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Jharkhand High Court · body

2009 DIGILAW 1577 (JHR)

Dayal Steels Ltd. v. Damodar Valley Corporation

2009-12-11

D.G.R.PATNAIK

body2009
Order Both these writ applications are being disposed of by this common •order, since common issues are involved in both. 2. Heard counsel for the parties. 3. In WPC 3232 of 2004, the petitioner has prayed for a writ in the nature of certiorari for quashing the order dated 6.2.2004 (Annexure-4) issued by the Chief Engineer (Commercial), Damodar Valley Corporation, Calcutta (Respondent No.2), whereby 'the petitioner's claim for giving him the proportionate relief for the period 4.2.2004 to 12.2.2004, during the period when there was breakdown in the transformer installed in the petitioner's premises, was rejected. Prayer has also been made for quashing the monthly bill for the month of February 2004 to the extent that the petitioner has been charged for the• entire month without granting any remission under clause 4 of the agreement entered into between the petitioner and the respondent DVC for the period 4.2.2004 to 12.2.2004. 4. In WPC No. 3834 of 2004, the prayer is or quashing the letter dated 15.3.2004 (Annexure-3), whereby the Chief Engineer (Commercial), DVC. Calcutta (Respondent No.2) has refused to give proportionate relief to the petitioner for the period 6.3.2004 to 6.4.2004 during the period when there was breakdown in the Order dated 6.10.2009 transformer installed in the petitioner's premises and due to which, the petitioner was not able to avail any electricity for its Ferror Alloy Unit. Prayer has also been made for quashing the monthly bill for the month of February 2004 to the extent that the petitioner has been charged for the entire month without granting any remission under clause 4 of the agreement entered into between the petitioner and the respondent DVC for the period 6.3.2004 to 6.4.2004. 5. The main question which the petitioners want this court to address are,- I. Whether the breakdown in the transformer would fall within clause 4 of the agreement and can be treated under I Force Majeure' as an unforeseen condition/circumstances, because of which the petitioner could not run its factory? II. Whether the petitioner is entitled to remission from current bill from t February 2004 on account of breakdown of the transformer, under clause 4 of the agreement? III. Whether the impugned bill raised without giving remission to the petitioner for the period of breakdown of the transfer, is illegal and liable to be set aside? 6. II. Whether the petitioner is entitled to remission from current bill from t February 2004 on account of breakdown of the transformer, under clause 4 of the agreement? III. Whether the impugned bill raised without giving remission to the petitioner for the period of breakdown of the transfer, is illegal and liable to be set aside? 6. The facts of the case of the petitioners in brief are as follows:- Both the petitioners are company registered under the Companies Act, 1956 and are established as medium/small scale industries for manufacturing of Steel Ingots/Billets and also Ferro Alloys. Petitioners had obtained electric connection for running their Units from the DVC fer initial contract demand of specific IV A and each of the parties had entered into their respective agreements with the DVC. During the certain specific period, the transformer installed within the premises of the petitioners factory for enabling transmission of the electric energy, developed technical snag, resulting in non-supply of electricity to the factories of the petitioners' Unit, leading thereby breakdown of normal operations. 7. Relying upon the terms as contained in clause 4 of the agreement, the petitioners had claimed remission of the electricity charges on the ground that the breakdown of the transformer resulting in the disruption of the electric supply, was due to 'Force Majeure' which was beyond the control of the petitioners and also of the respondent DVC and the petitioners are therefore entitled to proportionate reduction in payment of electrical charges for the period of breakdown. 8. The claim of the petitioners was rejected by the concerned officer of the respondent DVC on the ground that the petitioners are not entitled to any relief since the breakdown of the transformer amounts to breakdown of the machinery of the plant which had occurred in the normal operation and that, it did not come within the purview of the 'Force Majeure. The petitioner has claimed remission for Rs. 22,69,095/-. 9. Shri M.S. Mittal, learned counsel for the petitioner would argue that the ground for rejecting the petitioner's claim is totally misconceived and illegal and contrary to the terms as contained in clause 4 of the agreement. The petitioner has claimed remission for Rs. 22,69,095/-. 9. Shri M.S. Mittal, learned counsel for the petitioner would argue that the ground for rejecting the petitioner's claim is totally misconceived and illegal and contrary to the terms as contained in clause 4 of the agreement. Learned counsel explains that as per the terms of the agreement, it was for the DVC to maintain the transformers to ensure regular supply of the electric energy to the petitioners' Units and it does not form part of the plant and machinery of the petitioners' factory. The technical snag of the transformer was certain unforeseen event beyond the control of the petitioners and as such, the breakdown of the transformers squarely falls within the purview of the 'Force Majeure' condition. Elaborating his argument, by referring to the encyclopedic definition of 'transformer', learned counsel explains that the transformer is a device that transfers electric energy from one circuit to another through inductively coupled conductors transformer coils. It is essentially a device by which an alternating current of one voltage is changed to another voltage, without alternation in frequency. Learned counsel adds that the transformers are essential requirement for high voltage power transmission and it is only a medium through which the electricity is transmitted to the consumer. 10. A counter-affidavit has been filed on behalf of the respondent DVC. The petitioner's claim has been denied and contested by the respondents on the following grounds:- I. That the DVC though entered into an agreement with the petitioners for supply of electric energy to the petitioners' company, but in the agreement executed by and between the petitioner and the DVC, there is no mention of any Ferro Alloy Unit of M/s Dayal Steels Limited. II. The meter for power supply to Dayal Steel Limited as per the agreement, was installed at the DVC Sub-Station for registering the electrical energy and demand of Dayal Steels limited. III. DVC has not prevented the petitioner company from receiving full allocated power. IV. The condition of 'Force Majeure' would apply only in the event of strike, lockout, fire, accident, cyclone or any other act of God beyond the control of the parties to the agreement. III. DVC has not prevented the petitioner company from receiving full allocated power. IV. The condition of 'Force Majeure' would apply only in the event of strike, lockout, fire, accident, cyclone or any other act of God beyond the control of the parties to the agreement. V. Petitioner (in WPC 3232 of 2004) claims that though, it had informed about the technical snag which had developed in the transformer of Ferro Alloy Unit, but it did not ask the concerned authorities of the respondent DVC to make inspection since Ferro Alloy Unit was not declared as a Unit of Dayal Steels Limited and therefore, it does not come within the purview of the agreement. VI. As per the terms of clause 4 of the agreement, the failure of the consumer to use the electrical energy under the agreement either in whole or in part due to plant shut down and/or breakdown of machinery or plant in course of normal operation or shut down of machinery or plant due to non-availability of raw material or similar other reason, the same cannot be a ground for reduction in demand charge and the guaranteed electric charge. 11. Shri Delip Jerath, learned counsel for the respondent DVC, would argue that it is incorrect to say that the transformer is a separate installation unconnected with the plant and machinery of the petitioners' Unit. Learned counsel explains that the transformer is a essential part of the plant and machinery of the petitioners' Unit and for the operation of its machines, the petitioners draw electric energy through the transformer and without the transformer, the petitioner's machines cannot be operated and therefore, the transformer is a part and parcel of the petitioners' plant and machinery. 12. From the rival submissions, the main question is as to whether, the breakdown in the transformer can be considered as a circumstance involving condition of 'Force Majeure' and thereby enabling the petitioner to claim the benefit of proportionate reduction in the electricity charges, under the terms of clause 4 of the agreement? 13. For better appreciation, clause 4 of the agreement may be Quoted as under:- "Both the parties shall ensure compliance with the terms of his agreement. 13. For better appreciation, clause 4 of the agreement may be Quoted as under:- "Both the parties shall ensure compliance with the terms of his agreement. However, no party shall be able for any claim for any loss, damage or compensation whatsoever arising out of the failure to carry out the terms of this agreement or shortage of power supply to the extent that such failure or shortage is due the Force Majeure on account of the events such as strike, lockout, fire, accident, cyclone or any other act of God beyond the control of any party or due to any restraint or regulation of the State Govt. or Central Govt. or any other statutory authority. But any party claiming the benefit under this clause shall satisfy the other party of the existence of such a Force Majeure and shall make the best endeavour to perform its normal obligations as per terms of this agreement as soon as possible after the cessation of such Force Majeure. If at any time the consumer is prevented from receiving or using the electrical energy to be supplied under this agreement either in whole or in part or if the Corporation is prevented from supplying or unable to supply such electrical energy owing to anyone of the aforesaid reasons. then the Demand Charge and the Guaranteed Energy Charge as set out in Schedule-II annexed hereto payable by the consumer shall be reduced in proportion to the ability of the consumer to take or the Corporation to supply such power: Provided that the failure of the consumer to use the electrical energy under this agreement either in whole or in part due to planned shut-down and/or breakdown of mact1inery or plant in course of normal operation or shut down of machinery or plant due to non-availability of raw materials or similar other reasons shall not be ground for the aforesaid reduction in Demand Charge and the Guaranteed Energy Charge." 14. The term 'Force Majeure' has been explained in the clause as arising on account of the events "such as strike, lockout, fire, accident, cyclone or any other act beyond the control of any other party or due to any restraint or regulation of the State Government or Central Government or any other statutory authority" and if one account of Force Majeure, consumer is prevented from receiving or/using electrical energy, then the consumer would be entitled to remission in the electric charge. 15. In the instant case, admittedly, the technical snag in the transformer resulting in the breakdown of the plant was not on account of any of the aforementioned circumstances. Technical snag in the transformer do develop in normal operation and the transformers have to be regularly maintained. In fact, the maintenance aspect of the transformer have also been considered and agreed to by the parties as appearing in clause 6 of the agreement which lays down that all transformers, switchgear and other electrical equipments belonging to the consumer and directly connected to the feeders or lines of the Corporation shall be of suitable design and be maintained to the reasonable satisfaction of the Corporation. It cannot therefore be said that the occurrence of technical snag in the transformer is a totally unforeseen contingency. 16. The question is whether the transformer constitutes an integral part of the plant and machinery of the petitioner Unit or is a separate and distinct installation? As explained by the learned counsel for the petitioner, the transformer is a device by which an alternating current of one voltage is changed to another voltage without alternation in frequency and are essentially for high voltage power transmission. As explained, for enabling transmission of high voltage electric power to the Units for enabling operation of machinery, the petitioners needed the installation of transformer. This implies that without the transformer, the petitioners may not avail the smooth transmission of high voltage electricity for operation of their plants and machinery. Even as per encyclopedic definition of the term 'Machinery' as supplied by the learned counsel for the petitioner machinery includes prime movers, transmission machinery and all other appliances whereby power is generated, transformed, transmitted or applied. The logical inference from the definition of this word 'machinery', is that the transformer constitutes transmission machinery whereby power is transmitted. Even as per encyclopedic definition of the term 'Machinery' as supplied by the learned counsel for the petitioner machinery includes prime movers, transmission machinery and all other appliances whereby power is generated, transformed, transmitted or applied. The logical inference from the definition of this word 'machinery', is that the transformer constitutes transmission machinery whereby power is transmitted. In this view of the matter, can it be disputed that the transformer constitute an integral part of the plant and machinery of the Unit? The answer in my opinion, is no. The breakdown in the transformer would certainly constitute breakdown of machinery in course of normal operation and it certainly does not fall within the purview of 'Force Majeure'. Break down of machinery in course of normal operation, as has been declared in the proviso to clause 4 of the agreement amounts to the failure of the consumer to use the electrical energy under the agreement, and therefore, cannot be a ground for any reduction in the demand charge and in the guaranteed energy charge. The petitioner therefore cannot claim any benefit under the terms of clause 4 of the agreement. On the contrary, the benefit claimed by continued under the proviso to clause 4 of the agreement. In the facts and circumstances of the case and the discussions made above. I do not find any merit in this writ application. Accordingly, the same is dismissed.