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2009 DIGILAW 538 (CAL)

Cesc Ltd v. He-Man Ductile Irons Ltd

2009-07-23

BISWANATH SOMADDER, S.S.NIJJAR

body2009
Judgment :- (1) By the impugned order, the learned Single Judge has directed the respondents/writ petitioners to execute a bank guarantee by 9th of June, 2009 to the tune of Rs.11,00,000/- to be renewed from time to time till disposal of the writ petition. In default, CESC Ltd. will be within its right to take appropriate steps including disconnecting the electric line. This order has been challenged by the CESC Ltd. on the ground that the entire amount ought to be secured by directing the writ petitioners to deposit 50% of the amount due in cash and not through a bank guarantee. Mr. Anindya Mitra, learned Senior Counsel appearing with Mr. Utpal Bose, learned Counsel submits that the issue with regard to the kind of security that is required in cases such as this has been settled by the Supreme Court in the case of W. B. State Electricity Board v. Fakir Chand Rice Mills and Ors., reported in 1996 (8) SCC 647 . In that case the Supreme Court has clearly observed that when the Electric Supply Company is obligated to supply electrical energy to the consumer, an equal obligation has to be cast on the consumer to pay the amount subject to determination of controversy in the, suit. (2) On the other hand, Mr. S.N. Mitra, learned Counsel appearing for the respondents/writ petitioners submits that furnishing of bank guarantee as directed by the learned Single Judge would be sufficient security for the claim made by the appellant/CESC Ltd. Learned Counsel also submitted that the rights of the parties have not been adjudicated at this stage. At the time of the final hearing of the writ petition, the writ petitioners would be able to demonstrate that the demand made by the appellant is palpably erroneous. In fact, it relates to periods other than the period which was the subject-matter of the appeal before the appellate authority. The controversy only related to December 2001. The appellate authority had, however, determined the liability for the period commencing from 25th October, 2001 to 29th April, 2002. It was upon taking into consideration these facts and circumstances that the learned Single Judge had directed that it would be sufficient if security was furnished by way of bank guarantee only. The controversy only related to December 2001. The appellate authority had, however, determined the liability for the period commencing from 25th October, 2001 to 29th April, 2002. It was upon taking into consideration these facts and circumstances that the learned Single Judge had directed that it would be sufficient if security was furnished by way of bank guarantee only. Learned Counsel further submitted that it would be wholly inequitable if the writ petitioners are directed to furnish security for an amount which would not be due in accordance with law. Merely, because the appellant has raised a demand notice, which is without the sanction of law, the same would not entitle them to claim security, let alone insist on cash deposit. Learned Counsel further submitted that the judgment in the case of W.B. State Electricity Board (supra) is not applicable in the facts and circumstances of this case. In the present case, the rights of the parties have not been adjudicated by any judicial authority thus far. In the case before the Supreme Court, the matter had been adjudicated by the trial Court, Appeal Court and the High Court, in revision. (3) We have considered the submissions made by the learned Counsel. We are of the opinion that the judgment of the Supreme Court in the case of W. B. State Electricity Board (supra) would be applicable in the facts and circumstances of this case. Since it is only a short judgment we are reproducing the same in its entirety. "(Before K. Ramaswamy, S. Saghir Ahmed and G. B. Pattanaik, J J) West Bengal State Electricity Board ....Appellant v. Fakir Chand Rice Mills and Ors.....Respondents Civil Appeal No. 4720 of 1996, decided on February 27, 1996 Order 1. Mr. A. D. Sikri, the learned Counsel accepts notice on behalf of the respondents. We have heard the counsel for the parties. 2. Leave granted. 3.As rightly pointed out by the counsel for the respondents, jt is a discretionary order. The discretion would also be properly exercised by the Courts below when dealing with the points in controversy. A demand of Rs.28,68,264.06 was made on the allegation that there were pilferages in the meter reading of the electrical energy supplied to the respondents. In a suit by the respondents for supply of energy to the respondents, the trial Court directed payment of Rs.2,60,000/- and odd. On appeal, it was confirmed. A demand of Rs.28,68,264.06 was made on the allegation that there were pilferages in the meter reading of the electrical energy supplied to the respondents. In a suit by the respondents for supply of energy to the respondents, the trial Court directed payment of Rs.2,60,000/- and odd. On appeal, it was confirmed. When it was carried in revision, the High Court in CO. No. 2714 of 1995 modified the order and directed the respondents to deposit a sum of -Rs.5,60,000. Thus, this appeal by special leave. 4. A demand notice for Rs.28 lakhs and odd having been issued, the question is: whether the Court was right in directing ultimately payment of Rs.5,60,000? The High Court does not appear to have addressed itself to the questions. It simply repeated that it was a discretionary order passed by the Courts below directing payment of Rs.2,60 lakhs and at the same time directed the respondents to deposit Rs.5,60,000/-without adjudicating the matter. Normally, in matters of money claim, at least half of the amount would be directed to be deposited. In the situation obtaining in this case, when the appellant is obligated to supply electrical energy to the respondents, an equal obligation has to be cast on the respondents to pay the amount subject to determination of controversy in the suit. Under these circumstances, the respondents are directed to deposit a sum of Rs.12 lakhs within a period of two months from today. If the amount of Rs.5,60,000/-has already been deposited, the same may be given credit for the payment and the balance be paid within the aforesaid period. 5. The appeal is accordingly disposed of. No costs." (4) From the above it becomes apparent that a suit was filed challenging a demand which was in the sum of Rs. 28,68,264.06. The trial Court as an interim measure directed the consumer to pay a sum of Rs.2,60,000/-for restoration of the supply of electricity during the pendency of the suit. In appeal, the aforesaid amount was increased to Rs.5,60,000/-. This order was upheld by the High Court on the ground that it was a discretionary order and ought not to be interfered with by the High Court. This order was challenged by the West Bengal State Electricity Board before the Supreme Court. In appeal, the aforesaid amount was increased to Rs.5,60,000/-. This order was upheld by the High Court on the ground that it was a discretionary order and ought not to be interfered with by the High Court. This order was challenged by the West Bengal State Electricity Board before the Supreme Court. Taking into consideration the fact situation of that particular case, it was directed that an amount of almost 50% of the demand shall be deposited in Court pending disposal of the suit. Mr. Mitra would be right to the extent that the judgment of the Supreme Court was in the facts and circumstances of that case. But then all judgments are rendered in the facts and circumstances of a particular case. It is the ratio decidendi, which constitutes the binding precedent, unless distinguished. In the aforesaid case i.e. W.B. State Electricity Board (supra) the rationale for directing the deposit of Rs.12.00 lakh is contained in the following four lines of Paragraph-4 which is reproduced below:- "Normally, in matters of money claim, at least half of the amount would be directed to be deposited. In the situation obtaining in this case, when the appellant is obligated to supply electrical energy to the respondents, an equal obligation has to be cast on the respondents to pay the amount subject to determination of controversy in the suit." (5) In our opinion, the aforesaid rationale is binding on all the Courts in this country in view of Article 141 of the Constitution of India. We may also notice here an additional justification given by Mr. A. K. Mitra for insisting on cash security. He submits that certain amount of cash is required by the appellant CESC Ltd. to provide the facilities for which it has been created. Learned Senior Counsel has submitted that CESC Ltd. cannot run on bank guarantees. Taking into consideration the entire facts in this matter as also the wider interest of the public, we are of the considered opinion that the appellant is justified in making a demand that at least 50% of the amount claimed ought to be deposited in cash instead of Bank Guarantee. We may also notice here that the requirement for cash deposit is not unknown even in statutory provisions. We may also notice here that the requirement for cash deposit is not unknown even in statutory provisions. For instance Section 127(2) of the Electricity Act, 2003 provides that "No appeal against an order of assessment under sub-section (1) shall be entertained unless an amount equal to half of the assessed amount is deposited in cash or by way of bank draft with the licensee............." (6) In the present case, as the appeal has already been deckled, the demand has been raised on the basis of the order passed by the appellate authority. The respondents have challenged the demand by way of writ petition in Court. Therefore, the controversy between the parties is yet to be determined. If anything, the matter has been decided in favour of the appellant. The position of the writ petitioners herein cannot be any better than a consumer who avails of a remedy of appeal under a statute such as the Electricity Act, 2003. We may notice here that Mr. S. N. Mitra. learned Counsel for the respondents has been at pains to point out that the present proceedings are covered by the Old Electricity Act of 1910 under which there is no such provision of any cash deposit. We, therefore, make it clear that the reference to Section 127 of the Electricity Act of 2003 is only by way of analogy to demonstrate the rationale or justification for securing the amount due in cash rather than by a bank guarantee. (7) In view of the above, the appeal is allowed. We modify the order passed by the learned Single Judge and direct that the amount of Rs.11,00,000/-shall be deposited by the respondents with CESC Ltd., within a period of three weeks from date hereof. Deposit of this amount shall be subject to the decision of the writ petition. In case the writ petition is ultimately allowed, the amount shall be adjusted by CESC Ltd. against the future bills. In such case the adjustment shall be of the amount deposited together with the interest that would have accrued if, the amount had been invested with a Nationalised Bank in short term fixed deposits. In case the amount is not deposited within the stipulated time, the CESC Ltd. shall be at liberty to take appropriate steps in accordance with law. In such case the adjustment shall be of the amount deposited together with the interest that would have accrued if, the amount had been invested with a Nationalised Bank in short term fixed deposits. In case the amount is not deposited within the stipulated time, the CESC Ltd. shall be at liberty to take appropriate steps in accordance with law. Parties are at liberty to make a prayer before the learned Single Judge for expeditious disposal of the writ petition. Xerox certified copy of this order be made available to the parties upon compliance of usual formalities.