STATE ELECTRICITY BOARD AND OTHERS versus M/S RAMKRISHNA FORGING LIMITED on 30 April 2021

454

[2021] 4 S.C.R.

AJHARKHAND STATE ELECTRICITY BOARD AND OTHERS

v.

M/S RAMKRISHNA FORGING LIMITED

(Civil Appeal No. 6145 of 2010)

BAPRIL 30, 2021

[L. NAGESWARA RAO AND VINEET SARAN, JJ.]

Electricity: Jharkhand State Electricity RegulatoryCommission (Electriity Supply Code) Regulations, 2005 – Regns.9.1,9.2 – On 14.04.2004, the respondent, small scale industry enteredCinto an agreement with Board for High Tension connection of 325KVA load – Thereafter, on 14.03.2006, respondent applied forenhancement of load from 325 KVA to 1325 KVA, which wassanctioned – On 26.12.2006, respondent again applied forenhancement of load from 1325 KVA to 3500 KVA which was alsoDsanctioned by Board – On a further request of respondent, on07.07.2007, the load was again enhanced to 4000 KVA – Due tocontinuous load shedding, which was affecting machineries,respondent decided to reduce load from 4000 KVA to 1325 KVA –However, the application to that effect was rejected treating it to bea case of determination of agreement, and quoting the Clause 9BEof the agreement which provided that the agreement could not bepermitted to be determined prior to the completion of initial periodof three years from 07.07.2007 and that the respondent will have topay the minimum guarantee charges and other charges, even if therespondent decides to terminate the agreement – RespondentFsuccessfuly filed writ petition before High Court – Board filed instantappeal – Held: Chapter 9 of the Regulations of 2005 deals with theenhancement and reduction of contract demand/sanctioned load –Regn.9.1 deals with enhancement of contract demand/sanctionedload, whereas Regn.9.2 deals with the reduction of contract demand/sanctioned load – Regn.9.2.6 of the Regulations of 2005 providesGfor execution of a supplementary agreement for reduction of contractdemand/sanctioned load of the consumer – If the Regulationsprovide for contract load to be varied even through a writtencommunication, then in all fairness, though fresh agreements mayhave been executed at the stage of enhancement of load of theH

JHARKHAND STATE ELECTRICITY BOARD v.M/S RAMKRISHNA FORGING LIMITED

same electricity connection, the same cannot be treated as anythingbut an extension/amendment or modification of the initial agreementgranting the electricity connection, which in the present case wouldbe the agreement dated 14.04.2004 – Thus, even though theconsumer may have been required to sign fresh agreements for eachenhancement of load, but the enhancement being for the sameelectricity connection which still continues, it would merely beamendment of the initial agreement – This would also be inconsonance with the provisions of the Regulations of 2005, whichhave to be liberally interpreted in favour of the consumer – TheBoard was wrong in treating the application of the respondent forreduction of load to be that for determination of the agreement underClause 9B of the agreement, which application, in fact, ought tohave been considered under Regn. 9.2 of the Regulations of 2005– The agreement to be considered in the present case is the initialagreement dated 14.04.2004 and not the subsequent agreementdated 07.07.2007.

Dismissing the appeal, the Court

HELD : 1. After the initial agreement dated 14.04.2004,which came into effect from 16.04.2004 whereby the contractdemand of 325 KVA was allowed in favour of the respondent, theJharkhand State Electricity Regulatory Commission in exerciseof power conferred by Section 181(2)(x) read with Section 50 ofthe Electricity Act, 2003, framed the Jharkhand State ElectricityRegulatory Commission (Electricity Supply Code) Regulations,2005, which came into effect from 28.07.2005. [Para 5][459-F-H]

Conclusion

2.1 The communication dated 08.11.2007 of the ElectricalSuperintending Engineer of the Board, refusing the prayer of therespondent for reduction of load showed that the application ofthe respondent for reduction of load was rejected in terms ofClause 9(B) of the agreement, treating the date of commencementof the agreement to be 7/12.07.2007 and only by considering theprovision of determination of the agreement, which could not havebeen without giving notice of less than 12 calendar months. It isclear that the said communication/order does not consider theprovisions of the Regulations of 2005 with regard to reduction ofload, but only treats the application for reduction of load to be an A

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Aapplication for determination of the agreement. [Paras 9, 11][463-B; 464-A-C]

2.2 Chapter 9 of the Regulations of 2005 deals with theenhancement and reduction of contract demand/sanctioned load.Regulation 9.1 deals with enhancement of contract demand/Bsanctioned load, whereas Regulation 9.2 deals with the reductionof contract demand/sanctioned load. Just as the consumer hasthe liberty of getting its load enhanced under Regulation 9.1, thereduction of contract demand/sanctioned load can also be prayedfor and decided in terms of Regulation 9.2. The proviso toRegulation 9.2.1, no doubt, provides that no reduction of loadCshall be allowed before expiry of the initial period of agreement,which is three years in the present case. The question would bewhether the initial agreement is to be considered forsuch purpose, or the subsequent agreements. [Paras 12, 13][464-C-F]D

3. Regulation 9.2.6 of the Regulations of 2005 provides forexecution of a supplementary agreement for reduction of contractdemand/sanctioned load of the consumer. Similarly, forenhancement of load also, even if a fresh agreement may havebeen executed between the parties, the same could be treatedEas nothing but a supplementary agreement of the initial agreementby which the electricity connection was granted for a particularload. Clause 2(l) of the Regulations also defines “contractdemand” to be demand mutually agreed in the agreement oragreed through other written communication, meaning thereby thatfor variation of the contract demand execution of a freshFagreement is not essential and the same can be done otherwisealso by mere written communication. [Para 14][464-F-H]

4. The Jharkhand State Electricity Board (‘the Board’) is amonopoly supplier of electricity which has laid down its own termsand conditions, regarding which the consumer has no say or choiceGbut to sign on the dotted lines, if it wants of get electricity loadvaried for running its industry. The Board is an instrumentalityof the State. It has to be fair and reasonable. If the Regulationsprovide for contract load to be varied even through a written H

communication, then in all fairness, though fresh agreements mayhave been executed at the stage of enhancement of load of thesame electricity connection, the same cannot be treated asanything but an extension/amendment or modification of the initialagreement granting the electricity connection, which in thepresent case would be the agreement dated 14.04.2004. On thedictates of the Board, the consumer may have been required tosign fresh agreements for each enhancement of load, but theenhancement being for the same electricity connection which stillcontinues, it would merely be amendment of the initial agreement.This would also be in consonance with the provisions of theRegulations of 2005, which have to be liberally interpreted infavour of the consumer. [Para 15][465-A-D]

5. The Board has gone wrong in treating the applicationdated 20.09.2007 of the respondent for reduction of load to bethat for determination of the agreement under Clause 9B of theagreement, which application, in fact, ought to have beenconsidered under Regulation 9.2 of the Regulations of 2005. Theagreement to be considered in the present case is the initialagreement dated 14.04.2004 and not the subsequent agreementdated 07.07.2007. [Para 16][465-D-F]

Bihar State Electricity Board, Patna and Others v. M/s.Green Rubber Industries and Others (1990) 1 SCC 731: [1989] 2 Suppl. SCR 275; Orissa State ElectricityBoard v. Orissa Tiles Limited (1993) Supp. 3 SCC 481: [1993] 2 SCR 860; Andhra Steel Corporation Ltd.And Others v. Andhra Pradesh State Electricity Boardand Others (1991) 3 SCC 263 : [1991] 2 SCR 624;Jharkhand State Electricity Board & Others v. LaxmiBusiness and Cement Company Private Limited andAnother (2014) 5 SCC 236 : [2014] 3 SCR 453– distinguished.

Case Law Reference

[1989] 2 Suppl. SCR 275distinguished[1993] 2 SCR 860distinguished Para 17Para 17

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A[1991] 2 SCR 624distinguishedPara 17[2014] 3 SCR 453distinguishedPara 17

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6145of 2010.

BFrom the Judgment and Order dated 23.07.2008 of the High CourtJharkhand at Ranchi in W.P. (C) No. 6651 of 2007.

Anup Kumar, Saurabh Jain, Ms. Neha Jaiswal, Shivam Kumar,Ms. Shruti Singh, Advs. for the Appellants.

Navniti Prasad Singh, Sr. Adv., Devashish Bharuka, DhanjayCPathak, Vaibhav Niti, Ms. Sarvshree, Justine George, Ms. Srishti Agarwal,Ms. Taniya Bansal, Advs. for the Respondent.

The Judgment of the Court was delivered by VINEET SARAN, J.D

D1. The respondent is a small scale industry. For running its industry,it had a contract demand/sanctioned load of electricity of 4000 KVAfrom the appellants-Jharkhand State Electricity Board (for short ‘theBoard’). The request of the respondent for reduction of such sanctionedload to 1325 KVA having been refused, the respondent filed a writ petitionbefore the High Court of Jharkhand, which has been allowed. AggrievedEby the said judgment of the High Court, this appeal has been preferredby the Board.

2. The brief facts, relevant for the present case, are that therespondent, which is a small scale industry, had entered into an agreementwith the Board on 14.04.2004 for High Tension (H.T.) connection ofF325 KVA load. The respondent thereafter applied for enhancement ofload from 325 KVA to 1325 KVA, which was allowed by the GeneralManager-cum-Chief Engineer of the Board on 14.03.2006. Therespondent again applied for enhancement of load from 1325 KVA to3500 KVA, which was sanctioned by the Board on 26.12.2006. On aGfurther request of the respondent, the load was again enhanced by 500KVA to 4000 KVA. For each enhancement of load, fresh agreements tothat effect were entered into between the respondent and the Board,the last one being on 07.07.2007 for supply of 4000 KVA load. Therespondent alleges that after the enhancement of load, it was facingmajor trippings as well as continuous load shedding which was affectingH

the costly machineries and, therefore, the respondent decided to reducethe load from 4000 KVA to 1325 KVA. Accordingly, the respondentfiled an application, on 20.09.2007, before the authority of the appellants-Board for such reduction. Vide its order dated 08.11.2007, the ElectricalSuperintending Engineer rejected the said application of the respondentfor reduction of load from 4000 KVA to 1325 KVA informing therespondent that from the date of enhancement of supply of load, anagreement (dated 07.07.2007) would be enforced for a period of threeyears and treating it to be a case of determination of agreement, andquoting the Clause 9B of the agreement, it was provided that theagreement could not be permitted to be determined prior to the completionof initial period of three years from 07.07.2007 and that the respondentwill have to pay the minimum guarantee charges and other charges,even if the respondent decides to terminate the agreement.

3. Challenging the said order of the Board dated 08.11.2007, therespondent filed Writ Petition No.6651 of 2007, which has been allowedby the High Court vide its judgment dated23.07.2008, primarily on theground that the proviso contained in Regulation 9.2.1 of the JharkhandState Electricity Regulatory Commission (Electricity Supply Code)Regulations, 2005 (for short, ‘the Regulations of 2005’), providing for noreduction of load to be allowed by the Distribution Licensee before expiryof the initial period of agreement was discriminatory, arbitrary and againstthe public policy. Challenging the aforesaid judgment, this appeal hasbeen filed.

4. We have heard Shri Anup Kumar, learned counsel appearingfor the appellants and Shri N.P. Singh, learned Senior Counsel appearingfor the respondent, assisted by Shri Devashish Bharuka, Advocate-on-Record for the respondent.

5. It is noteworthy that after the initial agreement dated 14.04.2004,which came into effect from 16.04.2004 whereby the contract demandof 325 KVA was allowed in favour of the respondent, the JharkhandState Electricity Regulatory Commission (for short, ‘the Commission’)in exercise of power conferred by Section 181(2)(x) read with Section50 of the Electricity Act, 2003, framed the Jharkhand State ElectricityRegulatory Commission (Electricity Supply Code) Regulations, 2005,which came into effect from 28.07.2005.

6. The submission of the learned counsel for the appellants-Board,is that in terms of Regulation 9.2.1 of the Regulations of 2005, which A

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Arelates to the reduction of contract demand/sanctioned load, no reductionof load could be allowed before the expiry of the period of agreementwhich, according to the appellants, would be 07.07.2007 when a freshagreement was executed for enhanced load of 4000 KVA. Learnedcounsel for the appellants has thus submitted that the application forreduction of load filed by the respondent on 20.09.2007, which was wellBwithin the period of three years from 07.07.2007, was rightly rejected bythe Board vide its order dated 08.11.2007, as it was in conformity withthe provisions of the Regulations of 2005.

7. Per contra, learned Senior Counsel appearing for the respondenthas submitted that the agreement was initially entered into on 14.04.2004Cand thereafter even though technically fresh agreements may have beenexecuted for enhancement of load of the respondent, but the same wereonly extension/amendment of the initial agreement dated 14.04.2004,and the terms of each of these agreements were identical, with the onlychange being that of the increased contracted load. It has been contendedDby the learned Senior Counsel for the respondent that the Regulationsdo not permit execution of a fresh agreement in case of enhancement ofload, and the enhancement agreements would merely be supplementaryagreements in continuation of the initial agreement dated 14.04.2004and cannot be treated as fresh agreement because it is the same electricityconnection, which was granted by the agreement dated 14.04.2004, inEwhich there have been amendments from time to time for increase ofload, and merely executing a fresh agreement for enhancement of loadcannot be termed as fresh agreement for the purpose of Regulations of2005. It has, thus, been submitted that the application of the respondentfor reduction of load dated 20.09.2007 has to be treated as after a period Fof three years from the date of initial agreement dated 14.04.2004 andthus, the application of the respondent ought to have been allowed and/or should be deemed to be allowed in terms of the provisions ofRegulations of 2005. In this regard, reliance has been placed onRegulations 2(l), 9.1 and 9.2 of the Regulations of 2005.

G8. For the ready reference, the relevant provisions of theRegulations of 2005 are reproduced below:- “2. Definitions. 2.1 In these regulations, unless the contextotherwise requires:

(a) …..

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(b) …..

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(l) “Contract Demand” means demand in Kilowatt (KW) orKilo Volt amperes (KVA) or H.P (Horse Power) mutually agreedbetween the Distribution Licensee and the consumer as enteredinto agreement or agreed through other writtencommunication.

(m) …..

(n) …..

9. Enhancement and Reduction of Contract Demand/Sanctioned Load. –

9.1Enhancement of Contract Demand /Sanctioned Load 9.1.1 The application for enhancement of Contract Demand/Sanctioned Load shall be made in the prescribed form and inthe manner as specified in new service connection in Clause5 of these Regulations.

9.1.2 The application for enhancement of load shall bedisposed of in the manner and within the time frame asprescribed for new service connection in Clause 6.2.11 ofthese Regulations.

Provided that the application for enhancement of ContractDemand/Sanctioned Load may be outright rejected by thedistribution licensee if the consumer is in arrears of licensee’sdues and the same have not been stayed by a court of law orthe Commission.

9.2 Reduction of Contract Demand/Sanctioned Load. - 9.2.1 The application for reduction of Contract Demand/Sanctioned Load shall made in the prescribed form specifiedfor the new service connection.

Provided that no reduction of load shall be allowed by theDistribution Licensee before expiry of the initial period ofagreement.

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9.2.2 The application for reduction of load shall beaccompanied by- A

(i) Details of modification, alteration and removal of electricalinstallation with completion certificate and test report of theLicensed Electrical contractor.

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(ii) Any other reason for reduction of load

(iii) Details of generator if any installed by the consumer withsafety clearance certificate from competent authority asapplicable.

9.2.3 The Distribution Licensee shall consider the applicationverify the same and communicate in writing its decision onreduction of Contract Demand/Sanctioned Load in writingwithin 30 days of the application.

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Provided that if the distribution licensee rejects or refusesthe reduction of Contract Demand/Sanctioned Load it shalldo so after affording the consumer reasonable opportunityof being heard in the matter and after communicating inwriting the reasons for such refusal.

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9.2.4 If the decision of the application for reduction ofContract Demand/Sanctioned Load is not communicated byEthe licensee within 30 days of the application, the consumershall send a notice to the licensee requesting for disposal inthe matter and if the decision is still not communicated within15 days of the notice. The reductions of Contract Demand/Sanctioned Load shall be deemed to have been sanctioned,Ffrom the 16th day after the issue of notice to the licensee bythe consumer.

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9.2.5 The reduction of Contract Demand/Sanctioned Loadshall come into effect from the first day of the month followingthe month in which the reduction of load has been sanctionedor have been deemed to be sanctioned.

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9.2.6 After the sanction of the reduction of Contract Demand/Sanctioned Load the consumer shall execute a supplementaryagreementand the licensee shall recalculate the SecurityDeposit excess Security Deposit if any shall be refunded by H

way of adjustment in the minimum number of succeeding billsof the consumer.”

(emphasis supplied)

9. The communication dated 08.11.2007 of the ElectricalSuperintending Engineer of the Board, refusing the prayer of therespondent for reduction of load, is reproduced below:- “Sub:Regarding the reduction of load from 4000 KVAto 1325 KVA in respect of M/s R.K. Forging Ltd.Conn. No. HJAP-185

Ref:Your letter No. R.K.F.L/III and IV 182/07-08 dated05.10.2007.

With respect to the above, you have applied for reductionof C.D from 4000KVA to 1325KVA. It is to inform you thatC/9B of agreement may kindly be seen.

‘C/9B- The consumer shall not be at liberty to determinethis agreement before the expiration of three years fromthe date of commencement of the supply of energy(4000KVA w.e.f. 12.07.2007). The consumer may determinethis agreement with effect from any date after the saidperiod on giving to the Board not less than twelve calendarmonths’ previous notice (this has charged not less than 6Month Notice vide Secretary, Jharkhand State ElectricityBoard Notification No.5058 dated 20.08.2002) in writingin that behalf and upon the expiration of the period ofsuch notice. This agreement shall cease and determinewithout prejudice to any right which then have accrued tothe Board herewith provided always that the consumersmay at any time with the previous consent of the Boardtransfer and assign this agreement to any other personand upon subscription of such transfer, this agreement shallbe binding on the transferee and Board and take effect inall respects as if transferee had originally been party inplace of the consumer who shall henceforth be dischargedfrom all liabilities under or in respect thereof.’

Hence your request for reduction cannot be done as peragreement.”

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Hence your request for reduction cannot be done as peragreement.”

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A10. Heard learned Counsel for the parties and have carefully gonethrough the record.

11. From perusal of the communication dated 08.11.2007, it isclear that the application of the respondent for reduction of load hasbeen rejected in terms of Clause 9(B) of the agreement, treating theBdate of commencement of the agreement to be 7/12.07.2007 and onlyby considering the provision of determination of the agreement, whichcould not have been without giving notice of less than 12 calendar months.It is clear that the said communication/order does not consider theprovisions of the Regulations of 2005 with regard to reduction of load,but only treats the application for reduction of load to be an applicationCfor determination of the agreement.

12. Chapter 9 of the Regulations of 2005 deals with theenhancement and reduction of contract demand/sanctioned load.Regulation 9.1 deals with enhancement of contract demand/sanctionedload, whereas Regulation 9.2 deals with the reduction of contract demand/Dsanctioned load.

13. Just as the consumer has the liberty of getting its load enhancedunder Regulation 9.1, the reduction of contract demand/sanctioned loadcan also be prayed for and decided in terms of Regulation 9.2. Theproviso to Regulation 9.2.1, no doubt, provides that no reduction of loadEshall be allowed before expiry of the initial period of agreement, which isthree years in the present case. The question would be whether theinitial agreement is to be considered for such purpose, or the subsequentagreements.

14. Regulation 9.2.6 of the Regulations of 2005 provides forFexecution of a supplementary agreement for reduction of contractdemand/sanctioned load of the consumer. Similarly, for enhancement ofload also, even if a fresh agreement may have been executed betweenthe parties, the same could be treated as nothing but a supplementaryagreement of the initial agreement by which the electricity connectionGwas granted for a particular load. Clause 2(l) of the Regulations alsodefines “contract demand” to be demand mutually agreed in theagreement or agreed through other written communication, meaningthereby that for variation of the contract demand execution of a freshagreement is not essential and the same can be done otherwise also bymere written communication.H

15. It is noteworthy that the Jharkhand State Electricity Board(‘the Board’) is a monopoly supplier of electricity which has laid downits own terms and conditions, regarding which the consumer has no sayor choice but to sign on the dotted lines, if it wants of get electricity loadvaried for running its industry. The Board is an instrumentality of theState. It has to be fair and reasonable. If the Regulations provide forcontract load to be varied even through a written communication, then inour considered view, in all fairness, though fresh agreements may havebeen executed at the stage of enhancement of load of the same electricityconnection, the same cannot be treated as anything but an extension/amendment or modification of the initial agreement granting the electricityconnection, which in the present case would be the agreement dated14.04.2004. On the dictates of the Board, the consumer may have beenrequired to sign fresh agreements for each enhancement of load, but theenhancement being for the same electricity connection which stillcontinues, it would merely be amendment of the initial agreement. Thiswould also be in consonance with the provisions of the Regulations of2005, which have to be liberally interpreted in favour of the consumer.

16. Reverting to the order dated 08.11.2007, which was impugnedin the writ petition, we are of the opinion that the Board has gone wrongin treating the application dated 20.09.2007 of the respondent forreduction of load to be that for determination of the agreement underClause 9B of the agreement, which application, in fact, ought to havebeen considered under Regulation 9.2 of the Regulations of 2005. Further,we are unable to accept the submission of the learned Counsel for theappellant that the application of the respondent for reduction of load waswithin the period of three years, because as we have discussedhereinabove, the agreement to be considered in the present case is theinitial agreement dated 14.04.2004 and not the subsequent agreementdated 07.07.2007.

17. The judgments of this Court rendered in Bihar StateElectricity Board, Patna and Others v. M/s. Green RubberIndustries and Others, (1990) 1 SCC 731, Orissa State ElectricityBoard v. Orissa Tiles Limited, (1993) Supp. 3 SCC 481, AndhraSteel Corporation Ltd. and Others v. Andhra Pradesh StateElectricity Board and Others, (1991) 3 SCC 263 and JharkhandState Electricity Board & Others v Laxmi Business and CementCompany Private Limited and Another, (2014) 5 SCC 236 as have AB

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Abeen relied upon by learned counsel for the parties, are distinguishableon facts, in as much as they all relate to minimum guarantee charge, andthat too under the old Electricity Act of 1910, as is so in the first threecases.

18. In view of the aforesaid, we are of the opinion that theBapplication of the respondent dated 08.11.2007 ought to have been allowedby the Board in terms of Regulation 9.2 of the Regulations of 2005,treating the application to be beyond the period of three years from thedate of the execution of the initial agreement dated 14.04.2004, by whichthe electricity connection of the respondent had been initially granted.

C19. While dismissing the appeal, we are not going into the questionas to whether the provisions of Regulation 9.2.1 are discriminatory,arbitrary and against the public policy, as has been held by the JharkhandHigh Court vide its judgment dated 23.07.2008.

20. The appeal is, accordingly, dismissed. No order as to costs.

D21. The application of the respondent dated 20.09.2007 forreduction of contract load/sanctioned load from 4000 KVA to 1325 KVAwould be deemed to have been allowed under the provisions of Regulation9.2 of the Regulations of 2005, and the respondent shall be entitled to allconsequential benefits.

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Devika Gujral

Appeal dismissed.

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