Research › Browse › Judgment

Gauhati High Court · body

1995 DIGILAW 153 (GAU)

Kamprup Paper Mills Limited; Purbanchal Timber and Industries Pvt. Ltd; Durgapur Tea Company ; Shreeram Boards and Penals Pvt. Limited; Jhamku Devi Buc v. Assam State Electricity Board

1995-07-20

J.N.SARMA

body1995
The Terms and Conditions of Supply, 1988 for the supply of electricity was framed by the Assam State Electricity Board in pursuance of the provisions of the Electricity (Supply) Act, 1948. Clause 18 (c) provides as follows: “ 18. Payment of Bills: (c) Surcharge for delayed payment: Except in case of categories of consumers mentioned below surcharge of 2% per month (or part thereof) in simple interest shall be levied if payment is not made on or before the due date of payment specified in the bill. Exceptions 1. Commercial 2. LT Industry 3. Medium Industry 4. Large Industry 5. Tea, Coffee and Rubber. In case of the above consumers a surcharge of 5% PM (or part thereof) will be charged for delayed payment. However, for payment of or before the due date fixed therefore a rebate of 3% on the energy consumption to be admissible to the above categories.” In the writ applications, the surcharge of 5% per month is challenged as arbitrary, illegal and whimsical by the petitioners. It is urged that clause 18 (c) is capricious and not within the jurisdiction of the ASEB. It is contended that the State Electricity Board have the power to charge surcharge and the law on this point is settled by the following decisions : (1) AIR 1979 SC 1511 (The Adoni Ginning Factory & others vs. The Secretary, Andhra Pradesh Electricity Board, Hyderabad & others); (2) AIR 1976 SC 127 (M/s Bisra Stone Lime Co. Ltd. vs. Orissa State Electricity Board & another); (3) AIR 1991 Allahabad 351 (Modi Industries Limited (Steels) vs. Executive Engineer, Electricity Distribution Division, Modi Nagar); (4) AIR 1990 SC 699 (Bihar State Electricity Board, Patna vs. M/s Green Rubber Industries & others) and (5) 2 judgments of this Court passed in Civil Rule No.968 of 1990 (Himagni Ceramic Industry vs. Assam State Electricity Board & others). Date of judgment 5.8.93 and Civil Rule No.2234 of 1988 (Namburnadi Tea Company Limited vs. The Assam State Electricity Board & others). Date of judgment 8.7.94 [1994 (2) GLJ 276]. 2. Date of judgment 5.8.93 and Civil Rule No.2234 of 1988 (Namburnadi Tea Company Limited vs. The Assam State Electricity Board & others). Date of judgment 8.7.94 [1994 (2) GLJ 276]. 2. It was also held by this Court in Civil Rule No.968 of 1990 that the interest charged @ 5% per month is not against the provision of Interest Act, 1978 as the Interests Act applies only in respect of Court proceeding where the question of payment of interest may arise, it was also held by this Court that surcharge is not bad under the Usurious Loans Act, 1918. Usurious Loans Act, 1918 was enacted to give additional power to the Court to deal in certain cases with usurious loans of money on any account. The amount realised by the ASEB by way of surcharge does not come within the purview of usurious loans of money and the provision of that Act be made available. 3. In AIR 1979 SC 1511 (supra) the Supreme Court considering the question regarding the payment of surcharge pointed out that the rate of levy of surcharge stipulated in the agreement namely, 1% PM, i.e. 12% PM is a clear indication that the levy is not meant to be a penalty but is a provision for interest by way of compensation for delayed payment. Supreme Court further pointed out that the said agreement is a valid agreement in the eye of law. 4. AIR 1976 SC 127 (supra) the Supreme Court pointed out as follows : “The word surcharge is not defined in the Act but etymologically, inter alia, surcharge stands for an additional or extra charge or payment. Surcharge is thus a superadded charge of payment. Surcharge is thus a superadded charge, a charge over and above the usual or current dues. It is in substance an addition to the stipulated rates of tariff. The nomenclature, therefore, does not alter the position. Enhancement -of the rates by way of surcharge is well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act.” 5. It is in substance an addition to the stipulated rates of tariff. The nomenclature, therefore, does not alter the position. Enhancement -of the rates by way of surcharge is well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act.” 5. AIR 1991 Allahabad 351 (supra), the Allahabad High Court pointed out as follows: “Additional charge for delayed payment is nothing but a device for ensuring timely payment of the bills and is necessary for its efficient working.” In the case before the Allahabad High Court the Electricity Board prescribed additional charge @ 25.5% on unpaid amount of bill and the Allahabad High Court pointed out that the same could not be termed as penalty but it was a device to ensure timely payment when the same was applicable to the consumer who are big industries whose bills for electricity ran into several crores per month and, as such, was neither arbitrary nor unconscionable. Further, the same being covered by a particular clause in the agreement between the parties under which the consumer had agreed to pay for the supply of the electric energy at the rate of enforced by the supplier from time to time the payment of additional charge would be deemed to be part of the agreement. In this view, the providing for charge are not ultra vires of Article 14 and 19 of the Constitution and principles of natural justice were not attracted. 6. AIR 1990 SC 699 (supra) the Supreme Court pointed out as follows : “ If an agreement is made and if there is a stipulated to pay minimum guaranteed charges, irrespective of whether energy was consumed or not that will not be ultra vires on ground that it is incompatible with statutory duty of Board.” 6A. AIR 1990 SC 699 (supra) the Supreme Court pointed out as follows : “ (a) Every contract is to be considered with reference to its object and the whole of its terms and accordingly the whole context must be considered in endeavoring to collect the intention of the parties, even though the immediate object of enquiry is the meaning of an isolated clause. A supply agreement to a consumer makes his relation with the Board mainly contractual, where the basis of supply is held to be statutory rather than contractual. A supply agreement to a consumer makes his relation with the Board mainly contractual, where the basis of supply is held to be statutory rather than contractual. In cases where such agreement are made the terms are supposed to have been negotiated between the consumer and the Board and unless specifically assigned, the agreement normally would have affected the consumer with whom it is made, as was held in Northern Ontario Power Co. Ltd. vs. La Roche Mines Ltd. (1938) 3 All ER 755.” 7.1 have heard Smti M. Hazarika,, learned counsel in Civil Rule Nos. 1071 of 1988 and 1049 of 1988 and Sri AK Maheswari, learned counsel in Civil Rule Nos.477 of 1989, 1167 of 1989 and 343 of 1989 for the petitioners and Sri NN Saikia, learned counsel for the respondents. 8. The ground on which this second part of the proviso levying surcharge of 5% PM is challenged as follows : (i) That the respondents have assumed arbitrary and uncanalised power. (ii) That the enhancement was made from 18% to 60% and that is arbitrary and without any basis. (iii) The penalty imposed by way of interest as only can be measure of punishment and the same cannot be legal ly resorted to for augment of its revenue. (iv) That the imposition of surcharge is unjust, unfair and unreasonable. 9. Let us have look at the following decisions in order to appreciate the contentions made by the petitioners. (i) (1986) 2 SCC 431 (Delhi Cloth and General Mills Co. Ltd. & another vs. Rajasthan State Electricity Board & others). That was case where there was a surcharge of 15% of the normal tariff by the Rajasthan State Electricity Board and that notification was challenged before the Single Judge of the Rajasthan High Court. The Single Judge quashed the notification. The Division Bench reverted that judgment and upheld the impunged notification. In paragraph 45 of the judgment, the Supreme Court pointed out as follows : “That takes us to the question whether the Board had no power under the Act to levy a surcharge. The word surcharge is not defined in the Act Plainly, the word surcharge' means an additional or extra charge or payment: Shorter Oxford English Dictionary, p.2199. As held by this Court in Bisra Stone Lime Co. The word surcharge is not defined in the Act Plainly, the word surcharge' means an additional or extra charge or payment: Shorter Oxford English Dictionary, p.2199. As held by this Court in Bisra Stone Lime Co. Ltd. vs. Orissa State Electricity Board a surcharge is in substance an additional to the stipulated rates of tariff and enhancement of the rates by way of surcharge is well within the power of the Board to fix or revise the rates of tariff under the provisions of the Act.” (ii) AIR 1986 SC 1999 (Kerala State Electricity Board vs. M/s SN Govinda Prabhu and Brothers & others). That was case by the Kerala State Electricity Board regarding its authority to increase electricity tariff under the Electricity (Supply) Act. The Supreme Court pointed out that -” it is not within the province to examine the price structure in minute detail if the Court is satisfied that the revision of the tariff or fixation of tariff is not arbitrary and is not the result of the application of any wrong principle. Such a fixation of tariff can be questioned only when it is manifestly unjust and discriminatory only when can be shown that one consumer is deserving the benefit at the cost of other consumers or general tax payers.” In the case in hand also only some consumers charge is levied at 5% and on others at 3%. That can be done depending on the nature of supply and purpose for which supply is required and other relevant factors. (iii) (1979) 4 SCC 560 (Adoni Ginning Factory & others vs. Secretary, Andhra Pradesh Electricity Board & others). In that case default in payment of the electricity bill was made because an order of injunction was obtained by the consumer and argument was made that there is no default and further it was urged that levy of surcharge was penal in nature and could not be enforced. The Supreme Court pointed out that levy is not meant to be penalty, but is a provision for interest by way of compensation for delayed payment. (iv) 1993 Supp (1) SCC 451 (CESC Limited & others vs. Bowrech Cotton Mills Co. Ltd & others). There also the question arose regarding payment of charge on delayed payment. The Supreme Court held that if thefe is delayed payment, the consumer will be liable to pay the charge. (iv) 1993 Supp (1) SCC 451 (CESC Limited & others vs. Bowrech Cotton Mills Co. Ltd & others). There also the question arose regarding payment of charge on delayed payment. The Supreme Court held that if thefe is delayed payment, the consumer will be liable to pay the charge. (v) AIR 1983 SC 1296 (M/s Jagdamba Paper Industries (Pvt) Ltd & others vs. Haryana State Electricity Board & others). That was a case regarding Haryana State Electricity Board and regarding enhancement of security imposed by the Board. Earlier the security was Rs.30/- per KW and it was raised to Rs.100/- per KW. It was that which was challenged and the Supreme Court pointed out once it is held that the Board has the power, it must follow that the demand of higher additional security for payment of energy bill is only assailable provided that the power is exercised arbitrarily or unreasonably. 10. It is seen from the affidavit-in-opposition that regarding the increment in tariff there was an appeal before the Supreme Court in SLP No.498 of 1990 M/s Eastern Steel and Alloy Company Ltd) and the Supreme Court vide judgment dated 16.1.91 observed as follows : “ The materials placed on record and on perusal of the impunged judgment of the Hon'ble High Court, it is not possible to take the view that the increase in the tariff which is made by the Assam State Electricity Board, was either without jurisdiction or arbitrary.” 11. In paragraph 5 and 6 of the affidavit-in-opposition it is stated as follows : “ That the deponent begs to state that the Board in exercise of its power conferred by section 49 of the Act revised the Terms and Condition of Supply in 1988 as the Board thought fit and the same was made effective from 1.1.8 8. This revised Terms and Condition of Supply was framed under the statutory provisions of the Act and has the force of law. The Board experienced that the consumer under the categories commercial, Industry and Tea Gardens etc. are the highest consumers of the Board but many of them are habitual defaulters in payment of their energy bills. Such a : situation obviously put the Board in serious financial constrain, as crores of Board's revenue get blocked for their negligence in making timely payments. are the highest consumers of the Board but many of them are habitual defaulters in payment of their energy bills. Such a : situation obviously put the Board in serious financial constrain, as crores of Board's revenue get blocked for their negligence in making timely payments. Many such consumers rather prefer to invest the money for earning more profits in their own venture leaving their liability of electric charges undischarged for months together. The Board, therefore, with a view of obviate such difficulties as well as to motivate such consumers to make timely payments provided for incentive of 3% rebates on the energy charges especially for the above mentioned categories of consumers, failing which surcharge of 5% to be levied per month on the outstanding amount until full payment is made. The surcharge rate on default of payment has been increased from 1.5% PM of 1981 to 5% PM so that the aforesaid categories of consumers take sufficient care in making payment of their energy bills within the due dates. The question of the levy of surcharge will never arise for the consumers making regular and timely payment of their energy bills. That the electricity consumers usually get 3 months time for making payment of electricity bills for the energy already consumed by them. After the monthly consumption of electricity by a consumer, about one month is taken for reading the meter and preparation of bill, thereafter it takes about 10 to 15 days time to serve the bill. From the date of service of the bill 15 days time is allowed for making payments. Situation is then watched for another 10 to 15 days and then only on default of payment, a disconnection notice is served allowing 7 days time to make payment. Thus the consumer get about 3 months time for making payment from the date of consumption. The consumers under the categories of commercial, Industry, Tea etc. utilise the electric energy received from the Board from their manufacturing process before making payment, whereas they are required to make prior payments to procure other inputs for their purpose of manufacturing goods and for other services. The consumers under the categories of commercial, Industry, Tea etc. utilise the electric energy received from the Board from their manufacturing process before making payment, whereas they are required to make prior payments to procure other inputs for their purpose of manufacturing goods and for other services. That regarding payment of bills it is prescribed in the Schedule of Tariff 1986 that from 1.1.88 on default a surcharge of 5% simple interest per month or part thereof on the outstanding amount will be levied until the amount is paid in full. The petitioners while applied for supply of electricity to the Board executed an agreement whereby they categorically agreed to pay electricity charges in accordance with the Board's Schedule of Tariff and Terms and Conditions of Supply in force or as may be amended from time to time. The petitioners are, therefore, bound to pay their energy bills raised in accordance with the prevailing tariffs on the Board. In case of any default in payment of the bill they are legally bound to pay the prescribed surcharge as above on the outstanding amount.” The Board in their affidavit-in-opposition has categorically stated that the industries by making default of huge money due to the Board in their own made an undue gain to cause loss to the Board and realised undue benefit on their part. 12. What is unreasonable ? In ordinary parlance it means not according to reason, not conformable to reason, exceeding the bounds of reason. Unreasonableness is not confined to culpability or callous indifference, it can include where carried in excess, sentimentality, romanticisus, bigotry, wild prejudice, caprice, fatuouseness or absolute lack of common sense. In order to be reasonable, the rule/matter must have a rational relation to the object which the authority seeks to achieve and must not go in excess of that object. The test of reasonableness should be applied to each matter/ thing impugned and no abstract standard of general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to be infringed, the underlying purpose of imposing the matter, the extent and urgency of the evil sought to be remedied, the disproportion of the imposition, the prevailing condition/situation all should be taken note of while rendering judicial verdict in the matter. The nature of the right alleged to be infringed, the underlying purpose of imposing the matter, the extent and urgency of the evil sought to be remedied, the disproportion of the imposition, the prevailing condition/situation all should be taken note of while rendering judicial verdict in the matter. The self conscious Judge Holmen pointed out that judicial verdict in such matter should represent the sober second thought of the community and must be suited in its inarticulate needs, keeping in mind cannot that the Judge is always not free to rule according to his discernment of the long term public interest. The area of his freedom is limited. There are some cases where there is an area of choice, and when he is within it, he can act, otherwise he must leave it to the proper authority. It was learned Judge Hand who opined that where a matter is not “obviously oppressive and obsurd” but is “fairly within the field of rational discussion and interest” the Court should not delve in such matter and should leave it to the wisdom of the authority. Conveniences is not always a safe guide to construction or a method to test the validity of a matter. Maxwell on the Interpretation of Statutes (12th Edn, page 206) referred to a case in the House of Lords regarding a provision of the Income Tax Act, 1952 and its validity it provided for a statutory penalty (for making an incorrect return of income) of s£20, and treble the tax which he ought to be charged under this Act referred not to the tax on the amount which the tax payer had failed to declare, but to the whole tax which he ought to be charged for the relevant year, notwithstanding the extraordinary consequences which flowed from giving effect to the provision in usual course. That was held to be valid. In order to find a provision not enforceable it must be fundamentally contrary to the ideas of justice. In order to hold a provision to be absurd it must be astounding, shockingly disproportionate, highly unconscionable. On the general principle of avoiding unjustice and absurdity, and approach must be rejected which would enable a person by his own act or default to impair an obligation which he has undertaking, it would allow him to earn, otherwise profit by his own wrong. On the general principle of avoiding unjustice and absurdity, and approach must be rejected which would enable a person by his own act or default to impair an obligation which he has undertaking, it would allow him to earn, otherwise profit by his own wrong. A man cannot be allowed to take advantage of his own wrong. He cannot be allowed to plead in his own interest a self created necessity. 13. Another argument which is advanced, that in some of the cases there are stay orders obtained by the petitioner and as such the amount shall not due in view of the stay order and the amount become due only after disposal of the cases and on those amount, surcharge cannot be levied. This situation was created by the petitioners by their own act and having created that situation the petitioners are not entitled to come forward and say that there was no default on their part. That will amount to encouragement to stall payment of the due amount by approaching the Court and obtain stay order and thereafter making the grievance that the amount was not due. That aspect of the matter also has been considered by the Apex Court in the judgment which has been disc assed above. So, this contention also cannot be accepted and stands rejected. 14. Accordingly, after perusal of the materials on record and after hearing the learned counsel for the parties, I find that the petitioners have failed to establish that the surcharge levied on them is unjust, unfair and unreasonable. 15. In that view of the matter, there is no merit in the writ applications and the same are dismissed. However, I leave the parties to bear their own costs.