Holding

The Electricity Act, being a special later statute, limits arbitration to matters expressly listed; the present dispute is not among them and therefore cannot be referred to arbitration, with the Act prevailing over Condition 29 and the Arbitration Act.

Summary

Bassi Cold Storage, a consumer of electricity supplied by the Punjab State Electricity Board, claimed that its supply was wrongfully disconnected and sought damages. The consumer invoked Condition 29 of the Board's Abridged Conditions of Supply, which provided that disputes not determinable under the conditions could be referred to arbitration under the Indian Arbitration Act. The Board applied to the court under Section 33 of the Arbitration Act, 1940, to quash the arbitration proceedings, arguing that the dispute was not arbitrable. The Supreme Court held that the Electricity Act, 1910 is a special later statute that confines arbitration to matters expressly listed in Sections 13(2), 16(3), 19(2), 21(4) and 22A(2). Since the present dispute does not fall within those enumerated categories, it cannot be the subject matter of arbitration, and the provisions of the Electricity Act override both Condition 29 and the general Arbitration Act. Consequently, the Board's application to quash the arbitration was upheld and the consumer may pursue relief in a civil court. The appeal was allowed, setting aside the lower court's judgment on the arbitration issues.

Issues considered

Whether the dispute concerning wrongful disconnection of electricity is arbitrable under the Electricity Act, 1910.
Whether the provisions of the Electricity Act, 1910 override the arbitration clause in Condition 29 of the Abridged Conditions of Supply.
Whether the Board could successfully invoke Section 33 of the Arbitration Act, 1940 to quash the arbitration proceedings.

Legislation cited

Arbitration Act, 1940s. 33
Indian Electricity Act, 1910s. 13(2), s. 16(3), s. 19(2), s. 21(4), s. 22A(2), s. 24(1), s. 26(6), s. 52

Subjects

arbitrationelectricity supplyconsumer rightsIndian Electricity ActSection 52wrongful disconnectionjurisdictionspecial statutearbitration clausecivil remedy

Judgment

PUNJAB STATE ELECTRICITY BOARD A
v.
BASSI COLD STORAGE, KHABAR Al\D ANR.

MARCH 16, 1994

[K. RAMASWAMY AND B.L. HANSARIA, JJ.] B

Elect1icity Act, 191(}-Sections 13(2), 16(3), 19(2), 21(4), 22A(2), 24( 1),
26(6) and 52:-Arbitral disputes--Dete1mination-Overriding effect of
provisions of Act-Matters enumerated in Act alone should go for arbitra-
tion-Act to prevail over law of arbitration and also stipulation contained in C
conditions between parties-Disconnection of electn'city-Clain1 of daniages
for wrongful disconnection-Remedy-Arbitration-Wliether disputes would
be referable to arbitration.

The respondent, a consumer of electric energy, had some dispute
with the Electricity Board which was resolved. However, his power supply D
was disconnected. Since the disconnection was done in a wrongful n1anner,
to determine the quantum of damage, the respondent called upon the
Board to appoint an arbitrator. However, the Board approached the Court
to quash the arbitration proceedings initiated by the respondent stating
that the dispute in question could not be the subject matter of arbitmtion. E
The Senior Sub-Judge rejected the contention. Revision filed against the
order was also dismissed.

In this appeal challenging the order, appellants contended that only
those matters could he determined by arbitration relating to which there
is a direction in the Act as stated by Section 52. F

The respondent sought to rely on Condition No. 29 of Abridged
Conditions of Supply applicable to the consumers of the Board it, support
of its case that the present dispute is an arbitral dispute. Further, as the
difference or dispute at hand cannot be determined as provided in the G
main part of condition 29, the provisions of the Arbitration Act would
come into play. According to the appellant, the condition has to be read
alongwith the relevant provisions of the Electricity Act and the Act would
prevail over the conditions.

Allowing the appeal, this Court H
33
34 SUPREME COURT REPORTS [1994] 3 S.C.R.

A HELD : 1.1. The matters relating to which there is no direction in
the Indian Electricity Act required to be determined by arbitration cannot
be the subject matter of arbitration. This is for the reason of the Act being
not only a special statute on the question as to which disputes covered by
it could be decided by arbitration, but also because it is a later statute than
the Indian Arbitration Act, 1899. [39-H; 40-A]
B
1.2. What has been provided in Condition 29 has to be read
alongwith the provisions of the Act and, in case provisions of the Act
would not permit reference of the dispute at hand to arbitration, what has
been laid down in the Act has to prevail over the remedy provided by
Condition 29. Having found that the dispnte of the present nature cannot
c be subject matter of arbitration being not covered by any of the sections
of the Act dealing with arbitration and that the provisions of the Act have
to override what has been mentioned in the Condition, and that the Act
would prevail over the general law of arbitration now contained in the
Arbitration Act of 1940 (and earlier in Arbitration Act, 1899) it is held
0 that though the present dispute would ha,·e been referable to arbitration
because of what has been provided in Condition 29, it cannot be done, in
view of the provisions of the Act which would override the stipulation
contained in the Condition. [42F -H; 43-A]

Ajay Kumar v. Union of India, AIR (1984) SC 1130; Commissioner
E Sales Tax v. Agra Belting Works, [1987] 3 SCC 140; Usman Bhai Dawood
Blzai v. State of Gujarat, [1988] 2 SCC 271; Vijay Kumar Shamta v. State
of Kamataka, [1990] 2 SCC 562; Ashoka Marketing Ltd. v. Punjab National
Bank, [1990] 4 SCC 406 and R.S. Raghunath v. State of Kamataka, [1992]
1 sec 335, relied on.

F CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1813 of
1994.

From the Judgment and Order dated 22.8.1986 of the Punjab and
Haryana High Court in C.R. No. 1791 of 1986.

G P.P. Rao, P-.N. Gupta and Shrinath Singh for the Appellant.

Kapil Sibal and P.O. Sharma for the respondents.

The .Judgment of the Court was delivered by

H HANSARIA, .J. Leave granted. Heard learned counsel of the parties.
ELECTRICITY BOARD v. BASSI COLD STORAGE [HANSARIA, J.] 35

2. Bassi Cold Storage, respondent No. 1, is a consumer of electric A
-+·
energy supplied by the appellant Punjab State Electricity Board
(hereinafter the Board), who is a licensee under the Indian Electricity Act,
1910 (for short, the Act). The consumer aforesaid had some dispute with
the Board (the details of which are not relevant for the present appeal)
which ultimately came to be resolved by an Undertaking given by one Ved
B
Bassi. Who is the proprietor of the above named cold storage. This
Undertaking is dated 31.7.1979. One of the conditions of the Undertaking
given by Bassi was that he would pay the current bill for electricity
becoming due for consumption from August, 1979 onwards by way of a
nominal sum of Rs. 2500 per month pending final settlement of dispute in
view of the financial crises. This is contained in para 5 of the Undertaking.
c
Respondent's case is that it started paying as per this Undertaking from
the month of August, 1979 and did so till January, 1980. The power supply
was, however, disconnected on 4.2.80. It is of the view that resort to
disconnection had been taken to feed fat the grudge which the certain
officers of the Board had against its proprietor. It, therefore, thought that D
present is a fit case where it can claim damages for disconnection of the
electricity and to decide about the quantum of damage, it called upon the
Board to appoint its arbitrator within a period of 15 days from the receipt
of its letter dated 4.12.80. This was not done. Not only this, the Board
approached the Court of Senior Sub-Judge, Patiala by filing an application E
under Section 33 of the Arbitration Act, 1940 to quash the arbitration
proceedings initiated by the respondent. Its case was that the dispute in
question could not be the subject matter of arbitration.

3. The Senior Sub-Judge rejected the contention. Feeling aggrieved, F
the Board carried the matter in revision to the High Court of Punjab &
• Haryana, who dismissed the petition by a short order reading as below :

"Mr. Sibal. learned Senior Advocate, appearing for the respon-
dents states that finding on issues Nos. 1 and 4 may be set aside
on his concession, but otherwise the impugned order deserves to G
be maintained.

Having heard the learned counsel for the parties, I find no
infirmity in the findings recorded by the lower court on other issues.
Therefore, this petition is dismissed, but the findings on issues Nos. H
36 SUPREME COURT REPORTS [1994] 3 S.C.R.

A 1 and 4 are nullified in view of the concession given by Mr. Sibal."

(Emphasis supplied)

Feeling aggrieved, this Court has been approached under Article 136 of
the Constitution.
B
4. Before examining the main contention advanced by Shri Rao on
behalf of the Board, we have to clear the decks. The need for the same is
because Shri Sibal, learned counsel for the respondent, has urged that the
question raised in this appeal does not really arise for our determination
inasmuch as while issuing notice in the revision application the High Court
c had done so relating to Issues 1 and 4 which were "Whether application
has been filed by a competent person" and "Whether the application is not
maintainable 11 ; and a concession having been made qua those issues before
the High Court, we may not examine what had been held by the Subor-
dinate Judge on other issues: Shri Rao contends that though it is correct
D that notice had been issued relating to Issues 1 and 4 but the counsel for
the parties had been heard by the High Court on other issues also as to
which the learned Single Judge simply stated he found "no infirmity"; and
1
so, the correctness of the view taken on "other issues' do call for our
consideration.

E 5. From the order as quoted above it would appear that in the second
paragraph it was specifically stated that no infirmity was found in the
findings recorded by the lower Court "on other issues". This would show
that the counsel for the parties were heard by the High Court on all issues;
and the matter was not confined to Issues 1 and 4 only. The two other
issues, which were numbered as 2 and 3, do relate to the point urged by
F
Shri Rao inasmuch as these lv.lo iss,ues were:

"2. Whether there is no arbitration agreement between the parties
OPA.

3. Whether the prov1s1ons of Abridged Conditions of Supply,
G
statutory provisions of Sections 21, 52 of Indian Electricity Act,
1910 are not applicable in the instant case as alleged by PSEB
OPA."

(Acronym OPA was explained to us to mean "Onus on Party
H Alleging". What an acronym?)
- ELECTRICITY BOARD v. BASSI COLD STORAGE [HANSARIA, J.]

So, we have to express our views on the aforesaid two issues bec&.use
of the importance of the same not only for the case at hand but for such
other disputes which might arise between the parties like the ones in this
37

A

appeal.

6. The respondent sought to rely on Condition No. 29 of Abridged
B
Conditions of Supply applicable to the consumers of the Board in the State
of Punjab (to be referred as Conditions, hereinafter) in support of its case
that the present dispute is an arbitral dispute. According to Shri Rao,
however, the aforesaid Condition cannot be read in isolation and has to be
so done alongwith relevant provisions of the Act. The same being sections
24(1), 26(6) and 52, according to the learned counsel. Our attention has c
also been invited to Condition No. 30 on the subject of "Interpretation"
stating that the Conditions shall be "subject to the Act". It is, therefore,
urged that what has been provided in the Act would prevail over the
Conditions and, in any case, Condition No. 29 has to be read alongwith
relevant provisions of the Act. D

7. There is l:nough force in these submissions. The Conditions at
hand being :ikin to subordinate legislation, the same cannot override what

- has been provided by the legislature. Let us, note the provisions of the Act
relied on by Shri Rao. These are sections 24(1), 26(6) and 52 which read
as below :-
E

"24(1) : Discontinuance of supply to consumer neglecting to pay
any charge;

Where any person neglects to pay any charge for energy or any F
sum other than a charge, for energy, due from him to a licen.see
in respec·t of the supply of encrb'JI to him, the licensee may, after
giving not less than seven clear days notice in writing to such person
and without prejudice to his right to recover such charge or other
sum by suit cut off the supply and for that purpose cut or discon- G
nect any electric supply line or other works, being the property of
the licensee, through which energy may be supplied, and may
~ disconnect the supply until such charge or other sum, toget.her with
any expenses incurred by him in cutting off and reconnecting the
supply, are paid, but no longer. H
38 SUPREME COURT REPORTS [1994] 3 S.C.R.

A 26: Meters

xxx xxx xxx

(6) Where any difference or dispute arises as to whether any meter
referred to in sub-section (1) is or is not correct, the matter shall
B be decided upon the application of either party, by an Electrical
Inspector, and where the meter has, in the opinion of such .Inspec-
tor 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 not, in the opinion of such Inspector, .J
c have been correct, but save as aforesaid, the register of the meter
shall, in the absence of fraud, be conclusive proof of such amount
or quantity;

Provided that before either a licensee or a consumer applies
D .. 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.

52 : Arbitration

E Where any matter is, by or under this Act, directed to be
detennined by artibration, the matter shall, unless it is otherwise
expressly provided in the licence of a licensee, be determined by
such person or persons as the State Government may nominate in
that behalf on the application of either party; but in all other
respects the arbitration shall be subject to the provisions of the
F Arbitration Act, 1940.

Provided that where the Government or a State Electricity
Board is a party to a dispute, the dispute shall be referred to two
arbitrators, one to be appointed by each party to the dispute."
.G
., (Emphasis supplied)

8. The thrust of Shri Rao's submission is that the only those matters
can be determined by artibtration relating to which there is a direction in
the Act as stated by section 52. The counter submission of Shri Sibal is that
H section 52 has laid down is that in the matters relating to which there is a .
ELECTRICITY BOARD v. BASSI COLD STORAGE (HANSARIA, J.] 39

direction in the Act, those would be determined only by arbitration and A
no other remedy known to law could be availed of. Shri Sibal contends
that section 52 has left the choice of arbitration to the State Government,
except where the proviso is attracted. This is the only purpose of this
section. This power would not take away the right conferred by Condition
No. 29. B
9. Let us examine the soundness of the rival contentions. To do this
it would be appropriate to first apprise ourselves which are the matters
relating to which the Act has directed that the same would be determined
by arbitration. These matters are contained in sections 13(2), 16(3), 19(2),
21(4) and 22A (2). c
10. We have to know as to why the Act has specifically mentioned
that the difference or dispute relating to the matters enumerated in the
aforesaid sections are requied to be determined by arbitration. The need
for this examination has been felt because a general law relating to arbitra- D
tion was holding the field when the Act was enacted-that law being the
Indian Arbitration Act of 1899 (Though this Act when enacted had
restricted application as would appear form its section 2; but the same was
extended to various local areas by issuing notifications as permitted by the
proviso to the aforesaid section). If the legislature while putting the Act E
in the statute book would have required that all the disputes between
the parties should be subject matter of arbitration, there would have
been no necessity to mention about some disputes or difference specifically
in the aforesaid section as being remediable by arbitration. This clearly
shows, according to us, that the legislature did require that the matters
enumerated in the Act alone should go for arbitration, and no others.
F

11. The Indian Arbitration Act of 1899 being a general provision
relating to settlement of disputes by arbitration and the Act.having carved
out certain matters only as available for determination by arbitration we
are of the new that on the principle of general specialibus non derogant, G
what has been provided in the Act would over-ride the general provision
contained in the Indian Arbitration Act of 1899 (which subsequently) came
to be repealed by Arbitration Act of 1940 because of which in section 52
as it stood at the relevant time reference has been made to arbitration Act
of 1940). So, the matters relating to which there is no direction in the Act H
40 SUPREME COURT REPORTS [1994] 3 S.C.R.

A required to be determined by arbitration cannot be the subject matter of
arbitration. This is for the reason of the Act being not only a special Act
on the subject of which disputes covered by he Act could be decided by
arbitration, but also because it is a later Act than the Indian Arbitration
Act, 1899. Because of t~e existance of these two facets, doubt that the
B aforesaid principle would apply on all fours in view of what has been stated
qua this principle in Ajay Kumar v. Union of India, AIR (1984) SC 1130;
Commissioner Sales Tax v. Agra Belting Works, [1987] 3 SCC 140; Usman
Bhai Dawood Bhai v. State of Gujarat, [1988] 2 SCC 271; Vijay Kumar
Sharma v. State of Kamataka, [1990] 2 SCC 562; Ashoka Marketing Ltd. v.
C Punjab National Bank, [1990] 4 SCC 406 and R.S. Raghunath v. State of
Kamataka, [1992] 1 SCC 335.

12. In this context, Shri Rao has contended that section 24(1) of the
Act would also show that arbitration provision is not available in a dispute
of the present nature and the only remedy to be taken recourse is filing of
D a suit. We have not felt impressed with this submission, because that
section having left it open to the Board to recover the charges or sum
mentioned therein by filing a suit, cannot be held to mean that for the
consumer also for redressal of any of his grievance the only remedy is filing
of a suit. But then, remedy of approach to the civil court would definitely
E be available to a consumer, if he would seek to recover damages for
disconnection due to wrongful manner.

13. Having held as above, let the import of Condition No. 29 be now
noted as to which too Shri Rao submits that the same cannot come to the
assistance of the respondent. That condition reads as below :-
F
"In the event of any difference or dispute arising between the
Board and the con.sumer in respect of any ntatter connected with
the supply which cannot be determined by these Conditions, or by
the terms of any agreement between the Board and the consumer,
G and in the event of any difference or dispute arising as to the
interpretation of these Conditions or of the terms of any agreement
between the Board and the consumer, the matter shall be deter-
mined in accordance with provisions of the Act or by reference to
the Chief Electrical Inspector. And in the event of any difference
H or dispute arising that cannot be determined as aforesaid the
ELECIBICITY BOARD v. BASSI COLD STORAGE [HANSARIA, .I.] 41

provisions of the Indian Arbitration Act as amended from time to A
time shall apply."

(Emphasis ours)

14. A close reading of the aforesaid Condition shows that two types
of difference or disputes come within its hold. These are : (i) difference or
B
dispute arising between the Board and the consumer in respect of any
matter conencted with the supply; and (ii) difference or dispute arising as
to the interpretation of the Conditions or the terms of any agreement
between the Board and the consumer. If the dispute or difference be of
the first nature, what has been stated in the operative part would come in C
to play, if the same cannot be determined by the Conditions or the terms
of any agreement between the Board and the consumer. In such a case,
the first difference or dispute, and the second difference or dispute in any
case shall be determined in accordance with the provisions of the Act or
by reference to the Chief Electrical Inspector. In the event the aforesaid D
two disputes or differences cannot be determined in the manner indicated
in the maln part of Condition 29~ the provisions of the Indian Arbitration
Act shall apply qua that difference or dispute.

15. The Senior Subordinate Judge, while examining lhe matter, held E
that the dispute at hand would come 1vithin the purview of Conditon No.
29 because the dispute relates to "any matter connected with the supply",
as the dispute is about damage in respect of disconnection of supply in a
wrongful manner. Shri Rao has disputed this proposition. We do not think
if the learned counsel is right, as the dispute has relation with supply of
energy. Jn any case, Shri Rao himself has submitted that the dispute is one
F
11
which concerns the interpr.etation of terms of any agreement between the
Board and the consumern inasmuch as interpretation of aforesaid para 5
of the Undertaking is involved. Though Shri Sibal does not agree with Shri
Rao in lhis rcgard it is apparent that unless the dispute be one visualised
1

by Condition 29 that condition would not come into play. As stated earlier, G
the dispute should come v.ithin "any matter connected with the supply" and
as such, the applicability of Condition 29 cannot be ruled out on the ground
that the dispute is not encompassed by it.

16. The aforesaid, however, is not conclusive of the matter, because H
42 SUPREME COURT REPORTS [1994] 3 S.C.R.

A it has to be first seen whether the dispute at hand can be determined in
accordance with the provisions of the Act or by reference to Chief Electri-
cal Inspector - the same being apparently and admitedly not determinable
by reference to the Conditions or 11 terms of the agreement 11 • A reference to
the Act shows that apart from it having provided that some difference or
dispute would be determined by arbitration, to which reference has already
B
been made, some other sections, to wit sections 28(2), 30(2) and 32(2), deal
with the question as to who shall determine those differences or disputes.
It is not in controversy that none of the aforesaid provisions deal with the
dispute at hand. Insofar as reference to Chief Electrical Inspector (or
Electrical Inspector) is concerned, we find that sections 26(6) and para-
c graphs V(2) and VI(3) of the Schedule to the Act have mentioned about
resolution of some differences or disputes by such an officer. Shri Sibal has
urged that in such matters section 52 of the Act would permit the State
Government to nominate who among the Electrical Inspectors, whose
appointment has been dealt with by section 36(1) of the Act, should decide
D the dispute. It is again not in dispute that the dispute at hand is not one
that can be referred to the Electrical Inspector or Chief Electrical Inspec-
tor.

17. It is because of the above that Shri Sibal contends that as the
difference or dispute at hand cannot be determined as provided in the main
E
part of Condition 29, the provisions of the Indian Arbitration Act would
come into play and the dispute can be subject matter of arbitration. We
would have had no hesitation in accepting this contention of Shri Sibal but
for the fact that what has been provided in Condition 29 has to be read
alongwith provisions of the Act and, in case provisions of the Act would
F not permit reference of the dispute at hand to arbitration, what has been
laid down in the Act has to prevail over the remedy provided by Condition
29. Having found that the dispute of the present nature cannot be subject
matter of arbitration being not covered by any of the sections of the Act
dealing with arbitration; and having held that the provisons of the Act have
G to override what has been mentioned in the Conaition, and having further
held that the Act would prevail over the general law of arbitration now
contained in the Arbitration Act of 1940, we would hold that though the
present dispute would have been referable to arbitration because of what
has been provided in Condition 29, it cannot be done, in view of the
H
l
_/ ELECTRICITY BOARD v. BASSI COLD STORAGE (HANSARIA, J.) 43

provisions in the Act which would override the stipulation contained in the A
aforesaid Conditon.

18. The appeal is, therefore, allowed. The impugned Judgment is set
aside insofar as the views taken in it on aforesaid issues 2 and 3 is
concerned. It would, however, be open to respondent No. 1 even no\v
despite delay to approach appropriate civil court seeking the relief in B
question, if so advised. On the facts and circumstances of the case, we
make no order as to costs.

A.G. Appeal allowed.