Holding

Clause 13 of the electricity supply agreement obliges the consumer to pay the minimum charges in any event, making the consumer liable for such charges even after disconnection.

Summary

The Orissa State Electricity Board entered into a five‑year electricity supply agreement with Orissa Tiles Ltd, which required the consumer to pay a stipulated minimum charge irrespective of actual consumption. The Board disconnected supply on 30 April 1968 for non‑payment and the consumer also failed to pay the minimum charges for the period thereafter (1 May 1968 to 5 March 1970). The Board sued for the unpaid electricity charges up to the disconnection date and for the minimum charges for the post‑disconnection period. The trial court awarded both claims; the Orissa High Court upheld only the claim up to the disconnection date, holding that no minimum charge was payable when no energy was supplied. On appeal, the Supreme Court held that clause 13 of the agreement expressly obliges the consumer to pay the minimum charge in any event, relying on the precedent set in Bihar State Electricity Board v. Mis Green Rubber Industries, and restored the trial court decree. Consequently, the consumer remained liable for the minimum charges for the entire contract term despite the disconnection.

Issues considered

Whether a consumer is liable to pay the minimum charge stipulated in an electricity supply agreement for the period after the supply has been disconnected due to non‑payment.

Legislation cited

Indian Electricity Act, 1910

Subjects

electricity supply agreementminimum chargedisconnectionconsumer liabilityIndian Electricity Actcontractual obligationSupreme Court of India

Judgment

~

A ORISSA .STATE ELECTRICITY BOARD
v.
ORISSA TILES LIMITED

MARCH 31, 1993
B
[B.P. JEEVAN REDDY AND N. VENKATACHALA, JJ.]

Indian Electricity Act, 1910:

Agreement between Electricity Board and Consumer-Provision for
-
c minimum charges-Default in payment of electricity charges-Disconnectio11
of supply-Liability of consumer to pay minimum charges for period sub- ~
sequent to date of disconnection of supply-Consumer held liable to pay
minimum charg"' for period subsequent to disconnection.

D The respondent-industry entered into an agreement with the appel-
!ant-Board for snpply of electricity on Sth March, 1965. Under the agree-
ment, which was valid for five years i.e. upto Sth March 1970, consumer
was obliged to pay certain minimum charges in any event. However, on
30th April, 1968 supply of electricity to respondent was disconnected for
non-payment of electricity charges. Since the respondent also failed to pay ,.,l
E the minimum charges for the period subsequent to the date of disconnec-
lion, the Electricity Board filed a suit for the amount due on account of
the electricity consumed upto April 30, 1968 and for the minimum charges
from May 1, 1968 to March S, 1970. The Trial Court decreed the suit.

The respondent preferred an appeal before the High Court which
-
F
sustained the Trial Court's decree only for the period upto the date of ;J.,
disconnection but disallowed the claim for the period subsequent to th•
date of disconnection on the ground that since -the respondent did not
avail of any energy whatsoever during the period subsequent to the discon-
nection it was not liable to pay the minimum charges for that perioo.
G
In appeal to this Court it was contended on behalf of the Electricity
Board that in view of the judgment of this Court in the case of Bilzar State
·"'7 .
Electricity Board, Patna a11d Ors. v. Mis Green Rubber Industries a11d Ors.,
(1990] I S.C.C. 731 the respondent was liable to pay the minimum charges
H for the period subsequent to disconnection.
860
·r-
ORISSA S.E.B. v. ORISSA TILES [REDDY, J.] 861
~
Allowing the appeal dnd setting aside the order of the High Court, A
this Court,

HELD: Clause (13) of the agreement between the parties does oblige
the consumer to pay a certain minimum charges in any event. The judg-
~ ment and decree of the Trial Court is restored. [862 E, 863 DJ
B
Bihar State Electricity Board, Patna & Ors. v. Mis Green Rubber

-
Industries and Ors., (1990] 1 S.C.C. 731, relied on.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1496 of
1993.
c
From the Judgment and Order dated 20.2.1985 of the Orissa High
·--( Court in First Appeal No.139 of 1974

Raj Kumar Mehta for the Appellant.

The Judgment of the Court was delivered by D

B.P. JEEVAN REDDY, J. Heard the counsel for the appellant. None
appears for the respondent though served. Leave granted .

.J-.. This appeal by the Orissa State Electricity Board is preferred against
E
the judgment of the Orissa High Court allowing partly an appeal preferred
by the respondent. The dispute pertains to the liability of the consumer

- (respondent in this appeal) to pay the minimum charges during the period
subsequent to the date of disconnection of supply of energy to him for the
non-payment of electricity dues.
F
... The respondent is an industry. It entered into an agreement with the
appellant for supply of electricity on .March 5, 1965. The agreement ' was
valid for a period of five years. He started availing of the energy with effect
from July 31, 1965. The supply of his industry was disconnected on April
30, 1968 for non-payment of electricity charges. Since the consumer also
failed to pay the minimum charges for the period subsequent to the date G
+'r of <iisconnection, the Board filed a suit for the amount due on account of
the electricity consumed between April 1, 1968 and April 30, 1968 and for
the minimum charges for the period May 1, 1968 to March 5, 1970. (It may
be remembered that the agreement between parties was valid upto March
5, 1970). The Trial Court decreed the suit as prayed for along with interest H
862 SUPREME COURT REPORTS [1993) 2 S.C.R.

A of 6% per annum on the amount decreed from the date of suit till the date
of decree and also future interest at the same rate till full satisfaction. On
appeal, the High Court sustained the decree of the Trial Court only for the
period upto the date of c(isconnection (April 30, 1968) but disallowed the
claim for the period subsequent to the date of disconnection. The reason-
ing of the High Court is that inasmuch as the supply was disconnected and
B the respondent-consumer did not avail of any energy whatsoever during the
period subsequent to the disconnection, it is not liable to pay the minimum

C
charges.

In this appeal, it is contended by the learned counsel for the appel-
!ant that the question arising herein is concluded in favour of the Board by
-
the decision of this Court in Bihar State Electricity Board, Patna and Ors.
v. Mis Green Rubber lndusiries and Ors., [1990) 1 S.C.C. 731. On a perusal ';r-
of the judgment, we find that that was also a case w~ere the claim inter alia
pertained to the period subsequent to the date of disconnection till the
expiry of the agreement. In that case too, minimum charges were claimed
D by the Board even for the period during which the supply remained
disconnected and no energy whatsoever was availed of by the consumer.
We also find that clause (4) of the agreement considered in the said
decision and clauses (6) and (13) of the agreement concerned herein are
substantially same. Clause (13) of the agreement between the parties hereto A-
E does oblige the consumer to pay a certain minimum charges in any event. · ·
The clause reads as follows:

"Clause 13:

The consumer shall (subject to the provisions
F hereinafter contained) pay to the Engineer for the power
demand and electrical energy supplied under this Agree-
ment, the charges to be ascertained as mentioned below
viz. (Government resolution on tariff to be inserted here)

LARGE INDUSTRIES: For demand of 1'.?5 K.V.A. and
G
above for supply at 11 K.V. at

(i) Rs.5.50 paise per K.V.A. per month plus

(ii) Rs.0.08 paise per K.W.H. per month subject to an
H overall maximum rate of Rs.0.09 paise per K.W .H. and
ORISSA S.E.B. v. ORISSA TILES [REDDY, J.] 863

without prejudice to payment of minimum charge of 75 A
per cent of the contract demand at the above rate of
Rs.5.50 paise per K.V.A. per month and subject further
to absolute minimum payment on 125 K. V.A. in the first
part of the tariff.

- For less than 250 K.V.A the demand may be metered
in K.W. and charged for at Rs.6.00 per K.W. per month.
Besides the charges for K. W.H. consumed at the rate
B

- specified above. For supply at M.T; less than 11 K.V.A
and M.T. less that 11 K.V.A. and M.T. the above rate will
be increased by 10%."
c
The reasons for such a stipulation and its justifiability are duly and
fully explained by this Court in the aforesaid decision. It is not necessary
for us to reiterate the same.

The appeal is accordingly allowed. The Judgment of the High Court D
is set aside. The judgn1ent and decree of the Trial Court is restoi"ed. NO
costs.

T.N.A. Appeal allowed.
. -f..

.I