PUNJAB STATE ELECTRICITY BOARD AND OTHERSversusLUDHIANA STEELS PRIVATE LTD.

         PUNJAB STATE ELECTRICITY BOARD AND OTHERS                               A
                                        v.
                    LUDHIANA STEELS PRIVATE LTD.

                              DECEMBER 1, 1992

                 [B.P. JEEVAN REDDY AND G.N. RAY, JJ.]                              B

         Constitution of India, 1950-Artic/e 136-Appeal by special leave- '
    Supreme Court referring dispute to Arbitrator-Participation by parties in ar-
    bitratio~Award made on merit-Whether party can question.

          The respondent • plaintiff entered into· an agreement with the
                                                                                    c
    Eleciricity Board for supply of energy and was availing it. On 6.4.1987,
    when the meter installed at the respondent's premises was checked, it was
    found that it was recording lower consumption than what was actually
    being consumed.
                                                                                 D
          On 16.5.1988 a check meter was installed. The respondent paid the
    charges on the basis of the readings recorded by the check-meter. For the
    period commencing 6.10.1986 upto 16.5.1988 the Board sent a bill dated
    16.8.1988 for Rs.28,56,854 towards the energy said to have been consumed
    by the respondent, though not recorded by the meter.
                                                                                 E
          The respondent instituted a suit disputing the bill and asked for a
    permanent injunction restraining the Board and its officials from recover-
    ing the amount or any part thereof on the basis of the bill.


.          A Temporary injunction was granted initially on his application and
    later it was vacated.
                                                                                    F

          Meanwhile, the respondent applied to the Electrical Inspector under
    sub-section (6) of Section 26 of the Indian Electricity Act requesting him
'   to decide whether the meter was correct and whether he was liable to pay
    any amount over and above that paid by him already with respect to the       G
    said period.

          The Electrical Inspector refused to proceed with the application on
    the ground of pendency of the suit.

          Against the order vacating the temporary injunction, the respondent H
                                        275
    276                   SUPREME COURT REPORTS [1992] SUPP. 3 S.C.R.

A   filed a revision before the High Court.

          The High Court dis posed of the rev1S1on petition directing the
    Electrical Inspector to decide the matter referred to him in accordance
    with law within four months.

B          The respondent filed a review petition which was dismissed on 29tl't
    August 1991, against which the present appeal was preferred by special
    leave.

          When the Special Leave Petition came up for orders this Court
    directed to refer the dispute to the arbitration of a retired Judge of this
c   Court.

          In accordance with this Court's order, the Arbitrator entered upon
    the reference.

D         The Arbitrator held that the suit in which reference to arbitration
    was made pertained only to the period from 6.lr 1986 to 16.5.1988. He
    refused to pronounce upon the respondent's claim With respect to the
    periods, 17 .5.1988 to 10.8.1990 and 10.8.1990 onwards. He held that the
    Board was not entitled to any amount for supply of electrical energy to the
    company over and above that computed in accordance with the readings
E   recorded by the first meter except in so far as an Electrical Inspector might
    allow it in a decision given in conformity with the provisions of sub-section
    (6).

          The ·Board filed objections in this Court to the award. The Board
F   urged that the award be sent to the trial court which would consider and
    decide whether, it should be made the Rule of the Court; that what could
    have been referred to the Arbitrator was .only the dispute which was
    involved in· the Special Leave Petition; that the main dispute pending in
    the suit was never intended to be nor was it actually referred to the
G   Arbitrator; that the Arbitrator had not decided the question which he was
    asked to decide, inasmuch as he had relegated the dispute over again to
    the Electrical Inspector; that sub-section (6) of Section 26 empowered the
    Electrical Inspector to estimate the amount of energy supplied to the
    consumer for a period six months prior to the check; that the agreement
    between the pa!"1ies provided to the contrary, as contemplated by sub-
H   section (1) of Section 26 and for that reason the agreement prevailed over
             ELECTRICITY BOARD v. LUDHIANASIBELS                           277

the provisions of the statute.                                                    A
      Disposing of the case, this Court

      HELD: 1.1. The very dispute between the parties pending in the suit
was referred by this Court. At no stage before the Arbitrator did the Board
raise the objection that he had no authority to go into the main dispute          B
and that he must confine himself to the correctness of the High Court's
order directing the Electrical Inspector to proceed with the application
under Section 26(6). Having consented to the order dated November 14,
1991 and having participated in the proceedings before the Arbitrator on
the merits of the main dispute, it is not now open to the Board to raise the
said objection merely because the award has gone against it. [281-D]
                                                                                  c
       1.2. The order referring the dispute to the Arbitrator expressly states
that "the award may be sent to the Registry of this Court." There is nothing
in the order to show that this Court contemplated transmitting the award
to the trial court for consideration. It is evident from a reading of the order   D
that the acceptance or rejection of the award lies with this Court and this·
Court alone. [280-H], 281-A]

     1.3. There is no warrant for remitting the award under Section 16
nor does the award suffer, from any error apparent on the face of the
record. [282-A]                                                                   E
      1.4. This Court never intended that the Arbitrator should substitute
himself for the Electrical Inspector and render a decision under Section
26(6). [281-G]

      1.5. The Arbitrator has proceeded to consider the Board's claim for         F
the disputed period. The reference to Electrical Inspector too is for the
very same period i.e. 6.10.1986 to 16.5.1988, the date on which the check-
meter was installed. [282-C]

      1.6. The Arbitrator has decided that the Board is not entitled to
recover any amount for supply of electrical energy to the plaintiff over and G
above that computed in accordance with the readings recorded by the first
meter except in so far as an Electrical Inspector may allow it in a decision
given under sub-section (6) of Section 26. He has further clarified that if
and when Electrical Inspector renders his decision, it shall prevail over
his award subject, of course, to any appeal therefrom. [281-G-H)             H
    278                   SUPREME COURT REPORTS [1992] SUPP. 3 S.C.R.

A         1.7. The award made by the Arbitrator on February 18, 1992 is made
    the Rule of the Court. It is to be treated as the decree in the Suit. The Suit
    is disposed .of in terms of the said award. The Electrical Inspector· is
    directed •o decide the dispute referred to him expeditiously in accordance
    with law. [2_83-A)                                                       '

B           CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5137 of
    1992.

            From the Judgment and Order dated 29.8.91 of the Punjab and
     Haryana. High Colirt in R.A. No.40 C-11/91 in Civil Revision No.1206 of
    ·1991.·
c
            S.P. Goel and R.S. Sodhi for the Appellants.

            A.K. Goel for Ms. Sheela Goel for Respondents.

            The Judgment of the Court was delivered by
D
            H.P. JEEVAN REDDY, J. Leave granted.

         The respondent, Ludhiana Steel Private Limited is a consumer of
  electricity. It had entered into an agreement with the Punjab State
  Electricity Board for supply of energy and was availing it. The meter
E installed at the respondent's premises was checked on 6.4.1987. It was
  found .that it was recording lower consumption than what was actually
  being consumed. Sometime later, a check meter was installed (on
  16.5.1988) and, we are told, the petitioner has been paying the ,charges on
  the basis of the readings recorded by the check-meter. For the period
F commencing 6.10.1986 (Six months prior to the date of check) upto
  16.5.19~ (the date on which the check-meter was installed) the Board sent
  a bill dated 16.S.1988 in a sum of Rs.28,56,854 towards the energy said to
  have been consumed by the plaintiff but not recorded by the meter.
  Contesting the said bill, the plaintiff instituted a suit asking for a permanent
G injunction restraining the Board and its officials from recovering the said
  amount ·or any part· thereof on the basis of the said bill. In that suit, he
  applied for a temporary injunction which was granted initially but vacated
  later. Meanwhile, the respondent applied to the Electrical Inspector under
  sub.section (6) of Section 26 of the Indian Electricity Act requesting him
                                                                                     (
  to decide whether the meter was not correct and whether he is liable to
H pay any amount over and a"ove that paid by him already with resp~ct to
      ELECTRICfIY BOARD v. LUDHIANA STEELS [JEEVAN REDDY, J.]             279

the said period. The Electrical Inspector refused to proceed with the said A
application on the ground of pendency of the suit aforementioned.

       Against the order vacating the temporary injunction, the respondent
filed a revision before the High Court of Punjab and Haryana. The High
Court disposed of the revision petition directing the Electrical Inspector
to decide the matter referred to him in accordance with law as expeditious-      B
ly as possible, preferably within four months. It clarified tliat the pendency
of the suit is no ground for him not to proceed with the said application.
The plaintiff/respondent filed a review petition which was dismissed on
29th August, 1991. The present appeal is pre~red against the order in the
review petition.                                                                 C
      When the Special Leave Petition came up for orders before a Bench
coiµprisiug of Ranganath Misra, C.J. and one of us, G.N. Ray, J., the
following order was passed:

        "By the consent of parties we direct that the dispute be                 D
        referred to the arbitration of Mr. Justice A.D. Koshal, a
        retired Judge of this Court. He may take the assistance of
        a technical assessor and may consult the Chief Inspector.
        We would suggest that the Arbitrator may fix his terms .
        and would try to make his award within four months from
        now. The award may be sent to the Registry of this Court.
                                                                                 E
        Expenses shall be apportioned fifty-fifty."

       In accordance with this order, Sri Justice A.D. Koshal entered upon
the reference and passed his award on February 18, 1992. Before the
Arbitrator, the plaintiff/respondent split up its claim into three parts, each   F
relating to a specific period as stated in the table below: (extracted from
the award).
 Designation    Period                          Claim
   of part
    Part A     6.10.1986 The Boards demand contained in Bill dated               G
                   to    16.8.88 for Rs.28,56,854 and surcharge for non-
               16.5.1988 payment of that amount must be rejected in full,
                         subject only to the decision of C.E.I. regarding
                         the accuracy of the first meter under sub-section
                         (6) of Section 26 of the 1910 Act.
                                                                                 H
                                                                  {'


                                                                                 ;;

     280                      SUPREME COURT REPORTS [1992] SUPP. 3 S.C.R ..;

A          Part B    17.5.1988 The Board has charged the Company in:;
                         to     accordance with readings recorded by the second;\
                     10.8.1990 meter which is a very defective and wholly!
                               unreliable instrument.                    ~
           Part C    10.8.199Q The Board claims that second meter is also:;
B                    onwards running slow. This the Company denies and the;:
                             dispute has been referred to C.E.I. The Board::
                             can charge only in accordance with readings:;
                             recorded by the first meter or, in any case, those!
                             by the second meter.

c            The learned Arbitrator held that the suit in which reference to
                                                                                 ';


     arbitration has been made pertains only to period mentioned under Part-A'
     i.e., from 6.10.1986 to 16.5.1988~ He, therefore, refused to pronounce upoq
     the plaintiffs claim with respect to periods mentioned under Parts-B and,
                                                                                1
     C. So far as Part-A is concerned, he rendered.the following decision:       '

D
                "14. In the result, the claim of the Company relating to
                period A succeeds in full and it is held that the Board is
                not entitled to any amount for supply of electrical energy
               to the Company over and above that computed in accord-
                ance with the readings recorded by the first meter except
E               in so far as an Electrical Inspector may allow it in a
                decision given in conformity with the provisions of sub-
                section (6) above extracted. If and when such a decision
               'is announced, it shall prevail subject to the result of any
                appeal therefrom."
F
          ·The Board has filed objections to the said award. We have hear<t
     both the counsel for the appellant-Board as well as counsel for the responf,
     dent/plaintiff.                  ·                                         •i


G           The first objection urged by Sri Goel, learned counsel for the Board"
     is that the award must be . sent to the trial court which will consider and.'
     decide whether it should be made the Rule of the Court. He submitted
     that it is not for this court to consider whether the said award should b~
     made the Rule of the Court. We are not prepared to agree. The ordei;
     referring the dispute to the Arbitrator expressly states that "the award ma~
·H   be sent to the Registry of this Court." There is nothing in the order tQ,show
                                                                                      /
                                                                                      I
                                                                                      c
          ELECfRICITY BOARD v. LUDHIANA SfEELS [JEEVAN REDDY, J.)          281

    that this court contemplated transmitting the award to the trial court for A
    consideration. It is evident from a reading of the order that the acceptance
    or rejection of the award lies with this court and this court alone.

           The second objection of the learned counsel for the appellant i~ that
    what could have been referred to the Arbitrator was only the dispute which B
    was involved in the Special Leave Petition..The main dispute pending in
    the suit was never intended to be nor was it actually referred to the
    Arbitrator. This again is an objection which we cannot countenance. It is·
    rather ridiculous to suggest that what was referred to the Arbitrator was
    whether the Electrical Inspector should be asked to proceed with the


-   application under Section 26(6) pending the suit. It is evident from the C
    order that the very dispute between the parties pending in the suit was
    referred and that is how the Arbitrator and the parties understood it. At
    no stage before the Arbitrator did the Board raise the objection that he
    had no authority to go into the main dispute and that he must confine
    himself to the correctness of the High Court's order directing the Electrical D
    Inspector to proceed with the application under Section 26(6). Having
    consented to.the order dated November 14, 1991 and having participated
    in the proceedings before the Arbitrator on the merits of the main dispute,
    it is not now open to the Board to raise the said objection merely because
    the award has gone against it.
                                                                                 E
            Sri Goel then submitted that the Arbitrator has not decided the
      question which he was asked to decide, inasmuch as he has relegated the
      dispute over again to the Electrical Inspector. We cannot agree with this
      contention either. The case of the Board was that it is entitled to recover
      the said sum of Rs.28,56,854 straight-away even before the Electrical F
      Inspector decides upon the correctness of the meter and the liability of the
      plaintiff to pay additional amount. And that dispute the Arbitrator has now
      decided. This court never intended that the Arbitrator should substitute
      himself for the Electrical Inspector and render a decision under Section
      26(6). The Arbitrator has _decided that the Board is not entitled to recover
      any amount for supply of electrical energy to the plaintiff over and above G
      that computed in accordance with the readings recorded by the first meter
      except in so far as an Electrical Inspector may allow it in a decision given
      under sub-section (6) of Section 26. He has further clarified that if and
      when Electrical inspector renders his decision, it shall prevail over his
    · award subject, of course, to any appeal therefrom. We, therefore, see no H
    282                   SUPREME COURT REPORTS [1992] SUPP. 3 S.C.R.

A   warrant for remitting the award under Section 16 nor are we satisfied that
    the award suffers· from any error apparent on the face of the record. The
    error apparent, according to the Board, is the very same failure to decide
    the issue of the plaintiffs liability fully and finally.

          Yet another argument urged by Sri Goel pertains to the interpreta-
B   tion of sub-section (6) of Section 26. According to him, the said sub-section
    empowers the Electrical inspector to estimate the amount of energy sup-
    plied to the consumer for a period six months prior to the check in addition
    to the period subsequent to the check. We need not pronounce upon this
    submission inasmuch as the Arbitrator has proceeded to consider     ,     the
C   Board's claim for the very same_ period. The reference to Electrical Inspec-
    tor too is for the very same period i.e., 6.10.1986 to 16.5.1988, the date on
    which the check-meter was installed.
                              I
           Lastly, it was submitted by Sri Goel that the agreement between the
    parties provides to the contrary, as contemplated by sub-section (1) of
D   Section 26 and that for that reason the agreement prevails ove~ the
    provisions of the statute. He relies upon the opening words in sub-section
    (1) of Section 26 which reads as follows:

            "(i) In the absence of an agreement to the contrary, the
            amount of energy supplied to a consumer or the electrical
E
            quantity contained in the supply shall be ascertained by
            means of a correct meter, and the Jj,censee shall, if re-
            quired by the consumers, cause the consumer to be sup-
            plied with such a meter;

F               Provided that the licensee may require the consumer
            to give him security for the price of a meter and enter into
            an agreement for the hire thereof, unless the consumer
            elects to !Jllrchase a meter."

          It is not brought to our notice that the agreement contains any
G provision inconsistent with the one contained in sub-section (6) of Section
    26. It is not even show that the agreement provides for a method (for
    ascertaining the amount of energy consumed by the respondent) different
    than the one provided in sub-section (1) of Section 26. In such a situation,
    the contention urged by the learned counsel must be held to be a misplaced
H   one.
      ELECTRICITY BOARD v. LUDHIANA SfEELS [JEEVAN REDDY, J.)             283

       Accordingly, we make the award made by Sri Justice AD. Koshal             A
(retired) on February 18, 1992, th(i__Rule of the Court. k shall be treated
as the decree in the suit. The suit is disposed of in terms of the said award.
The Electrical Inspector shall decide the dispute referred to him ex-
peditiously in accordance with law. There shall be no order as to costs.

V.P.R.                                                   Appeal disposed of.