JUDGMENT : G.B. Pattnaik, J. - The petitioner, a company registered under the Companies Act and was engaged in manufacture of Steel, assails the validity of proviso to Regulation 46 of the Orissa State Electricity Board (General Condition of Supply) Regulations, which was brought in by way of amendmant by notification dated 25-6-1987, inter alia. on the ground that the said provision is ultra vires of Art. 14 of the Constitution. The petitioner has also prayed for quashing the bills raised by the Orissa State Electricity Board for the period January 1989; to August 1990 in accordance with the aforesaid amended Rugulations 2. The petitioner entered into an agreement with the Board, opp. party No 1 on 16-8-1981 and under the agreement the said opp. party No. 1 undertook to supply power up to a maximum demand of 777 8 KVA/7000-KW called "the contract demand" and the said agreement continues to be still in force. It is alleged in the write application that notwithstanding the aforesaid agreement between the parties, opp. party No. 1 was not in a position to suoply the maximum demand to the petitioner during 1985, 1986 and 987 on account of shonage of generation of power. During July, 1988 the Government of Orissa in the Irrigation and Power Department in exercise of its power u/s 22(b) of the Indian Electricity Act. 1910 hereinafter referred to as 'the Electricity Act') read with Sac. 73A of the Electricity (Supply) Act, 1945 (hereinafter referred to as 'the Supply Act') issued an order dated 13-7-1988 directing th3 Board to reduce the supply of energy so as to allow the consumers to avail to the extent as specified in the Annexure, notwithstanding anything contained in contract, agreement or requisition. So far as the petitioner is concerned the allowable drawal for the water year 1988-89 was 16-863 million K. V. M. The aforesaid order of the State Government has been annexed as Annexure-2 to the writ application. So far as the petitioner is concerned the allowable drawal for the water year 1988-89 was 16-863 million K. V. M. The aforesaid order of the State Government has been annexed as Annexure-2 to the writ application. In accordance with the aforesaid order of the State Government, the Board in its return intimated the petitioner by letter dated 16-7-1988, annexed as Annexure-3, stating therein that in case the petitioner's consumption exceeded the quantum of energy specified by the Government then the service connection was liable for disconnection without any notice and the excess energy drawn should be payable at double the highest rate of energy charge for any category as per the Tariff Schsdule of the Orissa State Electricity Board in force at the time plus demand charges and power factor penalty and other charges, if any, at normal rates of the Tariff applicable to the industry. From time to time the Board issued such power restrictions on the petitioner as per Annexure-4 series. The petitioner asserts that failure on the part of the Board to supply the agreed quantity of power to the petitioner almost made the petitioner's industry cripple and at the same time by virtue of the amended provisions of the Regulations continued to levy the demand charge on the basis of "maximum demand" as provided in the agreement apart from the levy of energy charge on the basis of actual energy consumption which is arbitrary, irrational and puts an unreasonable burden on the petitioner and is confiscatory in nature and the petitioner accordingly prays for striking down of the aforesaid proviso in respect of the "demand charge" in question. The petitioner being aggrieved by the excessiveness of the demand charge levied on the basis of maximum demand notwithstanding the power restrictions imposed by the State Government and by the Board, made a representation to the Chief Engineer (Commerce) of opp. party No. 1 requesting him to direct the concerned authority not to charge "demand charges" on the basis of miximum damand but charge demand, charges propor- tionate to the number of hours power is made available to the petitioner. party No. 1 requesting him to direct the concerned authority not to charge "demand charges" on the basis of miximum damand but charge demand, charges propor- tionate to the number of hours power is made available to the petitioner. But that prayer of the petitioner was not accepted and, on the other hand, the petitioner was intimated that the demand charges are not for round the clock supply during the month and an industry may not be supplied power due to to break-down or other exigencies but yet is supposed to pay the said demand charge. The said letter of opp. party No. 2 has been annexed as Annexure-7 to the writ application. The petitioner then Iearnt that it is because of the proviso to Regulation 46 which was brought about by notification dated 25-6-1987, the opp. parties are not in a position to levy the demand charge proportionate to the power made available to the petitioner and therefore, the petitioner filed the present writ application challenging the validity of the aforesaid proviso to Regulation 46. The petitioner has given a statement of the hourly power-cut as well as the power that was made available to the petitioner under Annexure-9 and it is stated that between January, 1939 to August, 1990 by raising the demand charge on the basis of maximum demand and not on the basis of proportionate reduction on account of reduction of power, an excess sum of Rs. 20,39,874/- has been sougt to be recovered by the Board from the petitioner. The bills for the period January, 1989 to August. 1990 have been annexed as Annexure-10 series. 3. The opposite parties pursuant to notice have entered appearance since 11-12-1990 but no return has been filed. Even though no return has been filed but the learned counsel appearing for the Board, Mr. G. Rath was heard at length since the question involved is a puie question of law. 4. Mr. 1990 have been annexed as Annexure-10 series. 3. The opposite parties pursuant to notice have entered appearance since 11-12-1990 but no return has been filed. Even though no return has been filed but the learned counsel appearing for the Board, Mr. G. Rath was heard at length since the question involved is a puie question of law. 4. Mr. Panigrahi,the learned counsel for the petitioner, contends that the proviso to Regulation 46 as brought out by amendment by notification dated 23-6-1987 providing levy of demand charge on the basis of maximum demand as provided in the agreement is grossly arbitrary and unreal and has got absolutely no connection with the readiness of the Board to supply power at any given point of time and such a provision must be struck down on the ground of arbitrariness and unreasonableness. He further contends that the right of the Board to levy demand charge being sustained on the ground of Board's readiness to supply power to the consumer irrespective of the fact whether the consumer consumes the same or not, when the Board itslf is not in a position to supply power as per the contract demand it is wholly unreasonable on the part of the Board to levy the demand charge on the basis of maximum demand. 5. Mr. Rath contends that the power of the Beard to frame Regulation indicating principles governing supply of electricity by the Board to persons cannot be doubted in view of See. 79(j) of the Supply Act and the Regulation providing for damand charge in case of two-part-1 ariff system has been upheld by the Supreme Court in Northern India's case reported in Northern India Iron and Steel Co. and Others Vs. State of Haryana and Another. He further contends that the prescription under the proviso to Regulation 46 of the Regulations requling a consumer to pay the "maximum demand'' as provided in the agreement for the period the restrictions on power supply are imposad by the State Government u/s 22(b) of the Supply Act can neither be said to be arbitrary nor unreasonable since for such restriction the Board has no control and restrictions are imposed by the State Government on account of shortage of generation of electric energy. 6. 6. In order to examine the correctness of the rival submissions the first question that arises for consideration is what is the true meaning of the expression "demand charge". But before entering into the said question it would be appropriate for us to notice Regula- tion 46 of the Regulations as it stood prior to its amendment and Regulation 46 as it now stands which is being impugned. Prior to the amendment which was brought about by notification dated 26-6-1987, Regulation 46 was to the following effect; "Rights of Board in case of break-down in Board's supply system- If at any time during the continuance of any agreement between the Board and consumer, due to reason mentioned in Clauses 40(d) and 43 above, the Board/Engineer is prevented from supplying the electrical energy contracted for, then the Board/Engineer shall be under no obligation to give supply of electrical energy as contracted during the period of such break down/force measure situation continues. Such period of discontinuance reduces supply shall not be added to the initial period of the agreement : Provided that during such period of discontinuance/reduced supply, the consumer shall not be liable to pay the minimum charges in accordance with the agreement, but shall only pay for the actual quantity of demand and/or energy to the consumer in lieu of the contracted demand.'' The aforesaid Regulation was substituted by a notification dated 25-6-1987 which is to the following effect : "If on account of shortage of the generation of electrical energy restrictions on power supply are imposed by the State Government u/s 22(b) of the Indian Electricity Act, 1910 or by the Board u/s 49 of the Electricity Supply Act, 1948 and all other power available under law, the Board and the Engineers shall be under no obligation to supply energy contracted for except in accordance with the restriction order and subject to other provisions of the Regulation : Provided that during the period the restrictions are in force the consumer shall not be liable to pay the minimum charges in accordance with the agreement, if the restriction on supply in a month exceeds 150 (One hundred fifty) hours but shall only pay, in case of two part. Tariff, on the basis of actual energy consumption and the "maximum demand" as provided in the agreement and in all other cases, on the basis of actual consumption of energy." Thus under the proviso to Regulation 46 as it now stands a consumer during the period of restrictions in force will not be required to pay the minimum charges in accordance with the agreement if the restriction on supply in a month exceeds 150 hours but shall liable to pay in case of two-part. Tariff, energy charges on the basis of actual energy consumption and "maximum demand" as provided in the agreement There is no dispute or challenge to the requirement of payment of energy charge on the basis of actual energy consumption, but the disoutecentres round the requirement to pay the "maximum demand" as provided in the agreement. 7. The expression "maximum demand" has been defined in Clause XX of Regulation 3 to the effect : "Maximum Demand-means the average amount of kilowatts or kilovolt-amperes, as the case may be, delivered to the point of supply of the consumer and recorded during a thirty minutes' period of maximum use in the month or it shall mean twice the largest number of kilowatt-hours(KWM)or kilovolt ampere-hours (KVA) delivered to the point of supply by the consumer during any consecutive 30 minutes' period. The Board, however, reserves the right to shorten this period in special cases, if necessary." The said expression has been defined in Section 2(8) of the Supply Act which is extracted hereunder : "Maximum demand' in relation to any period shall, unless otherwise provided in any general or special order of the State Government, mean twice the largest number of kilowatt-hours or kilo-volt-ampere hours supplied and taken during any consecutive thirty minutes in that period " Under the agreement in question which has been annexed as Annexure-1 by virtue of Clause 7 of the agreement the consumer is required to pay demand charge at the rate of Rs. 35/- per KVA of maximum demani together with the energy charge at the rate on units metered loss units billed separately with which we are not actually concerned in the present case. 35/- per KVA of maximum demani together with the energy charge at the rate on units metered loss units billed separately with which we are not actually concerned in the present case. Under the two-part Tarriff system which is meant for big consumers of electricity, the consumer is required to pay the demand charges which charges are levied to cover investment installation and the standing charges to some extent and energy charges for the actual amount of energy consumed. The expression "Demand charge" would mean that the charge leviable for the readiness of the supplier to meet the demand of the consumer. Where, therefore, the supplier, namely, the State Electricity Board was not at all in a position to supply the energy as per the demand of the consumer it would be an unreasonable burden on the consumer if the supplier is permitted to raise the entire demand charge. The excessiveness of the burden on the economy of the industry as well as on the consumer would be apparent from a small illustration. An industry needs 7000 KVA for running of its factory but because of the power restrictions issued by the State Government in exercise of power u/s 22(b) of the Supply Act it cannot run the factory throughout the month as that would exceed the quantum of energy which the industry could utilise. But to run its machinery if the industry in question on the first day of the month takes power then in the demand meter it would show 7000 KVA. Thereafter even if for next twenty-nine days of the month the industry does not take any further energy still by virtue of the proviso to Regulation 46 in accordance with the agreement between the parties the consumer will be required to pay towards "demand charge" to the extent of Rs. 35 x 7000. Levy of such a charge, in o jr considered opinion, cannot but be held to be arbitrary, unreasonable and confiscatory in nature. A somewhat similar question pertaining to the demand charge in accordance with the Regulation of the Haryana State Electricity Board cams up for consideration before their Lordships of the Supreme Court in the case of Northern India Iron and Steel Co. and Others Vs. State of Haryana and Another. A somewhat similar question pertaining to the demand charge in accordance with the Regulation of the Haryana State Electricity Board cams up for consideration before their Lordships of the Supreme Court in the case of Northern India Iron and Steel Co. and Others Vs. State of Haryana and Another. In that case the Regulation provided for the propertionate reduction where the Board was unable to supply electric energy as per the demand of the consumer according to the contract because of power-cut or other circumstances beyond its control. The Supreme Court upheld the levy of demand charge because of a provision of propertionate reduction. But if there would have been no provision for proportionate reduction, as in our case now under consideration, then possibly the levy would not have been sustained. We think it appropriate to extract a paragraph from the judgment of the Supreme Court which would indicate the anxiety of the Court while considering the question that had been posed. "An argument was advanced before us in the first instance by counsel for the appellants with reference to the definition of the demand charge in Clause 1 (h) of the terms and conditions of supply framed by the Board that since the Board was not ready to serve the consumer and the consumer was ready to consume maximum electric energy the former was not entitled to ask for any demand charge. This argument, in the beginning was combated with equal force. If not more, on behalf of the Board and it was asserted that the Board was entitled to assess and claim the full demand charge as per Clause 4 of the Tariff irrespective of the fact whether it was in a position to supply the energy according to the demand of the consumer or not. Such an extreme stand on either side appeared to us a bit puzzling and leading to inequitable results. The difficulty was not easy to solve. If we were to hold that for the Board's inability to supply a fraction of the consumer's demand as Per the contract, it could claim only the energy charge and not the demand charge, it would have been very hard and injurious to the Board and the consumer would have unjustifiably got the supply at a very cheap rate. If we were to hold that for the Board's inability to supply a fraction of the consumer's demand as Per the contract, it could claim only the energy charge and not the demand charge, it would have been very hard and injurious to the Board and the consumer would have unjustifiably got the supply at a very cheap rate. If on the other hand, we were to say that the consumer was liable to pay the entire demand charge as per the method of assessment provided in Clause 4 of the Tariff even when for no fault of it, it could get only a fraction of its demand fulfilled resulting in its not being able to run the industry to its full capacitv, it would be liable to pay a huge amount per month, and this will not only be unecono- mical but would seriously affect its. economic structure. But we were happy to find that a just equitable and legal solution of the difficulty was provided during the course of the argument on either side and that is with reference to Sub-clause (f) of Clause 4 of the Tariff. It is, therefore, not necessary to resolve the extreme stand taken on either side." 8. What was not necessary for the Aoex Court in the Northern India Iron's case to be solved because of Sub clausa (f) of Clause 4 of the Tariff has now actually cropped up for reconsideration. Arbitrariness or irrationality can render any provision unconstitutional. Principle of reasonableness is an essential element of equality under Art. 14 of the Constitution and any provision when challenged oh the ground of violation of Art. 14, the said provision must answer the test of reasonableness in order to be in conformity with Art. 14 of the Constitution. The effect of law has to be tssted to find out whether it violates Art. 14 of the Constitution. While upholding the validity of Section 49 of the Supply Act which provides for fixing the uniform tariffs and allows licensee to supply electricity to any other person upon such terms and conditions as the Board thinks fit, the Supreme Court in the case of Maharashtra State Electricity Board Vs. Kalyan Borough Municipality and Another, held that said Section 49 does not give an unguided and arbitrary power to the Board to fix tarif as it likes. Kalyan Borough Municipality and Another, held that said Section 49 does not give an unguided and arbitrary power to the Board to fix tarif as it likes. If the Board is entitled to levy a charge called "demand charge" in a two- part Tariff system for its readiness to supply the power to lhe consumer, the provision as contained in the proviso to Regulation 46 moking a consumer liable to pay the demand charge on the basis of maximum demand even on the failure of the Board to supply power on account of power-cut or otherwise cannot, but be held to be arbitrary and confiscatory provision and, therefore, the said provision does not satisfy the test of reasonableness enshrined in Art. 11 of the Constitution. In a recent cass, in the case of Massrs J. M. Graphit-Mining and Manufacturing Company v. Orissa State Electricity Board and Ors. (O.J.C. No. 1699 of 1993 disposed of on 5-1-1994) where a consumer had challenged his liability to pay the minimum charges this Court had observed : "The relationship between them is as between two contracting parties supervened by the provisions of the Electricity Act and the Electricity (Supply) Act as also the Regulations framed thereunder. The relationship between the parties is, therefore to be interpreted in, the light of the statutory provisions but however, wherever possible, the statutory provisions would not be stretched to be interpreted in a manner so as to deny the basic relationship of, contracting parties. It would hence stand to reason that the Board while has the unlimited authority to realise the dues as per . the agraemant executed yet should not be fund to bo so authorised if it itself was not in a position to supply the elect ica energy for which the charges are to be paid. The reason is that in the first event, i.e. where the Board is ready and willing to supply but the consumer does not consume, the liability arises because of the fact that the Board remains in readiness to supply energy and non-utilisation of energy by the consumer does not affect its liability to keen the energy apart from consumption. The reason is that in the first event, i.e. where the Board is ready and willing to supply but the consumer does not consume, the liability arises because of the fact that the Board remains in readiness to supply energy and non-utilisation of energy by the consumer does not affect its liability to keen the energy apart from consumption. But so far as the reverse situation is concerned, where the consumer is ready to consume but the Board is not prepared to supply, to yet allow the Board to realise the higher duty merely because of the existence of agreement would be travesty of justice." The ratio of the aforesaid case as well as the observations ext-acted above would apply while testing the reasonableness of the proviso to Regulation 46, namely, if the Board is ready and willing to suoply but the consumer does not consume then obviously the liability would arise as the Board remains in readiness to supply energy and non- utilisation of the energy by the consumer does not affect the liability of the Board to keep the energy set apart for consumption. But where the Board is not in a position to supply and then by virtue of Regulations like proviso to Regulation 46, levies demand charge on the basis of contract demand, it would be an unreal levy, arbitrary levy, irrational levy and as such violates the basic mandate enshrined in Art. 14 of the Constitution. In course of argument the learned counsel for the petitioner had produced before us a calculation sheet showing the unreasonable- ness of levy towards demand charge in accordance with the proviso to Regulation 46 and we think it appropriate to notice the earns at this stage. The contract demand of the petitioner is 7778 KVA and if there would have been no power-cut in any month and the petitioner would have been running the factory throughout, then in a month the petitioner would be consuming 40. 22, 115 K.W.H. of units of energy taking the power factor at 90% and load factor at 90%. But on account of the power restriction imposed by the State Government undsr Section 22(b) of the Act. 22, 115 K.W.H. of units of energy taking the power factor at 90% and load factor at 90%. But on account of the power restriction imposed by the State Government undsr Section 22(b) of the Act. the units of power actually consumed during the month of January, 1939 as is apparent from the bill No. 705 dated 3-2-1989 is 2, 66, 200 K. W. H. and in terms of quantity of demand it is 478, 3 KVA. But on the basis of maximum demand recorded in the trivector metre it is 6834 KVA and, therefore, the petitioner has been made liable to pay the demand charge at the rate of 35 per KVA, thus amounting to Rs. 2,51,160/- though for 478.3 KVA he could have been charged on proportionate reduction basis only to the extent of 17,678. The aforesaid concrete illustration exhibits the arbitrariness and irrationality of the provisions in question. On examining the proviso to Regulation 46, we have not found any nexus for the same for which it has been introduced. If the nexus is the readiness of the supplier to supply power then how can the provision be sustained when that readi- ness is not there. In the aforesaid facts and circumstances, we are of the considered opinion that the proviso to Regulation 46 is unreasonable, arbitrary, unreal and the same cannot be sustained and we 'accordingly quash the same. The bills for the month January, 1989 to August 1990 in relation to the demand charge on the basis of maximum demand charge also, therefore, cannot be sustained and we accordingly quash the same and permit the Board to revise these bills on the basis of proportionate reduction taking into account the actual consumption of energy. If the consumer has already deposited the amount eavered under the bills for the above period, then the excees amount will either be refunded to him or will be adjusted in the future bill. The writ applicacation is accordingly allowed with the aforesaid directions and observations. No costs. D.M. Patnaik, J. I agree. Final Result : Allowed