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Madhya Pradesh High Court · body

2009 DIGILAW 904 (MP)

JINDAL STRIOS LTD v. M P STATE ELECTRICITY BOARD

2009-08-03

DIPAK MISRA, R.K.GUPTA

body2009
Judgment ( 1. ) AS the factual backdrop and the question of law involved are common in all these writ appeals, they were heard analogously and are being decided by this common order. ( 2. ) THE present writ appeals are preferred by the appellants challenging the orders dated 30. 04. 1997 passed by the learned Single Judge in W. P. Nos. 4700/ 1996, 2318/1996,4723/1996 and 2866/1996 by which the writ petitions filed by the petitioners have been dismissed. ( 3. ) THE brief facts are that all the writ petitioners had challenged the notification dated 24. 01. 96 issued by the M. P. State Electricity Board (for short, the Board)was published in the gazette of M. P. dated 10. 5. 96. They also challenged the consequent action taken by the Board. The aforesaid notification was challenged on the ground that the same had the effect of amending and modifying the agreement under which electricity was being supplied to them. It was submitted by them that without hearing the appellants, the Board could not have withdrawn the condition of paying the interest to them. The Board had agreed to pay interest on the security deposit. Subsequently by way of notification dated 24. 1. 96 the clause relating to payment of interest in the agreement was deleted. . ( 4. ) THE learned Single Judge dismissed the petitions holding that there was material on record justifying the issue of the said notification in view of the financial position of the Board. The Learned Single Judge relied upon the judgment passed in case of Ferro Alloys Corpn. Ltd. Vs. A. P. State Electricity Board and another 1993 Supp (4) SCC 136. In paragraphs 16 and 24 of the judgment passed by the learned Single Judge, the following conclusion has been recorded. "16. Shri Sapre and Shri Shrivastava, learned counsel placing reliance on para 135 of the judgment contended that whenever the electricity boards have framed a provision for payment of interest after adjusting its finances at a stated rate, they cannot be allowed to delete such a clause. "16. Shri Sapre and Shri Shrivastava, learned counsel placing reliance on para 135 of the judgment contended that whenever the electricity boards have framed a provision for payment of interest after adjusting its finances at a stated rate, they cannot be allowed to delete such a clause. They contend that the provision for interest, as the Supreme Court observed, has been made by the various boards having regard to the overall budgetary and financial position, further, keeping in view the quantum and mode of security deposit and billing and recovery practice, the Board therefore, cannot withhold payment of interest on the basis of the said judgment. The argument loses sight of the further observations made by the Supreme Court. The Supreme Court has observed that:- "however, if there is any change in the circumstances affecting the budgetary and financial position, the Board can examine the case and decide the future course of action. But any change resulting in non-payment or reduction of interest will have to be justified by cogent reasons and materials having a bearing on the financial position of each Board and facts and circumstances of each case. " The Supreme Court did not touch the matter of haryana Electricity Board which had dispensed with payment of interest, as the matter was pending in the High Court. From the observations of the Supreme Court, it is clear that the changed circumstances, which affect the budgetary and financial position, may permit the Board to change the course of action, but the Board has to justify the withdrawal of the condition by cogent reasons. In the return filed by the Board it is clearly shown that the Board is required to take loan from various financial institutions and it is required to pay interest. Various courts, including the Supreme Court have considered the manner of billing and practice of payment regarding consumption. It cannot be doubted that after the consumer exploits energy for one full month, the Board takes the reading of the same. This process takes about seven days. When the bill is issued to the consumer at least seven days time is to be given to the consumer for making the payment. It cannot be doubted that after the consumer exploits energy for one full month, the Board takes the reading of the same. This process takes about seven days. When the bill is issued to the consumer at least seven days time is to be given to the consumer for making the payment. If the consumer does not make the payment within the period aforesaid, the Board is obliged to issue a dis-connection notice again granting seven to fifteen days time, till by that time the consumer goes on exploiting the energy. The Board virtually recovers the amount of the energy charges after the energy has already been consumed. If the Board for the purposes of maintaining its liquidity and making the funds available makes a provision of the deposit, it cannot be said to be illegal. The,courts in the country have held that the board is entitled to ask for the security deposit. The question still would be whether the Board is liable to pay the interest or is entitled to withdraw from the condition which it has already entered into regarding payment of interest. So far as the first question is concerned, the Supreme Court in the matter of Ferro Alloys Ltd. (supra) has held that there is no liability on the electricity Board either under the statute or in law or equity to pay interest. Regarding the second question, the Supreme Court has observed that if the change results in non-payment or reduction of interest then the Board has to justify its action by cogent reasons and material having a bearing on the financial position of the Board. In the cases in hands,, the return of the Board clearly shows the reasons which in the opinion of this Court are cogent and have material bearing on the issue that because of the losses the Board was forced to withdraw from the condition of payment of interest. If the Board either under the statute or common law or equity is not liable to pay interest on the security deposit and is also in a position to justify its action then this Court would not examine the correctness of the details of the budgets, etc. given by the Board. 24. If the Board either under the statute or common law or equity is not liable to pay interest on the security deposit and is also in a position to justify its action then this Court would not examine the correctness of the details of the budgets, etc. given by the Board. 24. The Court does not sit as a Court of appeal, but merely reviews the manner in which the decision was made and the material which was produced for coming to the conclusion: In the cases in hand, it is clear that the Board had sufficient reasons to withdraw from the earlier conditions. The Court does not have the expertise to correct the administrative decisions. If the Court is substituting its own decision without the necessary expertise, it may be fallible. " ( 5. ) IN para 24, the following conclusion has been arrived at:- "the Court does not sit as a Court of appeal, but merely reviews the manner in which the decision was made and the material which was produced for coming to the conclusion. In the cases in hand, it is clear that the Board had sufficient reasons to withdraw from the earlier conditions. The Court does not have the expertise to correct the administrative decisions. If the Court is substituting its own decision without the necessary expertise, it may be fallible. " ( 6. ) BEING aggrieved by the order passed by the learned Single Judge, the respective parties filed LPAs challenging the order passed by the learned Single judge. ( 7. ) THE Division Bench is LPA No. 202/97 (old) and the new number of which is W. P. No. 841/08 set aside the judgment passed by the learned Single Judge. Para 17 of the judgment passed by the Division Bench reads as under: - "17. Mr. Jaiswal, learned senior counsel endeavored hard to impress upon us that when the contract is statutory the Board has the authority to statutorily modify the terms and condition. On a careful and purposeful reading of the provision and what their lordships have said in the case of M/s. Hyderabad Vanaspathi (supra) we are of the considered view that the said provisions deal with the supply of electricity and the framing of uniform tariff and making of rehabilitation. On a careful and purposeful reading of the provision and what their lordships have said in the case of M/s. Hyderabad Vanaspathi (supra) we are of the considered view that the said provisions deal with the supply of electricity and the framing of uniform tariff and making of rehabilitation. On the contrary, the law laid down in the case of Bihar State Electricity Board (supra) would apply on all fours to the present case. That was what exactly said in paragraph 158 of Ferro Alloys case. We would like to clarify the position that the Board may refuse to incorporate any condition for grant of interest while demanding security deposit and no consumer can compel the board or challenge the said clause as arbitrary only on this facet or spectrum but once the Board has made provision for grant of interest, keeping in view its financial position and taking objective view of the matter as has been held by their Lordships, the same cannot be withdrawn. As the present notification has withdrawn the said benefit, we are impelled to hold that such action by the Board is not correct and we have no hesitation in stating that the Board was bound to pay interest as per the agreement as well as on the basis of the general terms and conditions of the agreement to the present appellant and cannot deny the same on the basis of the notification dated 24. 1. 96. " ( 8. ) BEFORE the Supreme Court, various Civil Appeals were registered and the numbers of which are 1026/2006, 1027/2006, 1028/2006, 1031/2006, 1029/2006, 1030/2006, 1032/2006, 1033/2006, 1034/2006 and 3223/2006. The Supreme Court expressed the view in para 7 and 8 of its judgment which reads as under:- "7. Since the fate of these appeals primarily depends upon the view expressed by this Court in Ferro Alloys case (supra) at paragraph 158, this paragraph needs to be noticed. The same reads as under: "in view of the above finding, upholding the clause relating to nonpayment of interest, for example, Rajasthan and Orissa, what is to happen to such of those cases where interest is provided like andhra Pradesh, Uttar Pradesh and Bihar? In all those cases wherever the Electricity Boards have framed a provision for payment of Interest after adjusting its finances at a stated rate they cannot be allowed to delete such a clause. In all those cases wherever the Electricity Boards have framed a provision for payment of Interest after adjusting its finances at a stated rate they cannot be allowed to delete such a clause. The provision for interest has been made by the various Boards having regard to the overall budgetary and financial position and further, keeping in view the quantum and mode of security deposit and billing and recovery practice. Nor again, could the Board withhold payment of interest on the. basis of this judgment. However, if there is any change in the circumstances affecting the budgetary and financial position,the Board can examine the case and decide the future course of action. But any change resulting in non-payment or reduction of interest will have to be justified by cogent reasons and materials having a bearing on the financial position of each board and facts and circumstances of each case. " (Underlined for emphasis) 8. Indisputably a bare reading of paragraph 158 quoted above shows that it is permissible for the Board to take a decision relating to the desirability for payment of interest on security deposits or otherwise. " At the end, the Supreme Court remanded the case to this Court for fresh consideration of the matter in the light of what has been stated in para 158 of ferro Alloys Case (supra) so far as it relates to power of the Board to delete provision relating to payment of interest on security deposit on the factual scenario. ( 9. ) ON the basis of the same, the matter on remand has come for hearing before us. ( 10. ) COUNSEL for the respective parties submitted that an agreement was entered into on 1. 1. 95 for payment of interest on the security deposit and the impugned notification was issued on 24. 1. 96. On this basis, it is submitted by them that the changed circumstances would be relevant during the period from 1. 1. 95 to 24. 1. 96 i. e. on the date when the impugned notification was issued for non deposit of interest on the security deposit. Accordingly, it is submitted that any circumstance subsequent to the notification dated 24. 1. 96 would not be relevant in the case so that the Board is justified in issuing the notification. ( 11. 1. 95 to 24. 1. 96 i. e. on the date when the impugned notification was issued for non deposit of interest on the security deposit. Accordingly, it is submitted that any circumstance subsequent to the notification dated 24. 1. 96 would not be relevant in the case so that the Board is justified in issuing the notification. ( 11. ) TO substantiate the submission, the return filed in W. P. No. 2866/96 (Century Textiles and Industries Ltd. "maihar Cement" Vs. M. P. Electricity Board and others) was referred to. We have taken into account additional pleadings submitted by the Board wherein the Board has stated that it was undergoing serious financial difficulties. There had been unprecedented revenue deficit of Rs. 745 Crores in the budget of 1996-97 and the aforesaid loss was likely to be further widened on account of payment of wage revision to the employees to Rs. 800) Crores. They also took us further to show that on 31. 3. 95, the Board has stated that it had borrowed the money from different institutions to the tune of Rs. 3753. 66 Crores. The cash credit was availed for working capital as on 31. 3. 95 to the extent of rs. 18. 34 Crores. The interest liability on the borrowed amount for the financial year 1995-96 was Rs. 650. 91 Crores. It is stated that the notification since was issued on 24. 1. 96, therefore, an attempt made by the Board to justify the notification dated 24. 1. 96 would not be relevant. ( 12. ) THE Board referred to the return filed in W. P. No. 4723/96 and referred to the document, Annexure R/1 in the said case and an attempt was made to show that on the date when the notification was issued i. e. 24. 1. 96, the Board was suffering with deficit which subsequently has also been proved and the assessment of the Board was deficit amount in subsequent years is sufficient to show that on the date when the decision was taken for issuing the notification dated 24. 1. 96, the Boards was justified. ( 13. ) BEFORE we advert to the rival submissions as aforesaid, it would be appropriate for us to refer herein below, para 158 of Ferro Alloys case (supra) which reads as under:- "158. 1. 96, the Boards was justified. ( 13. ) BEFORE we advert to the rival submissions as aforesaid, it would be appropriate for us to refer herein below, para 158 of Ferro Alloys case (supra) which reads as under:- "158. "in view of the above finding, upholding the clause relating to non-payment of interest, for example, Rajasthan and Orissa, what is to happen to such of those cases where interest is provided like Andhra Pradesh, Uttar Pradesh and Bihar? In all those cases wherever the Electricity Boards have framed a provision for payment of interest after adjusting its finances at a stated rate they cannot be allowed to delete such a clause. The provision for interest has been made by the various Boards having regard to the overall budgetary and financial position and further, keeping in view the quantum and mode of security deposit and billing and recovery practice. Nor again, could the Board withhold payment of interest on the basis of this judgment. However, if there is any change in the circumstances affecting the budgetary and financial position, the Board can examine the case and decide the future course of action. But any change resulting in non-payment or reduction of interest will have to be justified by cogent reasons and materials having a bearing on the financial position of each board and facts and circumstances of each case. " ( 14. ) THE Apex Court while remanding the case has also directed the High Court to decide the appeals by a fresh consideration in the light of what has been stated in para 158 of the judgment in Ferro Alloys case. Para 158 of the said judgment has already been reproduced in the earlier part of the judgment. As it is evident from the same, any change resulting in non payment or reduction of interest will have to be justified by cogent reasons and materials having a bearing on the financial position of each Board and facts and circumstances of each case. ( 15. ) KEEPING in view the nature of remand by the Apex Court and also keeping in view para 158 of Ferro Alloys case (supra), the justification has to be given whether there had been cogent reasons and materials with respect to financial position of the Board placed before this Court for arriving at a conclusion that the impugned notification dated 24. 1. 96 is justified. 1. 96 is justified. ( 16. ) IN this context, the discussion with regard to the cogent reasons and materials having a bearing on the financial position of the respondent Board was discussed by the learned Single Judge and we also thought it appropriate to refer para 16 and 24 of the judgment passed by the learned Single Judge in our earlier paragraphs. ( 17. ) IT was the defence stand of the Board in all the writ petitions while filing the return that during the financial year 1995-96, the financial position of the Board was bad and in subsequent years, it has further deteriorated. The return in W. P. No. 4623/96 also reflects the same picture with regard to financial position of the Board. A comparative chart has also been given by the Board with regard to its financial position along with the return filed in W. P. No. 4723/96 and the same is reproduced as under:- ( 18. ) ON a query made by us from the learned counsel for the appellants that whether any rejoinder was filed by the petitioners in the writ petition before hearing of the writ petition, a categorical statement was made that no rejoinder as such was filed. On the basis of the same, it is clear that the facts which were pleaded by the Board to justify their decision by issuing the notification on 24. 1. 96 were not controverted. As argued by learned counsel for the appellants that only the justification has to be seen prior to the date of impugned notification dated 24. 1. 96, we are not prepared to accept the submissions so argued. It is so because a prudent employer like Board has to take its decision particularly a decision which have the financial impact on the Board keeping in view the future prospects. A justification has been given that from 1991 -92, the financial position of the Board was not very sound. With respect to financial position in subsequent years also there had been no improvement. On the contrary, the financial deficit has increased. Thus, on this basis and the facts pleaded by the Board before the writ court and according to us, sufficient justification was given by the Board to justify the issuance of notification dated 24. 1. 96. With respect to financial position in subsequent years also there had been no improvement. On the contrary, the financial deficit has increased. Thus, on this basis and the facts pleaded by the Board before the writ court and according to us, sufficient justification was given by the Board to justify the issuance of notification dated 24. 1. 96. It is also submitted on behalf of the appellants that on the date when the agreement was entered into by the Board with the appellants i. e. 1. 1. 95, the Board was already suffering with the losses yet the Board has agreed to pay the interest. In this reference, we can only say that said submission may, on a first scene look attractive but it has no legs to stand upon. As is evincible from the material on record, there had been circumstances beyond the control of the Board which had the effect of increasing the deficiency and the same is adequately explained by the Board. ( 19. ) IN view of the aforesaid, we do not find any justification to entertain the present appeals and accordingly we uphold the order passed by the learned Single Judge. The writ appeals stand dismissed. There shall be no order as to costs. Appeal dismissed.