3) Where any difference or dispute arises as to the amount of energy
to be taken or guaranteed as aforesaid, or as to the cost of any
service-line or as to the sufficiency of the security offered by any H
632 SUPREME COURT REPORTS [1998] 2 S.C.R.

A owner of occupier, (or as to the position of the meter board) or as to
the improper uses of energy, or as to any alleged defect in any wires,
fittings. works or apparatus, or as to the amount of the expenses
incurred under the third proviso to sub-cl.(!). the matter shall be
referred to and (Electrical Inspector) and decided by him.

B 12. Turning to the provisions of the Supply Act, apart from the Sections
which we have referred to earlier, reference may be made to Sections 18 and
19. While Section 18 sets out the general duties.of the Board, Section 19 sets
out the powers of the Board. Section 49 is the most relevant provision in this
case and it reads as follows :
c ''Section 49. Provision for the sale of electricity by the Board to
persons other than licensees.- (1) Subject to the provisions of this
Act and or regulations, if any, made in this behalf, the Board may
supply electricity to any person not being a licensee upon such tem1s
and conditions as the Board thinks fit and may for the purposes of
D such supply frame uniform tariffs.

(2) In fixing the uniform tariffs, the Board shall have regard to all or
any or the following factors, namely-

(a) the nature of the supply and the purposes for which it is
required:
E
(b) the co-ordinated development of the supply and distribution
of electricity within the State in the most afficient and economical
manner, with particular reference to such development in areas
not for the time being served or adequately served by the licensee;
F (c) the simplification and standardisation of methods and rates of
charges for such supplies:

(d) the extension and cheapening of supplies of electricity of
sparsely developed areas.
G (3) Nothing in the foregoing provisions of this section shall derogate
from the power of the Board, if it considers it necessary or expendient
to fix different tariffs for the supply of electricity of any person not
being a licensee, having regard to the geographical position of any
area, the nature of the supply and purpose for which supply is
H required and any other relevant factors.
HYDERABAD VANASPATHI LTD. v. A.P. STATE ELEC. BOARD [SRINIVASAN, J.]. 633

(4) In fixing the tariff and terms and conditions for the supply of A
electricity, the Board shall not show undue preference to any person"-

13. Section 78 enables the GoYcrnment to frame Rules to give effect to
the provisions of the Act. Section 79 empowers the Board to make regulation
not inconsistent. with the Act and the Rules rnade thereunder to provide for
all or any of the matters set out therein. One of them is ·'(j) principles B
governing the supply of electricity by the Board to persons other than
licensees under Section 49•·. Section 79A provides that every mle made by
the State Government under Section 78 and every regulation made by the
Board under Section 79 shall be laid as soon as may be before the State
Legislature.
c
Ill RELEVANT CLAUSES OF THE TERMS AND CONDITIONS OF
SUPPLY
14. Clause 39 which is the main target of attack defines various
malpractices and provides for enquiries by designated officials. Clauses 39.4,
39.5., 39.6 read as follows:- D
Clause 39.4. Officers authorised to inspect and deal with cases of
malpractice and pilferage of energy are as indicated below :

SI. No. Particulars Officer or officers authorised
To inspect the To disconnect To make final ass. E
premises and and issue Appeallate authority
make provision provisional assessment
-al assessment notice to the consumer

2. H.T. Service ADE.DE ADE S.E. CE.
including &S.E. F
temporary supply incharge

"Clause 39.5. Where on the inspection of consumer's installations
or premises or on the basis of other information or data there is scope
for suspecting that a consumer is guilty of ··supply of electricity to
any service, which, is disconnected by the Board" or "pilferage of G
energy", the officer authorised in this behalf by the Board may without
prejudice to Board's other rights. casue the supply of electricity to
such consumer to be forthwith disconnected without any notice and
report the matter to the Final assessing authority. In the case of the
malpractices other than the one mentioned above, supply shall be H
634 SUPREME COURT REPORTS [1998] 2 S.C.R.

A disconnected only in the event of failure on the part of the consumer
to pay half of the estimated amount within the period stipulated in the
proYisional assessment notice."'

··Clause 39.6 Provisional assessment of the loss sustained by the
Board and payment:
B
The inspecting officer shall make a provisional estimate of the
loss incurred by the Board by the reason of the malpractice or pilferage
of enerh'Y committed by the consumer which shall be assessed as
mentioned herein below and intimated to the Assistant Divisional
C Engineer concerned. The A.D.E. concerned shall ensure disconnection
of such services forthwith in the case of malpractice with reference to
supply of electricity to any disconnected service or pilferage of energy.
The Assistant Divisional Engineer shall then serve the consumer with
a notice of provisional assessment in the prescribed form. Such notice
shall mention, interalia.
D
(a) the matters noticed during the inspection of the consumer's
premises and installations.

(b) the reasons for disconnection already effected or propose to
be effected and
E
(c) a provisional estimate of the loss sustained by the Board
computed in the prescribed manner.

He shall inform the consumer to pay half of the provisionally
assessed amount, pending the enquiry to be conducted by the
F concerned authority into the case, to secure restoration of supply
where supply has been disconnected or to avoid discontinuance of
supply where disconnection has not been effected. If such payment
is made the consumer's service shall not be disconnected on this
ground pending the enquiry".
G 15. The provisional assessment of the loss referred to in Clause 39.6
shall made on the principles set out in clause 39.7.1and39.7.2. It is provided
that assessment shall be made for the estimated period of malpractice subject
to a maximum of one year prior to the date of inspection. Clause 39.8.1 and
39.8.2 provide for provisional assessment notice in the case of malpractices
H other than supply of electricity to a disconnected premises and disconnection
HYDERABAD VANASPAT!ll LTD. v. A.P. STATE ELEC. BOARD [SRINIVASAN, J.I 635

of serYice on the consumer's failure to pay the provisionally assessed amount. A
.<(
16. Clause 39.9 is in the following terms :

Clause 39.9.1 After the provisional assessment notice is serYed upon
the consumer as mentioned in clause 39 .3 tl1ereof the officer authorised
in this behalf by the Board (see statement referred to in clause 39.4 B
above) shall issue a shm\' cause notice in the forms prescribed therefore
advising the consumer to file his representation if any, within 30 days
from the receipt of the notice.

Clause 39.9.2 The said officer of the Board shall, after the expiry of
the aforesaid notice period, enquire into the matter and after giving c
reasonable opportunity to the consumer and taking into account all
relevant facts and circumstances shall decide whether the consumer
has committed malpractice or pilferage of energy and if so satisfied
proceed to assess to the best of his judgment, the loss sustained by
the Board on account of such malpractice or pilferage of energy by
~
D
the consumer. The consumer may be represented by an advocate at
the time of personal hearing provided the consumer files proper
vakalatnama.

Clause 39.9.3 The final assessing authority shall then pass an order
setting out his conclusions and the reasons thereof and communicate E
a copy of the order to the consumer and demand the amount if any
due from the consumer on the basis of such order after giving credit
to the amounts paid by him.

Clause 3 9. 9 .4 Payment of amount of final assessment. The consumer
shall pay to the Board within 30 days of the receipt of final assessment F
order, the amounts demanded therein".

17. Against the order of final assessment an appeal lies to the designated
authority. The appellant may be represented by an advocate before the
appellate authority at the hearing. The appellate authority shall give his
G
reasons for his conclusions except in cases where the appeal is allowed in
;.. toto. Clause 39.10.6 provides that the order on appeal shall be final subject
to clause 39.11 and be not liable to be questioned in any court of law clause
39.11 is in the following terms :

Clause 39.11 The Chairman or his nominee (the nominee being any H
636 SUPREME COURT REPORTS [1998] 2 S.C.R.

A member of the Board) may suo moto at any time call for and examine
the rzcord of any order passed or proceedings recorded by the final
assessment authority or appellate authority for the purpose of
satisfying himself regarding ti:~ propriety or legality of such order or
proceeding and may pass such order in reference thereto, as he may
B think fit. No orders adverse to the consumer shall be passed without
giving notice and opportunity for making a written representation to
the consumer. The order passed by the Chairn1an or his nominee shall
be final and not liable to be questioned in any court of law. The
consumer shall have no right to invoke this provision".

C 18. Clause 46 reads thus :-

"Inter)lretation: These conditions shall be read and construed as
being subject in all respects to the provisions of the Indian ElectriGity
Act, 1910, Indian Electricity Rules, 1956 and the Electricity (Supply)
Act, 1948 in force and as amended from time to time and to the
D provisions of any other law relating to the supply of electricity for the
time being in force and nothing herein above contained in these
conditions shall abridge or prejudice the rights of the Board and the
consumer under any Central Act or State Act or rules made thereunder".

19. Appendix-III contains the form of H. T. agreement. The relevant
E clauses read as follows :

APPENDIX- III Form ofH.T. Agreement

"Agreement executed this day of ...... .19 by.......... for themselves/
himself/itself and for their/his/its/hers assigns and successors in favour
F of the Andhra Pradesh State Electricity Board a statutory corporation
constituted under section 5 of the Electricity (Supply) Act, 1948 and
its successors and assigns herein after called the Board.

2. SUPPLY OF POWER
G I/We the above mentioned have requested the Board to Supply
Electricity at High Tension for the purpose of .......... and the Andhra
Pradesh State Electricity Board agreed to afford such supply on the
terms and conditions notified by them from time to time under section
49 of the Electricity (Supply) Act, l 9.t8 and those herein after mentioned.

H 3. LOAD/MAXIMUM DEMAND
HYDERABAD VANASPATHI LTD. v. A.P. STATE ELEC. BOARD !SRINIVASAN, J.j 637

I/We agree to take from the Andhra Pradesh State Electricity . A
Board Electric Power for a maximum load not exceeding ...... KVA which
shall be taken to be my/our contracted demand for our exclusive use
for the purposes above mentioned, at our Mills/Factory/premises
situated at. ................. My/our contracted load shall be .............. Hp
................ and/or.................. KW. I/We shall not effect any change in the B
maximum demand or contracted load.

4. RE-SALE OF ELECTRIC POWER

I/We undertake that: I/We shall not sell electrical energy obtained
under this agreement without the sanction in writing of the Board. C

5. OBLIGATION TO COMPLY WITH REQUIREMENT OF ACTS
AND TERMS AND CONDITIONS OF SUPPLY:

I/We further undertake to comply with all the requirements of the
Indian Electricity Act, 1910, the Electricity (Supply) Act. 1948 the D
Rules thereunder, provisions of the tariffs scale of Miscellaneous and
General charges and the terms and conditions of supply prescribed by
the Board from time to time and agree

E

I/We hereby agree that if I/We am/are found indulging in theft of
energy or any malpractice in respect of use of electrical energy I/We F
shall pay additional charges as may be levied by the Board. I/We also
agree that in such an event the Board shall in addition to levy of the
additional charge have right to disconnect supply of electricity to my/
our premises for such period as may be decided by the Board.

Signature of Consumer". G

IV. NATURE OF AGREEMENT - STATUTORY OF CONTRACTUAL
20. We have already seen that Section 49 of the Supply Act empowers
the Board to prescribe such terms and conditions as it thinks fit for supplying
electricity to any person other than a licensee. The section empowers the H
638 SUPREME COURT REPORTS [1998] 2 S.C.R

A Board also to frame uniform tariffs for such supply. Under Section 79(j) the
Board could have made regulation therefore but admittedly no regulation has. ,..
so far been made by the Board. The Terms and Conditions of Supply were
notified in H.P. Ms. No. 690 dated 17. 9.197 5 in exercise of the powers conferred
by Section 49 of the Supply Act. They came into effect from 20. I0.1975. They
B were made applicable to all consumers availing supply of Electricity from the
Board. The section in the Act does not require the Board to enter into a
contract with individual consumer. Even in the absence of an individual
contract, the Terms and Conditions of Supply notified by the Board will be
applicable to the consumer and he will be bound by them. Probably in order
to avoid any possible plea by the consumer that he had no knowledge of the
c Terms and Conditions of Supply, agreements in writing are entered with each
consumer. That will not make the terms purely contractual. The Board in
performance of a statutory duty supplied energy on certain specific terms and
conditions framed in exercise of a statutory power. Undoubtedly the terms
and conditions are statutory in character and they cannot be said to be purely
D contractual.
21. In Punjab State Electricity Board v. Bassi Cold Storage, Kharar
and Another, [1994] Supp 2 S.C.C. 124, this court held that the conditions of
supply are akin to subordinate legislation.

E 22. In Bihar State Electricity Board and Others v. Parmeshwar Kumar
Agarwa/a and Others, (1996). 4 S.C.C. 686, the court held that they are part
of statutory terms and conditions. In para 16 of the judgment the court said:

"Before we advert to the effect produced by a combined reading of
the four clauses, it deserves to be pointed out that the terms and
F
conditions have sacrosanctity, in that Rule 27 of the Indian Electricity
Rules, 1956, framed by the Central Electricity Board in exercise of
power under Section 37 of 1910 Act has, read with Annexure VI
thereof, provided the model conditions of supply which are required
to be adopted by the State Boards. It is on the basis of this statutorily
G prescribed model, with suitable variations, that energy had been
supplied by the Board to the consumers. The model conditions can
be said to be akin to the model Standing Orders prescribed by Industrial
Employment (Standing Orders) Act, 1947, which, when certified, become
part of the statutory terms and conditions of service between the
H employer and employees and they govern the relationship between
HYDERABAD VANASPATHI LTD. v. A.P. STATE ELEC. BOARD (SRINIVASAN, J.J 639

the parties, as held in Workmen v. Firestone 1.'vre & Rubber Co. of A
India (P} Ltd., SCC atp. 832, [1973] l S.C.C. 813. We are inclined to
think that similar is the effect of terms and conditions, on which a
State Board supplies energy to the consumers".

23. Learned counsel for the consumers has referred to Shri Vi dya Ram
Misra v. Managing Committee, Shri Jai Narain College, [1972] l SCC 623. B
In that case Statute 151 framed under the Lucknow University Act, 1920
provided that the terms and conditions of service of a teacher must be
incorporated in the contract to be entered into between the teacher concerned
and the college. Hence the court held that the terms and conditions mentioned
in Statute 151 had proprio vigore no force of law. That decision has no C
relevance here.
24. The ruling in Executive Committee of Vaish Degree College. Shamli
and others v. Lakshmi Narain and others, (1976] 2 SCC 58 cited by learned
counsel has no applicability as the court found on the facts that the Executive
Committee was not a statutory body. D
-< 25. We are unable to uphold the view expressed oy the Full Bench in
the judgment under appeal that the terms and conditions of supply are purely
contractual. In our opinion the Terms and Conditions of Supply are statutory
in character.
V The Supply Act E
26. It is contended that Clause 39 of the Terms and Conditions of
Supply falls outside the power conferred on the Board in Sec. 49 of the
Supply Act. According to learned counsel the power of the Board to impose
such terms and conditions as it thinks fit, is expressly made subject to the
other provisions of the Act which means that the Board can impose only such F
conditions as may be found in an agreement between other ordinary licensees
and consumers. The contention is that the Board can neither define
'malpractices' nor prescribe an adjudicatory machinery for assessing and
levying penal damages. Such matters are, according to counsel, essential
legislative functions which cannot be delegated to the Board. G
27. We are unable to accept the contentions. Section 49 empowers the
Board to supply electricity on ·such terms and conditions as it thinks fit'. It
may also frame uniform tariffs. We have found that the terms and conditions
of supply are statutory in character. They can be invalidated only if they are
in conflict with any provision of the Act or the Constitution. Learned counsel H
--,.

640 SUPREME COURT REPORTS [1998] 2 S.C.R.

A have not shown to us any provision in the Supply Act with which Clause 39
is in conflict. In so far as the Supply Act is concerned, argument hovers ,... to
around Section 49 only_ The only limitauon in that Section is that the terms
and conditions of ~upply should be subject to the provisions of the Act.
Clause 39 does not violate any provision in the Supply Act. It is the statutory
duty of the Board to arrange for the supply of electricity throughout the State
B
and for transmission and distribution of the same in the most efficient and
economical manner. For that purpose it has necessarily got to prevent
unauthorised user, pilferage or malpractices by the consumers. Hence the
necessary safeguards have to be provided as part of the conditions of supply
so that the consumers will be bound by them. While on the one hand, the
c Board has to recoup the loss suffered by such pilferage or other malpractices.,
it has also on the other got to stop immediately the continuation thereof.
Hence the terms and conditions of supply have to provide for compensation
as well as immediate disconnection. For ascertaining the loss and fixing the
compensation, uniform procedure has to be framed and a machinery constituted.
D Clause 39 is only doing that. Every consumer is made fully aware of the said
terms and he signs the contract only on that basis. He gives an undertaking
in that contract that if he is found indulging in any malpractice etc. he shall
pay additional charges as may be levied by the Board and that the Board have
the right to disconnect supply of electricity to his premises for such period
as may be decided by the Board.
E
28. Learned counsel for the consumers has drawn our attention to
Powell v. May, (1946) All E.R. 444 wherein a bye-law made by the local county
council was struck down as ultra vires the powers of the council as it was
repugnant to the provisions of certain statutes. The· ruling has no application
F here. A

29. Strong reliance is placed on the decision of the Queen's Bench
Division in Commissioners of Customs and Excise v. Cure & Deeley Ltd.,
( 1961) 3 All E.R. 641. The Commissioners of Customs and Excise were
empowered by Section 33 (I) of Finance Act 1940 to make regulations providing
G for any matter for which provision 'appears to them necessary" for the
purpose of ''giving effect to" the statutory provisions relating to purchase tax
'·and of enabling them to discharge their functions thereunder". The
Commissioners made the Purchase Tax Regulations 1945. Regulation 12
provided that if any person failed to furnish a return as required by the
H regulation the Commissioners might determine the amount of tax appearing to
HYDERABAD VANASPATHI LTD. v. A.P. STATE ELEC. BOARD [SRJNIVASAN, J.I 641

them to be due and demand payment thereof which shall be deemed to be the A
proper tax. The Court held that the said Regulation 12 was ultra vires on three
grounds : (i) It was no part of the functions assigned to the Commissioners
to take on themselves the powers of a High Court Judge and decide issues
of fact and law as between the Crown and the subject; (ii) It renders the
subject liable to pay such Wx as the Commissioners believed to be due, B
whereas the charging sections impose a liability to pay such tax as in law is
due" (iii) It was capable of excluding the subject from access to the courts
and of defeating pending proceedings.

30. The ruling does not help the consumers in this cas<f. The impugned
Clause 3 9 does not suffer from the vices mentioned above. No doubt, Clause C
39.10.6 provides that the order on appeal shall be final subject to Clause 39.11
and not liable to be questioned in any Court of Law. Similarly, Clause 39.11
makes the order of the Chairman or his nominee final not liable to be questioned
in any Court of Law. But learned senior counsel for the Board, Mr. Shanti
Bhushan, has fairly conceded that the orders are subject to judicial review D
and the jurisdiction of Courts cannot be taken away by that Clause. It is to
be noted that the trial court and the High Court have in this case upheld the
jurisdiction of the civil court to entertain the suit and consider the validity
of the orders passed by he Board against the consumers.
31. Reliance is placed on the decision in Indian Express Newspaper E
(Bombay) pvt. Ltd. and others etc. etc. v. Union of India & others etc.etc.,
[1985] l S.C.C. 641, to support the argument that Clause 39 is in breach of the
principle of delegated Legislation. According to learned counsel the terms
and conditions of supply may tantamount to a subordinate legislation but it
must yield to the plenary legislation and that the Supply Act never intended
to confer powers on the Board to frame such terms and conditions of supply. F
including the power to adjudicate a dispute between itself and the consumer
and assess the damages. We have already adverted to the provisions of
Section 49 of the Supply Act and pointed out that the power conferred on
the Board is not circumscribed by any limitation other than that it should not
contravene the provisions of the Act. We are of the opinion that Section 39 G
is not violative of any provisions of the enactment.

32. InJiyajeerao Cotton A1ills Ltd & Am:, v. Madhya Pradesh Electricity
Board & Another, [1989] Supp. 2 S.C.C. 52 the Court held that the Board has
powers under Section 49(1) and (3) to levy higher charges for excess
consumption of electricity and it is not essential for the Board to make H
642 SUPREME COURT REPORTS [1998] 2 S.C.R

A regulations ;ndicating the basis for such levy before making the demand.

33. Our attention has been drawn to Agricultural Market Committee v.
Shalimar Chemicals Works Ud.. [1997] 5 Supp. S.C.C. 516 in which it has
been held that a delegate while making subsidiary rules or regulations cannot
widen or restrict the scope or the Act or the policy or principle. The proposition
B has no application in the present case as we have found that the Board has
not in any way violated any of the provisions of the Act by framing the terms
and conditions of supply including Clause 39. Hence we reject the contention
that Clause 39 is ultra vires the provisions of the Supply Act.

C VI. The Electricity Act.
34. lt is vehemently argued that provisions in Clause 39 run counter to
the relevant provisions of t11e Electricity Act. In particular, it is said that
Clause 39.1 covers the same field as that of ss.21 (4) and 26 (6)(b) and Clause
VI(3) oftlle Schedule in the said Act. According to learned counsel malpractice
D and pilferage defined in Cl.39 would be covered by the aforesaid provisious
of that Act and the autllority to decide the same is the Electrical Inspector
appointed by the Government and not the officers of the Board. It is also
argued tllat Clause 39.2 and 39.3 are contrary to Sec.20 of the Act and Clause
39. 4 is contrary to Sec. 36 of the Act read with Rules 4 to 6 of the Indian
E Electricity Rules. According to learned counsel, the entire clause 39 is violative
of the provisions of Clause VI(I) in the Schedule to the Electricity Act as the
latter enjoins on the Board to continue the supply of electricity 'save in so
far as prevented by cyclone, floods, storms and other occurrences beyond
its control. In short, the contention of the learned counsel for the consumers
F is that the procedure prescribed in the Electricity Act and the Rules would
apply to all situations arising between the Board and the consumer and the
same should be followed. According to him Clause 3 9 is invalid and
unenforceable in as much as it deviates from the provisions of tile Electricity
Act and the Rules.

G 35. We are unable to accept any of the aforesaid contentions. We have
carefully perused the provisons of the Electricity Act and we find that those
provisons provide for· a different situation. Clause 39 will come into play
whenever there is malpractice or pilferage on the part of the consumer or a
fraud played by the consumer. The Electrical Inspector has no jurisdiction to
H deal with those matters. He can be approached only when there is a defective
HYDERABAD VANASPAfHl LTD. v. A.P. STATE ELH'. BU.\RD !SRINIVASAN. J.J 643

meter or any defect in wires. fittings. works or apparatus. As regards. Cl. (VI) A
of the Schedule lo the Electricity Act. it is not applicable unless distribution
mains have been laid down under the provisions of Clause (IV) or Clause (V)
and the supply of energy through those mains or any of them has commenced.
The provisions of Section 26 of the Supply Act exclude the applicability of
Clauses (I) to (V) of the schedule to the Board. Hence Cl. (VI) of the schedule B
cannot by itself apply and that is why the second proviso to Section 26.
clarifies the position that the provisions of Clause (VI) of the Schedule shall
apply to the Board in respect of that area only where distribution mains have
been laid by the B0ard and the supply of energy through any of them has
commenced. The records before us do not disclose any pleading on the part
of the consumers that the requirement of the second proviso to Section 26 c
have been satisfied. No question has been raised in that regard before the
trial court. No doubt. the Full Bench of the High Court has placed reliance
on Clause (VI) of the Schedule and the grounds raised in the Special Leave
Petition filed by the Board do not refer to the same. But in the absence of
a specific pleading to that effect it cannot be presumed that Clause (VI) of D
the Schedule would apply. Even assuming that clause applies, it will not alter
the situation. The difference or dispute rderred to in sub-cl.(3) of CL(VI) will
not cover fraudulent malpractice or pilferage. A perusal of the said sub-clause
makes it evident that the matter shall be referred to an Electrical Inspector
only in cases of defects mentioned therein and not otherwise. We have no E
hesitation to reject the contention of learned counsel for the consumers and
hold that the provisions in clause 3 9 do not contravene the provisions of the
Electricity Act.
36. In State of UP. and others v. Hindustan Aluminium Corpn. and
others, [1979] 3 S.C.C. 229, the Court considered the expression .. regulating" F
in Section 22 (b) of the Electricity Act and observed that the word ·'regulate··
does not include prohibition. The ruling has no relevance whatever in the
present case. In Andhra Pradesh Carbides Ltd. and another v. Andhra
Pradesh State Electricity Board, Ilyderahad and others AIR J9'S6 Andhra
Pradesh 3 7 a Single Judge of the Andhra Pradesh High Court held that ·
regulations made under the Supply Act shall not be covered by Section 70 G
thereof and that Section 49 read with Section 70 of the said Act does not
empower the board to make a regulation inconsistent with the provisions of
Section 24 of the Electricity Act. The ruling has no bearing in the present case
as we have found that Clause 39 of the Terms and Conditions of Supply do
not contravene the provisions of either Act H
644 SUPREME COURT REPORTS [1998] 2 S.C.R.

A 37. In !11.P.E.B. and others v. S111t. Basantihai, [ i 988] (1) S.C.R 890 this
Court held that a dispute regarding the commission of fraud in tampering with
the meter and breaking the body-seal is one outside the ambit of Section 26(6)
of the Electricity Act and an Electrical Inspector has no jurisdiction to decide
such cases of fraud. This Court has clearly pointed out that under Section
B 26(6) if the dispute is as to whether the meter is or is not correct, it is to be
decided by the Electrical Inspector. We arc entirely in agreement with that
judgment.
38. In Municipal Corporation of Delhi v. Ajanta iron & Steel Company
(Pvt.) Ltd., (1990] 2 S.C.C. 659, this court found that there was a provision
C in the agreement between he Delhi Electric Supply Undertaking and the
consumer for service of notice as a pre-requisite for disconnection. Hence this
Court upheld the decree for mandatory injunction directing restoration of
supply of electricity discontinued during the pendency of the suit. without
issue of such notice.
39. In MP Electricizv Board, Jabalpur and others f!i?rsus Harsh Wood
D Products and Another, (1996] 4 S.C.C. 522, the Court held that Section 24 of
the Electricity Act would apply to a case of regular supply made and prior
demand of payment of electricity charges and it does not apply to demand
on detection of pilferage. The court upheld the validity of similar conditions
of supply of electricity and held that on a prima facie conclusion of power-
E theft reached by the authorities, it was not necessary to give further hearing
to the consumer and the action taken by the Board disconnecting the supply
was not violative of Article 20 (I) and 14 of the Constitution and the principles
of natural justice. We are in agreement with the view expressed therein.
40. In Belwal Spinning Mills & Ors, v. U.P State Electricify Board and
F another, (1997] 6 S.C.C. 740, the Court dealt with the provisions of Sections
26(6) and 26(7) of the Electricity Act alongwith Section 20 thereof. A perusal
of the judgment shows that the Bench was of the view that the provisions
of Section 26 would apply only when the dispute related to the correctness
of the meter. That ruling also supports the contention of the Board in this
G case.
VII. Article 14, Constitution of India.

41. What remains to be considered is whether Clause 39 is violative of
Article 14 of the Constitution of India. Under this head, the argument of
learned counsel for consumers is that the provisions in the clause are wholly
H unreasonable and against the principles of Natural Justice. According to
HYDERABAD VANASPATHI LTD. I'. AP. STATE ELEC. BOARD jSRINIVASAN_ J.j 645

them, the clause enables the officers to disconnect the sen-ice on a suspicion A
of malpractice and the consumer has to pay 50% of the provisional assessment
amount before gelling it restored. It is also contended that the officials of the
Board are enabled to judge its own cause and the doctrine of bias will apply.
In support of these contentions, our attention is drawn to :

I. J. Mohapatra and Co. and Another v. State of Orissa and .4nothe1;
B
(1984) 4 S.C.C. 103.

2. State of Karnataka v. Shree Rameshwara Rice Mills, Thirthahalli,
(1987) 2 S.C.C. 160.

3. Krishna Bus Service Pvt. Ltd. v. State of Haryana and Others, (1985)
c
3 S.C.C. 711.

4. Rattan Lal Sharma v. Managing Committee, D1'. Hari Ram (Co-
education) Higher Secondary School and Others, [1993) 4 S.C.C 10.
D
5. LIC of India and Another v_ Consumer Education & Research
Centre and Others, (1995) 5 S.C.C. 482

None of the ruling will apply in this case. We have already referred to
the judgment of this court in MP Electricity Board, Jabalpur and others v. E
Harshwood Products Case II, [1993) 4 S.C.C. 522, wherein it was held that
when power theft was found by the officials, immediate disconnection of the
supply was not violative of Article 14 of the Constitution and principles of
Natural Justice would not apply.

42. In Patel Parshottamdas Vanmalidas, v. Gujarat Electricity Board p
and another, AIR (1987) Gujarat 188, a Division Bench of Gujarat High Court
considered similar conditions and upheld their validity. The Bench said :

"Thus, it is clear that the Beard has formulated such a condition in
order to safeguard its interest. Such a condition is there for the
purpose of checking, apart from other things, the theft of electricity. G
It is not a case of any defective meter, but it is a case of theft of
electricity by the consumer concerned. As a matter of fact, in this case
it is alleged that the petitioner, by inserting a plastic strip, was able
to stop the running of the meter and thereby, committed theft of
electricity. The condition clearly states as to the procedure that has H
646 SUPREME C01JRT REPORTS [1998] 2 S.C.R.

A to be adopted for the purpose of questioning the departmental action
in levying penal charges. It has also been made clear in the condition
as to the limit to ll'hich the Department can go for the purpose of
assessing the theft of electricity. In no case the Department can go
beyond a period of six 111ont11s, according to this condition. Jn condition
No. 3+. we are able to see that manner of assessment also has been
B
specified. If all these steps are taken by the Department, the condition
itself states that the consumer has a remedy by filing an appeal to the
appropriate authority within a specified time. Thus, a conjoint reading
of this Condition and the purpose for which it is intended, clearly
makes out that such a cond;tion is not arbitrary or unreasonable, but
c within the powers of the Board and, in our opinion, it does not offend
any of the Articles of the Constitution. The argument as if the
imposition of penal assessment before filing an appeal is harsh and
makes the appeal illusory cannot be appreciated. The penal
assessment, as we have stated already, is restricted to a limited period.
D Such an assessment was made after the Department itself was satisfied
with regard to the theft or electricity committed by the consumer
concerned. Hence, it cannot be said that the appeal provided under
Condition No. 34 is an illusory one".

We agree with the above opinion.
E
43. The principle "Nerno Judex in Cause Sua' will not apply in this case
as the officers have no personal !is with the consumers. As pointed out by
learned senior counsel for the Board, they are similar to Income Tax or Sales
Tax Officials. There is nothing wrong in their adjudicating the matter especially
F when the consumers may be represented by an advocate and the formula for
making provisional assessment is fixed in the clause itself. As argument has
been advanced that the Board has recently deleted the provision enabling the
consumer to be represented by a power of attorney agent. It is contended that
the consumer is thereby deprived of the assistance of an expert which may
G be required in technical matters. We do not agree. When the consumer is
represented by a lawyer, he can certainly get such assistance as may be
needed from a technical expert. It is stated by the Board's learned counsel that
the provision was deleted as there was frequent misuse of the same. Whatever
may be the reason for deleting the provision, the existing part of the clause
enables the consumer to be represented by an advocate. That is sufficient
H safeguard for the consumer.
HYDERABADVANASPATHILTD. v. AP. STATEELEC. BOARD[SR!N!VASAN, J.] 647

44. Learned counsel for the consumer contends that the agreement with A
the Board is in the standard form and signing of the same by the consumer
will not prevent him from questioning it. He places reliance on certain
observations in Pawan Alloys & Casting Pvt. Ltd., Meerut versus U.P. State
Electricity Board and Others, [1997] 7 S.C.C. 251. The qµestion in that case
arose on the withdrawal of development rebate to the new industries for a B
period of three years. The court held that the principle of promissory estoppel
applied on the facts and circumstances of the case and by entering into the
standard agreement containing provision for revision of "rate schedule" from
time to time, the consumer had not given up his claim for the rebate for a
period of three years as per the promise held out by the Board. That case has
no bearing here. c
VIll. CONCLUSION

45. In the result, we uphold the judgment and decree of the High Court
in C.C.C.A.No. 38of1982 and dismiss Civil Appeal No. 2558of1988. We allow D
Civil Appeal Nos. 7139 to 7144 of 1997 and set aside the judgment of the Full
Bench of the High Court. The Writ Petitions and Writ Appeals shall be
disposed of by the High Court in the light of this judgment. The parties will
bear their respective costs.
M.P. C.A. No. 2558/88 dismissed.
E
C.A. No. 7139-44/97 allowed.