Holding

The Board, as a statutory authority and a 'State' under Article 12, must supply electricity to agriculturists within the two‑month period prescribed by law, and its failure constitutes deficiency in service; the National Commission's award is upheld but modified to 9% interest and Rs.5,000 compensation per applicant.

Summary

The Punjab State Electricity Board (the Board) was appealed against for refusing to supply electricity to a group of agriculturists (Zora Singh and others) despite receipt of security deposits and compliance with formalities. The District Consumer Forums, State Commission and National Consumer Disputes Redressal Commission held the Board liable for deficiency in service and ordered it to supply connections within a specified date, pay interest at 12% per annum on deposits and award Rs.10,000 compensation to each applicant. The Board contended that its own regulations, issued under the Electricity (Supply) Act, allowed it to limit interest and that the orders were beyond its jurisdiction. The Supreme Court held that the Board, as a statutory authority and a 'State' under Article 12, is bound by the Electricity (Supply) Act, 1948, the Indian Electricity Act, 1910 and related rules to supply electricity within the two‑month period prescribed for agriculturists, and that its failure amounted to unjust enrichment and a violation of Article 14. While affirming the National Commission's findings, the Court modified the award, reducing the interest rate to 9% per annum and the compensation to Rs.5,000 per applicant, and dismissed the Board's appeals.

Issues considered

Whether the Electricity Board is statutorily obligated to supply electricity to agriculturists within the period prescribed by the Electricity (Supply) Act, 1948 and related regulations.
Whether the statutory provisions governing supply are directory or mandatory, and whether the Board's delay violates the constitutional test of reasonableness under Article 14.
Whether the Board is liable to pay interest at the rate ordered by the National Commission and the quantum of compensation for deficiency in service.
Whether the Board's regulations under Section 79G of the Electricity (Supply) Act can lawfully limit or exclude interest on security deposits.
Whether the Board's refusal to supply amounts to unjust enrichment.

Legislation cited

Constitution of Indias. Article 12, s. Article 14
Consumer Protection Act, 1986
Electricity Act, 1910s. 22, s. 24
Electricity (Supply) Act, 1948s. 5, s. 79G

Subjects

electricity supplyconsumer protectionstatutory dutyunreasonable delayunjust enrichmentArticle 14Article 12compensationinterest ratepublic utilitydirectory vs mandatory statutes

Judgment

A PUNJAB STATE ELECTRICITY BOARD LTD.
V.

ZORA SINGH AND ORS.

AUGUST, 11, 2005

B [ASHOK BHAN AND S.B. SINHA, JJ.]

Electricity (supply) Act, 1948-Electricity Supply-Application for-By
agriculturists-Delay in giving connection despite deposit of security-
Complaint-Direction by Courts below to give connection to applicants
c within a specific period and payment ofcompensation and interest at the rate
of 12% p.a.-On appeal, held: Electricity Board is statutorily required to
give connection to the agriculturists within a specified period-The Board
being a statutory authority u/A 12 of the Constitution must also fulfil the test
of reasonableness-Act of the Board amounted to unjust enrichment-Since
the Board has given connection within the period stipulated by Court below,
D amount to compensation and rate of interest reduced Electricity Act, 1910-
Section 22 and 24-Electricity Ru/es-Constitution of India 1950-Article
14-Consumer Protection Act, 1986.

Interpretation of Statutes :

E Statutes requiring public functionary to perform its duty-Nature a/-
Whether directory or mandatory-Held: Generally such statutes are directory
in nature, but when injustice or inconvenience is caused to those who had
no control over those exercising the duty, it would be mandatory in nature.

F Respondent-consumers applied for supply of electric energy. the
appellant-Board, despite the respondents having deposited security amount
and having completed other formalities, did not supply the energy. In the
complaint of respondents, District Consumer Forum found the Board
guilty of deficiency in service and directed the Board to give connections
within specific period and also awarded compensation. The appeal and
G Revision Petition filed by the Board were dismissed by State Consumer
Commission and National Consumer Commissioner respectively. National
Commission directed to release the connections to all the applicants by
a specific date maintaining the seniority list and also directed payment
of interest @ 12% p.a. and compensation of Rs. 10,000 to each of them.
H Hence the present appeals.
524
PUNJAB STATE ELECTRICITY BO. LTD. v. ZORA SINGH 525

Dismissing the appeals, the Court A
HELD : I. The right of a prospective consumer is meticulously and
minutely regulated under the Electricity (Supply) Act, 1948 and/or the
Indian Electricity Act, 1910 and Indian Electricity Rules. The licensee,
thus, has a statutory liability to supply electrical energy to any prospective
consumer on the same terms as those on which any other person in the B
same area is entitled in similar circumstances to a corresponding supply.
Such a statutory obligation on the part of the licensee is also reinforced
in terms of Clause VI of the Schedule appended to the Act. [528-F-HJ

2. The administrative circulars as thence existed as also the regulations C
indisputably require supply of electrical energy to the agriculturists within
a period of two months from the date of receipt of the amount asked for
in terms of the demand notice. It may be true that the note appended
thereto provides that the period specified therein shall be subject to
availability of requisite material but the same does not absolve the
. Appellant from performing its statutory duties. (533-D-EJ D
3. What would be a reasonable period of supply of electrical energy
to different categories of consumers has been specified in
the administrative circulars issued as well as the regulations made by the
Board itself. Board was not serious to implement its own Circular.
(535-B-CJ E

4. The Board in terms of the Regulations was obligated to display
the reasons for delay on the Notice Board. They were also required to
indicate the probable date of supply therefor. Furthermore, such cases
were also required to be brought to the notice of Chief Engineer F
(Operation). Compliance of the said statutory requirements had not been
brought on record. [533-G-H; 534-A-B)

5. The Board is a statutory authority. It is a 'State' within the
meaning of Article 12 of the Constitution of India. As a State, the Board
is expected to discharge its statutory function within a reasonable time G
having regard to the Act that it undertakes an important public utility
service. Its actions besides being governed by the Electricity (Supply) Act
and the regulations framed. thereunder, must also fulfil the test of
reasonableness as envisioned under Article 14 of the Constitution of
India. (534-G-H; 535-A)
H
526 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A 6. A 'State' within Article 12 of the Constitution of India must act
fairly and bona fide. It cannot act for a purpose which is wholly
unauthorized and not germane for achieving the object it professes whether
under a statute or otherwise. (538-F-G)

7. It cannot be said that the Board was cash-starved owing to any
B faulty decision on the part of the State. If it suffered losses owing to any
direction issued by the State pursuant to any policy decision adopted by
it, the same being an internal matter between the State and the Board,
the prospective consumes cannot suffer therefor. (535-D-E]

C 8. The Board having not made itself ready to supply electrical energy
to the agriculturists unjustly enriched itself with the money deposited by
the complainants without rendering any service in return. [536-E-F]

9. Though when public functionary is asked to perform a statutory
duty within a specified time, the provisions of the statutes are normally
D held to be directory in nature. But the said principle would not apply in
cases when injustice or inconvenience to others would be caused who have
no control over those exercising the duty if such requirements are not
essential or imperative. (536-G-H)

P. T Rajan v. TP.M Sahir and Ors., [2003) 8 SCC 498 and Chandrika
E Prasad Yadav v. State of Bihar and Ors., (2004) 6 SCC 331, relied on.

Karna/ Improvement Trust, Rarnal v. Smt. Parkash Wanti (Dead) and
Anr., (1995) 5 SCC 159, distinguished.

UP. State Electricity Board v. Shiv Mohan Singh and Anr., [2004) 8
F sec 402, referred to.
10. Even if an order is found to be not vitiated by reason of malice
on fact but still can be held to be invalid if the same has been passed for
unauthorized purposes, as it would amount to malice in law. (557-D]

G Smt. S.R. Venkataraman v. Union of India, AIR (1979) SC 49; State
of A.P. and Ors. v. Goverdhanlal Pitti, (2003) 4 SCC 739 and Chairman &
MD. BPL Ltd. v. S.P. Gururaja and Ors., (2003) 8 SCC 567, relied on.

P. Anjaneyulu v. Chief Manager A.P. Circle Bharat Sanchar Nigam Ltd.
Govt. of India, Hyderabad and Anr., (2001) 3 ALD 313, referred to.
H
PUNJAB STATE ELECTRICITY BD. LTD. v. ZORA SINGH [SINHA, J.] 527

11. Keeping in view the fact that all the connections have been given A
to the respondents within the stipulated period as also the peculiar facts
and circumsta!lces of this case the interest of justice shall be sub-served
if the direction issued by the National Commission is modified to the
extent that instead and place of interest at the rate of 12% per annum,
the Appellants are directed to pay interest at the rate of 9% per annum
and instead of compensation at the rate of Rs. 10000 in each compensation
B
of Rs. 5000 in each is directed to be awarded. (538-H; 539-A-B]

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4910-4981
of 2005.

From the Judgment and Order dated 4.8.2003 of the National Consumers
c
Disputes Redressal Commission, New Delhi in R.P. Nos. 1750-1755, 2217,
2257-2298/2000 227, 345, 356-357, 373-375, 590-591,448, 450, 464, 1248-
1254, 538, 522, 2242 and 2272 of 2003.

WITH D
C.A. Nos. 4983 and 4984 of 2005.

Ashwani Kumar, Subramonium Prasad, Ms. Ruchi, G. Narula,
M.C. Arvind, Harinder Mohan Singh, Kaushal Yadav, Anil Hooda and
Ms. Shabana Saifi for the Appellants. E
Jana Kalyan Das, Rajesh Puni, Tribhuwan Singh, S.K. Misra, Ms. Ritu
Punj, Debasis Misra, Dinesh Verma and A.P. Mohanty for the Respondents.

The Judgment of the Court was delivered by
F
S.B. SINHA, J : Leave granted in S.L.Ps.

Punjab State Electricity Board (for short 'the Board') is a statutory
authority created in terms of Section 5 of the Electricity (Supply) Act, 1948
inter a/ia for the purpose of rationalization of the production and supply of
electricity to the consumers. Supply and distribution of electricity indisputably G
are public utility services. The Respondents herein are agriculturists.

Section 22 of the Indian Electricity Act, 19 I 0 imposes a statutory
obligation on the licensee to supply the electrical energy in the following term:
H
528 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A "Where energy is supplied by a licensee, every person within the
area of supply shall, except in so far as is otherwise provided by the
terms and conditions of the licence be entitled, on application, to a
supply on the same terms as those on which any other person in the
same area is entitled in similar circumstances to a corresponding
supply."
B
Electrical undertakings acquire the character of public utilities by reason
of their virtually monopolistic position and their profession to serve the
public. The State in exercise of its legislative power had a right to compel
the licensees to render service efficiently, promptly and impartially to the
c members of the public, as has been done by enacting Section 22 of the said
Act. Even in common law such public utilities having obtained a licence
under a statute are under an automatic obligation by reason of the fact that
the property of a public utility is dedicated to public service and impressed
with public interest to serve the public and any such statutory obligation is
in effect and substance a declaration of the common law.
D
Upon the dedication of public utility to public use and in return for the
grant to it of a public franchise, the public utility is under a legal obligation
to render adequate and reasonably efficient service, without unjust
discrimination and at reasonably rates to all the members of the public to
E whom its use and scope of operation extend and who apply for such service
and comply with reasonable rules and regulations of the public utility.
Although Section 22 of the Indian Electricity Act, 1910 per se does not apply
to Board in view of the provisions of the Electricity (Supply) Act, 1948, the
provisions contained therein indicate that the Board has also a duty to render
such services.
F
The right of a prospective consumer is meticulously and minutely
regulated under the Electricity (Supply) Act, 1948 and/ or the Indian
Electricity Act, 1910 and Indian Electricity Rules. The grounds upon which
a licensee can refuse to supply electrical ~nergy is also governed by the
statute.
G
The licensee, thus, has a statutory liability to supply electrical energy
to any prospective consumer on the same terms as those on which any other
person in the same area is entitled in similar circumstances to a corresponding
supply. Such a statutory obligation on the part of the licensee is also
H reinforced in terms of Clause VI of the Schedule appended to the Act.
PUNJAB STATE ELECTRICITY BD. LTD. v. ZORA SINGH [SINHA, J.] 529

The Respondents herein with a view to obtain supply of electricity A
energy filed applications and the Board asked them to deposit the security
amount. As despite deposit of such security amount and compliance of other
formalities electrical energy was not supplied to the Respondents, complaints
were filed before various District Forums alleging deficiency in service on
the part of the Board. B
The Respondents had also spent a huge amount on construction of
Kotha and making other arrangements for obtaining supply of electrical
energy. The District Forums found the Board guilty of deficiency in service
and directed the Board to give the connections to the complainants within
the period(s) specified therein and also awarded compensation. The Board c
preferred appeals thereagainst inter alia on the ground that it was obligated
to supply electrical energy to the applicants maintaining the order of
seniority, in view of Regulation 24 of the Sales Manual. The said appeals
were dismissed. Aggrieved by and dissatisfied therewith Revision Petitions
were filed by the Board and by reason of the impugned judgment dated
4.8.2003, the National Commission while upholding the claim of the Board D
that the order of seniority should be maintained in the matter of supply of
electrical energy, directed it to release connections to all applicants by
3 I .3.2004. It also directed payment of interest at the rate of 12% per annum
on the amounts deposited by the complainants and awarded compensation
of Rs. 10,000 each to them. Cost of Rs. 2000 was also directed to be paid. E
Aggrieved the Board is before us.

Jn these appeals, an additional affidavit has been filed annexing
therewith the regulations purported to have been framed under Section 79G)
of the Electricity (Supply) Act, 1948. F
Mr. Ashwani Kumar, learned senior counsel appearing on behalf of the
Board would contend that the National Commission acted illegally and
without jurisdiction in passing the impugned judgments and orders without
taking into consideration that the Board at the relevant time did not act only
in terms of the circulars issued by the State but also acted under the
G
regulations framed under Section 79G) of the said Act in tenns whereof no
interest was payable.

The learned counsel submitted that this Court should take judicial notice
of the fact that the Government of Punjab at one point of time directed supply H
530 SUPREME COURT REPORTS (2005] SUPP. 2 S.C.R.

A of free electrical energy to the agriculturists resulting in drainage of huge fund
and on that account the Board was not in a position to purchase materials
required for supply of electrical energy.

The learned counsel would contend that ifthe order of the Commission
is to be given effect to, the Board would have to bear a huge financial liability
B as during the relevant period 15000 applications for supply of electrical
energy were received.

It is not in dispute that prior to framing of the regulations, the Board
by way of executive instructions issued circulars known as Sales Manual and
C Abridged Conditions of Supply. The said executive instructions were restricted
for internal circulation only. However, allegedly with a view to provide
transparency in the functioning of the Board, Sales Regulations were issued
in 1999 incorporating and amending certain provisions contained in
Commercial Circular No. 2/97 dated 3.1.1997, including Instruction No. 26.
The said Regulations were also placed before the State Legislature on
D
28.3.2000 as is required in terms of Section 79-A of the Electricity (Supply)
Act.

The relevant provisions of Commercial Circular No. 2/97 which
allegedly formed a part of Regulation framed under Section 49 and Sub-
E section (j) of Section 79 of the Electricity (Supply) Act read, thus:

"Subject: Time limit for grant of connections - SMI26

The matter regarding time limit for release of connections to various
categor!es of consumers has been reconsidered and it has been
F
decided as under:

After the compliance of demand notice, the connection to various
categories of prospective consumers should be given within the time
schedule specified below:-
G
i) Large Industrial Power Supply and
Bulk Supply above l 00 KW : 3 months

ii) Medium Industrial Power Supply and
Bulk Supply upto 100 KW : 2 months
H
PUNJAB STATE ELECTRICITY BD. LTD. v. ZORA SINGH [SINHA, J.] 531

iii) Small Industrial Power Supply category: A
a) Where no augmentation is involved : 2 weeks
b) Where augmentation is involved : 6 weeks

iv) Domestic and Non-residential Supply
category : 2 weeks
B
v) Agricultural Pumping Supply category : 2 months

Note: The above specified period shall be subject to availability of
requisite material like poles, conductors, transformers, insulators
and other allied material. It will further be subject to any court case/ C
dispute or other bottlenecks such as damage of power transformer
etc.

However, where connections cannot be released within the above
time schedule, reasons for delay shall be displayed on the Notice
Board but individual intimation would also be given, in case of small D
power, medium supply and large supply applicants, indicating the
probable date. Where the connection cannot be released within 2
months of compliance of requisite formalities/ compliance of demand
notice then the same with the detailed reasons would be brought to
the notice of C.E./ Operation concerned. E
2. *** *** ***
3. In view of the time limits specified above, it should be ensured
that the demand notices are issued carefully taking all the
circumstances viz. availability of the funds, materials and also F
power position into consideration. The release of connections will
also be subject to restrictions imposed due to power shortage aud
loading conditions of the system etc.

The provisions of SMl-26 may be considered as amended above."
G
Clause 24 of the Sales Regulations also specifies the period during
which electrical connections are to be granted. Clauses 24.6 and 24.8 read
as under:

"24.6 Above time frame shall be subject to availability of requisite H
532 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A material particularly poles, conductors, transfonners and insulators.
It will further be subject to any court case/ dispute or other
bottlenecks such as damage to power transfonner, etc.

24.8 In view of the time limits specified above, it should be ensured
that the demand notices are issued carefully taking all the
B circumstances viz. availability of funds, materials and also power
position into consideration. Release of connections will also be
subject to restrictions imposed due to power shortage and loading
conditions of the System etc."

C On or about 11.7.2001, a Commercial Circular No. 57/2001 was also
issued wherein it was stated:

'.:
"8.1 Before commencing supply to a prospective consumer or
resuming supply I allowing additional load to an existing consumer
or any time during the existence of an agreement e.xecuted by the
D
consmer with Board, the Board may require the consumer to lodge
with it an Advance Consumption Deposit (ACD) and I or Additional
Advance Consumption Deposit (AACD), against advance energy
charges on which no interest shall be payable. This advance
consumption deposit shall not be transferable. Normally, the Advance
E Consumption deposit will be equivalent to three months electricity
bill on the prevalent tariff.

8.4 The ACD/ AACD/ security shall be deposited in cash. No
interest is payable on ACD/ AACD deposit against energy
consumption. However, interest @ 6% per annum shall be payable
F
on security deposit i;>f Rs. 100 and above against meters/ metering
equipment. However, no interest will be payable, if a connection is
disconnected within a year of giving supply."

Before adverting to the rival contentions raised before us, we may notice
G that keeping in view the fact that the Board had failed and/ or neglected to
supply electrical energy to a large number of agriculturists, the National
Commission secured the presence of the Chief Engineer (Commercial) oft'.1e
Board who gave an assurance and undertaking that while maintaining the
seniority list electrical connections would be given to all the complainants/
Respondents by 31.3 .2004.
H
PUNJAB STATE ELECTRICITY BD. LTD. v. ZORA SINGH [SINHA, J.] 533

Although a contention was raised that the Board is bound to supply A
electrical energy in terms of the seniority of the applications, no factual
dispute was raised that electrical connections were required to be granted
within two months of issue of demand notice, the same had not been done
for years.

Section 79GJ of the Electricity (Supply) Act, 1948 confers power upon
B
the Board to make regulations laying down principles governing the supply
of electricity by the Board. Although it is doubtful as to whether the Board
in exercise of its regulation making power under Section 79Q) can direct that
no interest shall be payable at all or limit the rate of interest, it may not be
necessary for us to go into the said question in this case as the said regulations c
are not applicable in the instant case having been brought into force only in
1999 in view of the fact that all the applications had been filed prior to 1999
and demands were raised in 1999.

The administrative circulars as thence existed as also the regulations
D
indisputably require supply of electrical energy to the agriculturists within
a period of two months from the date of receipt of the amount asked for in
terms of the demand notice. It may be true that the note appended thereto
provides that the period specified therein shall be subject to availability of
requisite material but the same does not absolve the Appellant from
performing its statutory duties. E

In Andhra Pradesh State Road Transport Corporation v. The State
Transport Appellate Tribunal & Ors., [!LR (200 l) AP l ], a Full Bench of
the Andhra Pradesh High Court has noticed thus:

F
"24. The meaning of "note" as per P. Ramanatha Aiyar's Law
Lexicon, 1997 Edition is 'a brief statement of particulars of some
fact', a passage or explanation"

The note, therefore, was merely an explanatory in nature and thereby
the rigour of 1i1e main provision was not diluted. G

The Board in terms of the Regulations was obligated to display the
reasons for delay on the Notice Board. They were also required to indicate
the probable date of supply therefor. Furthermore, such cases were also
required to be brought to the notice of Chief Engineer {Operation). Compliance
H

I
534 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.
)...
A of the said statutory requirements had not been brought on record. Clause
2 of the said Circular reads as under:

"2. It may, however, be pointed out that the period specified above
is the maximum to give connections in much shorter period."

B Clause 3 of the said Circular mandates the authorities to ensure that prior
to issuance of demand notice, care is taken to take into consideration all
circumstances, viz., availability of funds, materials and also power position.

Commercial Circular No. 57/2001 provides for advance consumption
c deposit or meter security deposit. Clause 8.4 thereof which puts a restriction
in the matter of payment of interest relates to only ACD/AACD. 6%,
however, is payable on security deposit of Rs. 100 and above against meters/
metering equipment.

Consumer Protection Act was enacted to provide for better protection
D of the interests of consumers and for that purpose to make provision for the
establishment of consumer councils and other authorities for the settlement
of consumers' dispute and for matters connected therewith. No dispute has
been raised before us that the provisions of the said Act are not applicable.

E "Deficiency" has been defined in Section 2(g) to mean "any fault,
imperfection or shortcoming in the quality, quantity, potency, purity or
standard which is required to be maintained by or under any law for the time
being in force or under any contract, express or implied or as is claimed by
the trader in any manner whatsoever in relation to any goods". "Service" is
defined in Section 2(o) to mean "service of any description which is made
F
available to potential users and includes provision '>f facilities in connection
with banking, financing, insurance, transport, processing; supply of electrical
or other energy, board or lodging or both, housing construction, entertainment,
amusement or the pureveying of news or other information, but does not
include the rendering of any service free of charge or under a contract of
G personal service".

The Board is a statutory authority. It is a 'State' within the meaning of
Article 12 of the Constitution of India. As a State, the Board is expected to
discharge its statutory functions within a reasonable time having regard to
the fact that it undertakes an important public utility service. Its actions
H
PUNJAB STATE ELECTRICITY BO. LTD. v. ZORA SINGH [SINHA, J.] 535
~

besides being governed by the Electricity (Supply) Act and the regulations A
framed thereunder, it must also fulfill the test of reasonableness as envisioned
under Article 14 of the Constitution of India.

What would be a reasonable period for supply of electrical energy to
different categories of consumers has been specified in the administrative
circulars issued as well as the regulations made by the Iioard itself. We find
B
from the records that the persons had applied for grant of electrical
connection as far back in I 986 and the Board had asked then to deposit the
,' security amount only sometimes in the year 1999. The complaints were filed
as despite expiry of the prescribed period, no electrical connection was given.
If the Board was serious to implement its own circular, it was obligatory on c
its part to draw a blue-print so as to enable it to make supply of electrical
energy to the consumers in order of seniority of application upon procuring
the requisite materials therefor. It failed and/ or neglected to do so. It was
also under an obligation to notify the persons concerned stating the reasons
why such supply could not be made during the period specified in the
D
administrative circular and/ or regulations. The Board does not say that the
said requirements were complied with.

It is also idle to contend that the Board was cash-starved owing to any
. faulty decision on the part of the State. If it suffered losses owing to any
direction issued by the State pursuant to any policy decision adopted by it, E
the same being an internal matter between the State and the Board, the

-
prospective consumers cannot suffer therefor.

Furthermore, it is evident from the orders passed by the District Forums,
State Commission and the National Commission that no reason was assigned
F
by the Board as to why it could not comply with its administrative circulars/
regulations.

Section 24 of the Indian Electricity Act, 1910 mandates a licensee to
grant electrical connecthn to an applicant. Although the said provision is not
applicable so far as the Board is concerned, as has been noticed hereinbefore, G
it is bound to supply electrical energy. The provisions contained therein also
envisage supply of electrical energy within a reasonable time. The Board
'oeing a deemed licensee under the Indian Electricity Act having been
constituted in tenns of Section 5 of the Act ordinarily cannot be heard to say
that it was not in a position to supply electricity to a class of consumers, H
536 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A having invited applications therefor from them.

In this case, apparently, the Board was not in a position to supply
electrical energy to the consumers within a reasonable time from the date of
issuance of the demand notice. It not only failed to supply electrical energy
to the 7 l complainants who were before the National Commission but even
B failed to supply electrical energy to those who had applied much prior thereto.
Before the State Commission and the National Commission, the primal
contention of the Board was that the claimants-Respondents could not have
been given a march over others who had filed applications prior to them. The I
~,

National Commission rightly did not find fault with such contention but
c secured the presence of the Chief Engineer of the Board only for the purpose
of ascertaining as to how soon supply of electrical energy could be ensured
to all concerned including the claimants - Respondents.

Faced with the orders passed by the District Forums and State Commission
and having regard to its own stand taken before the National Commission,
D
the Chief Engineer gave an undertaking that all such connections would be
given by 31st March, 2004. From the aforementioned conduct of the
authorities of the Board, we have no doubt in our mind had the claimants-
Respondents not knocked the doors of the forum under the Consumer
Protection Act, they might not have even obtained electrical connection for
E years to come.

In the premises aforementioned, the Commission, in our opinion, has

F
rightly found that the Board having not made itself ready to supply electrical
energy to the agriculturists unjustly enriched itself with the money deposited
by the complainants without rendering any service in return. It is evident that
-
the Board wanted to fill its coffer with the amount of the security deposits
and other deposits made by the prospective buyers of electricity. It has also
not been denied that relying on or on the basis of the representations made
by the Board in terms of its circular letters and I or regulations, the
prospective consumers also spent a huge amount on construction of kotha
G and making themselves ready for getting the electrical connection.

We are not oblivious of the fact that when public functionary is asked
to perform a statutory duty within a specified time, the provisions of the
statutes are normally held to be directory in nature. [See P. T. Rajan v. T.P.M.
H Sahir and Others, [2003] 8 sec 498] But the said principle would not apply
PUNJAB STATE ELECTRICITY BO. LTD. v. ZORA SINGH [SINHA. J.] 537

in cases when injustice or inconvenience to others would be caused who have A
no control over those exercising the duty if such requirements are not
essential or imperative. [See Karna/ Improvement Trust, Karna/ v. Parkash
Wanti (Smt.) (Dead) and Another (1995] 5 SCC 159].

In Chandrika Prasad Yadav v. State ofBihar and Others, (2004] 6 SCC
331, this Court held:
B

"3 I. The question as to whether a statute is directory or mandatory
would not depend upon the phraseology used therein. The principle
as regards the nature of the statute must be dete1mined having regard
to the purpose and object the statute seeks to achieve." c
[See also U.P. State Electricity Board v. Shiv Mohan Singh and
Another, (2004] 8 SCC 402].

Furthennore, there cannot be any doubt whatsoever that even if an order
is found to be not vitiated by reason of malice on fact but still can be held
D
to be invalid if the same has been passed for unauthorized purposes, as it
would amount to malice in law.

In Smt. S.R. Venkataraman v. Union of India, AIR (I 979) SC 49 :
[I 979] 2 SCC 49 I] this Court observed: E

"It is not therefore the case of the appellant that there was actual
malicious intention on the part of the Government in making the
alleged wrongful order of her premature retirement so as to amount
to malice in fact. Malice in law is however, quite different. Viscount F
Haldane described it as follows in Shearer v. Shields:

"A person who inflicts an injury upon another person in
contravention of the law is not allowed to say that he did so
with an innocent mind; he is taken to know the law, and he
must act within the law. He may, therefore, be guilty of malice G
in law, although, so far the state of his mind is concerned, he
acts ignorantly, and in that sense innocently." Thus malice in
its legal sense means malice such as may be assumed from the
doing of a wrongful act intentionally but without just cause or
excuse, or for want of reasonable or probable cause." H
538 SUPREME COURT REPORTS [2005) SUPP. 2 S.C.R.

A In State of A.P. and Others v. Goverdhanlal Pitti, [2003) 4 SCC 739,
this Court observed:

"12. The legal meaning of malice is "ill-will or spite towards a party
and any indirect or improper motive in taking an action". This is
sometimes described as "malice in fact". "Legal malice" or "malice
B
in law" means "something done without lawful excuse". In other
words, "it is an act done wrongfully and wilfully without reasonable
or probable cause, and not necessarily an act done from ill feeling
and spite. It is a deliberate act in disregard of the rights of others".
(See Words and Phrases Legally Defined, 3rd Edn., London
c Butterworths, 1989.)

13. Where malice is attributed to the State, it can never be a
case of personal ill-will or spite on the part of the State. If at all it
is malice in legal sense, it can be described as an act which is taken
with an oblique or indirect object. Prof. Wade in his authoritative
D
work on Administrative Law (8th Edn., at p. 414) based on English
decisions and in the context of alleged illegal acquisition proceedings,
explains that an action by the State can be described ma/a fide if
it seeks to "acquire land" "for a purpose not authorised by the Act..."

E [See also Chairman & MD, BPL. Ltd. v. S.P. Gururaja and Others,
[2003) 8 SCC 567 and P. Anjaneyulu v. Chief Manager, A.P. Circle, Bharat
Sanchar Nigam Ltd, Govt. ofIndia, Hyderabad and Another, (200 I) 3 ALD
313).

A 'State' within Article 12 of the Constitution oflndia must act fairly
F and bona fide. It cannot act for a purpose which is wholly unauthorized and
not germane for achieving the object it professes whether under a statute or
otherwise.

We do not, therefore, find any fault in the judgments of the National
G Commission. However, before us a statement has been made that all
connections have been given to the claimants - Respondents within the
period of aforementioned 31.3.2004.

Keeping in view the said fact as also the peculiar facts and circumstances
H of this case, we are of the opinion that the interest of justice shall be sub-
PUNJAB STATE ELECTRICITY BD. LTD. v. ZORA SINGH [SINHA J.] 539

served if the directions issued by the National Commission is modified to A
the extent that instead and place of interest at the rate of 12% per annum,
the Appellants are directed to pay interest at the rate of 9% per annum and
instead of compensation at the rate of Rs. l 0,000 in each, compensation of
Rs. 5000 in each is directed to be awarded. These appeals are dismissed
subject to the aforementioned modifications. No costs.
B
K.K.T. Appeals dismissed.