SURINDRA ALLOYS v. MUNICIPAL CORPORATION OF DELHI — 1990 DIGILAW 152 (DEL)

R. L. GUPTA, J. ( 1 ) THIS order will dispose of I. As. Nos. 3109 3140 3139, 3139a, 2873, 2874, 2?78, 2909, 2908, 2900, 3033 3032 3031, 3030, 3055, 2960, 2795, 2s92, 2942, 3344, 3337 3406 3335, 3457, 3505 and 2953 of 1990 in Suits Nos. 1265 1270 1274, 1271, 1154, 1155, 1156, 1157. 1158a, 1162 1223 1222, 1221, 1220a, 1239,1191, 1116, 1029, 1030 1329 1350, 1372, 1349, 1406, 1427 and 1198 of 1990 respectively because all these las basically raise the same question. Most of these suits are petitions under Section 20 of the Arbitration Act while some these Indian Administrative Service have been moved in suits for perpetual injunction. For the sake of reference averments in Suit No. 1198/90 filed by M/s. Surindra Alloys P. Ltd. are being extracted inorder to understand the controversy between the parties ( 2 ) BY this suit the petitioner seeks a direction to respondent No. 2 to file the original arbitration agreement existing between the petitioner and respondent No. . 2 and directing reference of the disputes existing between the parties to an arbitrator in terms of clause 25 of the aforesaid agreement. The basic disputes arose between the parties when the respondent-MCD revised the tariff by a resolution of May, 1989 whereby the rate of Rs. 40 per KVA was revised to Rs. 340 per KVA applicable only to those large Industrial power consumers (UP for short) who were running induction arc furnaces like the petitioner. The revision of the rate from Rs. 40 to Rs. 340 per KVA led to the filing of writ petitions in this Court But the writ petitions were dismissed by a common judgment dated 1st March, 1990 by a Division Bench of this Court. After dismissal of the writ petitions the respondents sent revised bills to the various LIP consumers billing them at the rate of Rs. 340 pet KVA for the period April, 1989 to January, 1990 and calling upon them to make those payments within 7 days failing which the electri- city will be disconnected. Now by these petitions under Section 20 of the Arbitration Act, the petitioners have raised certain disputes on the basis of which it is stated that unless such disputes are settled by an Arbitrator to be appointed under claust; 25 of the agreement between the parties, the electricity cannot be disconnected. Now by these petitions under Section 20 of the Arbitration Act, the petitioners have raised certain disputes on the basis of which it is stated that unless such disputes are settled by an Arbitrator to be appointed under claust; 25 of the agreement between the parties, the electricity cannot be disconnected. It is stated that there are bona fide disputes between the parties. The bona fide disputes sought to be raised now are that in spite of an assurance by the respondents to supply the contract load demand on 24 hours basis, the petitioners were forbidden from plying their furnaces for approximately four hours every evening purportedly because the aforesaid period was a peak period. Also a power out was imposed by respondents from time to time varying between 4 to 16 hours or more every day during which period there was no supply of electricity. Another dispute raised is that the petitioners were running their furnaces only on 8 hours basis and, therefore, a case was made out for proportionately scaling down or gram of rebate for 16 hours period everyday. In addition a number of hours were lost every week on account of line faults and catle problems and related break downs. Another dispute sought to be raised is that the revision was made effective from 1st April 19^9 but the bills received by the petitioners included a period of about a fort-night of March. 1989 for which the revisional tariff was not applicable. All these factors entitled the petitioners to reduction in the bills on account of the specific language of the contract/agreement between the parties and specially with reference to clause 15 (b) of the agreement. ( 3 ) WRITTEN statements have been filed in some of these petitions and arguments on the interim applications have been heard on the premises that the defence raised on behalf of the respondents will be deemed to be the same in all these cases. ( 4 ) THE main defence raised on behalf of the respondents is that in accordance with the agreement and the statutory provisions the respondents framed tariff of supply of electricity on universally recognized method of charging, being a two part tariff comprising of Energy charges and Demand charges (Minimum consumption charges ). In the event the energy charges exceeded the demand charges the demand charges got merged with the energy charges. In the event the energy charges exceeded the demand charges the demand charges got merged with the energy charges. However, if the energy charges were lower, the petitioners were required to pay the minmum consumption charge? in addition to other charges applicable. to the writ petitions disposed of by a Division Bench of this Court, the stand of the petitionets was that they did not con- same electricity 24 hours a day and worked only in one shirt of 8 hours. Since by working one shift of 8 hours the petitioners would never cross the minimum demand charges, the two part tariff was in effect converted into a single part tana. Another defence raised was that after the dismissal of the writ petitions. the Honble Supreme Court refused to stay the amount of recovery of the revised bills sent to the petitioners and, therefore, now this Court should not exercise its discrotion or staying the recovery which in fact may amount to ever reaching Hie orders of Hon ble the Supreme Court. It is further said that the minimum consumption charges fixed at Rs. 340. 00 per KVA per month took into consideration the factors like weekly days off, break downs/interruptions that might ensue as a normal factor of supply, legal restrictions on consumption on account of. peak load restrictions, the percentage average load utilisation of the industry and statutory power factor. Normally a Unit like the petitioner would utilise 510 Units of electricity per KW per month by giving allowance to these factors. But it was further assumed that such a Unit would roughly consume 60 per cent if the load and, therefore, normally a Unit would be deemed to consume only 306 Unit per KW per month and at the rate of 1. 10 per unit being the tariff in relation to the LIP consumers such an undertaking would pay approximately 336. 60 per EVA per month. Taking into consideration all these factors minimum consumption charges were fixed at Rs. 310 per month Therefore, all these factors which arc now sought to be raised is the shape of disputes by the petitioners were -already taken into consideration while fixing the minimum consumption charges and, therefore, these did not raise any bona fide disputes between the parties. It is further stated that before fixing minimum consumption charges . 310 per month Therefore, all these factors which arc now sought to be raised is the shape of disputes by the petitioners were -already taken into consideration while fixing the minimum consumption charges and, therefore, these did not raise any bona fide disputes between the parties. It is further stated that before fixing minimum consumption charges . here was a proposal to levy a surcharge of 25 per cent on consumption of the [ IP category if the energy consumption of any consumer exceeded 5 per cent of 300 units per KW per month. The Association of the petitioners then represented that such for a unit working 12 hours a day luf the induction Melting Furnaces by virtue of their technology had to be run on a continuous bans for 24 hours a day and cannot be run intermittently without jeopardising the process "adversely. Therefore, they desired that the restriction of 300 units being grossly inadequate should be increased to 600 units per KW per month as a minimum. A copy of that iepresentation is also attached with the written statement. The minimum tariff on 600 units per KVA per Month would come to Rs. 660 at the rate of 1. 10. Ultimately the rate was fixed Rs. 340 per KVA as the minimum consumption charges by taking into consideration the weekly days off, break-downs I interruptions, legal restrictions on consumption on account of peak load restrictions, percentage average load utilization of the industry and statutory power factor. Therefore, taking all these circumstances into consideration the minimum consumption charges were fixed at Rs. 340 per KVA per month instead of Rs. 660 per KVA per month. Moreover, the petitioners at the time of admissionof their writ petitions in the High Court had furnished security to pay difference of the bill amount calculated from the old rates to now rate of tariff in case they did not succeed in their writ petitions. Thus they were now estopped from raising any such objection about the payment of the bills and the only change which was now incorporated in the bills was that instead of the rate of Rs. 40 per KVA per month, they were sought to be charged at the rate of 340 per KVA per month. Thus they were now estopped from raising any such objection about the payment of the bills and the only change which was now incorporated in the bills was that instead of the rate of Rs. 40 per KVA per month, they were sought to be charged at the rate of 340 per KVA per month. ( 5 ) REGARDING the surcharge now sought to be levied in these bills, it is stated that since the recovery at the rate of 340 per KVA per month was stayed by the High Court during the pendency of the writ petitions, petitioners should have requested the High Court itself at the time of the passing of the interim orders not to make them liable for payment of surcharge because otherwise surcharge is leviable when the payment of the bill is made after 15 days as provided in the agreement ilself. ( 6 ) I have heard arguments advanced by learned counsel for the" parties and have given my careful consideration to all the aspects of the case. It may be noted that during the pendency of the writ petitions the respondent-undertaking was billing the petitioners at the rate of Rs. 40 per KVA per month. None of the petitioners raised any objection about the break-downs/interruptions, legal restrictions on consumption on account of peak load restrictions etc. Therefore, prima facie when the bills were paid by the petitioners without raising any objection at the rate of Rs. . 10 per KVA per month, there seems to be no prima facie reason to hold at this stage that the petitioners are entitled to the scaling down of the rate on account of the factors pleaded by them at a late stage. There is no contemporaneous evidence shown by the petitioners to the effect that they raised any objection about break-downs/interruptions etc. when the bills were sent to them by the respondent-undertaking. They also undertook to make the payment of the bills at the rate of Rs. 340 per KVA per month in case their writ petitions were dismissed. There- fore, prima-facie I am of the opinion that no doubt the parties are governed by an arbitration clause and if there are any disputes between the parties they must be. They also undertook to make the payment of the bills at the rate of Rs. 340 per KVA per month in case their writ petitions were dismissed. There- fore, prima-facie I am of the opinion that no doubt the parties are governed by an arbitration clause and if there are any disputes between the parties they must be. referred to an arbitrator, but pending the appointment of an arbitrator and publishing of his Award, will it be reasonable to stay the recovery of the electricity bills from the petitioners ? It is not to be lost sight of that the respodent is an Undertaking which produces electricity at a heavy cost. It has to maintain all the necessary infrastructure to produce the electricity and supply the same to the various consumers. In the case of Siliguri Municipality and others v. Amalendu Das and others, AIR 1984 SC 653 (1) the Calcutta High Court had restrained Siliguri Municipality from recovering the graduated consolidated rate on annual value of holdings in terms of amended provisions : Sections 123 and 124 of the Bengal Municipal (Amendment) Act. 1980. The Supreme Court observed that levy or impost did not become bad as soon as a writ petition was instituted in order to assail the validity of the levy. There was also no warrant for presuming the levy to be bad at (he very threshold of the proceedings. The only consideration at that juncture was to ensure that no prejudice is occasioned to the rate payers in case they ultimately succeed at the conclusion of the proceedings. This object could be attained by requiring the body or authority levying the impost to give an undertaking to refund or adjust against future dues, the levy of tax or rate of a part thereof as the case may be in the event of the entire levy or a part thereof being ultimately held to be invalid by the Court without obliging the tax payers to institute a civil suit in order to claim the amount already recovered from then;. On the other hand, the Supreme Court observed, the Court cannot be unmindful of the need to protect the authority levying the tax for at that stage the Court has to proceed on the hypothesis that the challenge may or may not succeed. On the other hand, the Supreme Court observed, the Court cannot be unmindful of the need to protect the authority levying the tax for at that stage the Court has to proceed on the hypothesis that the challenge may or may not succeed. The Court has to show awareness of the fact that in a case like the present a municipality cannot function or meet its financial obligations if its source or revenue is blocked by an interim order the municipality from recovering the taxes as per fie impugned provision. And that the municipality has to maintain essential civic services like water supply apart from running public institutions like schools, dispensaries, libraries etc. Supplies have to be purchased and salaries have to be paid. In the present case also it will be noted that for supplying the electricity to the consumers, the respondent-undertaking has to maintain the whole paraphemalia. It has to pay huge salary to the staff. It has field staff to attend to various types of faults. . If the source the field stall to attend to various types of faults. It the source of the revenue of the Undertaking is blocked at this stage by an interim order, its functioning is likely to be partly paralysed if not wholly. Therefore, in the circumstances of this case, I am of the view that when the petitloaers had furnished security to pay at the enhanced rate of levy in case their writ petitions ware dismissed, they should be called upon to honour their commitment. If during the course of arbitration proceedings, it is found that they are entitled to certain deductions, the over payments can always be adjusted in the future dues payable by the petitioners. It is not to be lost sight of that the respondent-Undertaking is perennially to keep supplying electricity to the various consumers like the petitioners and they are always to consume electricity so that they will be liable to pay bills in future also. If the petitioners are found to be entitled to any adjustment as now pleaded by them, there can always be adjusted from their future bills. In the case of M/s. Bharat Barrel and DrumManufacturing Co. Pvt. Ltd. v. The Municipal Corporation of Greater Bombay and another. AIR 1978 Bombay 369 (2) the Corporation sought to recover certain time barred dues from the appellants on pain of dis-connection of electricity. In the case of M/s. Bharat Barrel and DrumManufacturing Co. Pvt. Ltd. v. The Municipal Corporation of Greater Bombay and another. AIR 1978 Bombay 369 (2) the Corporation sought to recover certain time barred dues from the appellants on pain of dis-connection of electricity. The appellants when called upon to make those payments had pleaded the has of limitation. In spile ot such a plea, it was sold that the dispute raised by the consumer ought not to be regarded as bona fide and the failure to pay ro. ust be held as equivalent to neglects to pay within the meaning of Section 24 of the Indian Electricity Act. Therefore, interim stay was not granted even in such circumstances. In the case before us, as already pointed out the petitioners had undertaken to pay the dues without any objection in case their writ petitions were dismissed. I, therefore, see no reason why there should be stay of the recovery of the bills at this interim stage. ( 7 ) IT may also be noted that, SLPs were filed by the petitioners in the Hon ble Supreme Court against the dismissal of their writ petitions by the High Court. The Supreme Court also did not grant interim stay of the recovery. The only concession shown to the petitioners was that they were permitted to pay the amount in three monthly instalments. Two of these instalments already stand paid. ( 8 ) HOWEVER, I am of the view that the petitioners may he entitled to the grant of stay at this stage in respect of the surcharge sought to be recovered from them by the respondent- M/s. Surender Alloys Vs. MCD and others Undertaking for late payment. The bills at the enhanced rates were not paid by the petitioners because of the interim relief granted to then by the High Court. Therefore, it seems prima facie doubtful whether the respondents Undertaking can be allowed to recover surcharge for late payment after the dismissal of the writ petitions. Two-third of such surcharge already stands paid by the petitioners in two instalments. Therefore, there seems to be prima facie reason to hold that the petitioners may not be called upon to deposit for the time being the remaining one-third amount due on account of surcharge. Two-third of such surcharge already stands paid by the petitioners in two instalments. Therefore, there seems to be prima facie reason to hold that the petitioners may not be called upon to deposit for the time being the remaining one-third amount due on account of surcharge. The balance of convience also is in favour of the respondent and not in favour of the petitioners because if the recovery of the dues is stayed at this stage the very functioning of the respondent-undertaking is likely to be effected. The petitioners are also not likely to suffer any irreparable loss because they will be entitled to recover their dues if any from the respondent undertaking with 12 per cent per annum as interest as directed by Hon ble the Supreme Court. ( 9 ) IN view of the above discussions, the interim applications are partly allowed. The petitioners shall deposit arrears excluding ene-third amount of the surcharge immediately latest by 5. 00 P. M. on 14-5-1990 failing which the respondent Undertaking will be at liberty to take action according to law. ( 10 ) THE main cases may be listed now on 16th May, 1990.