Indian Rare Earths Ltd. , Orissa Sands Complex Unit, Chhatrapur, Ganjam represented by its General Manager v. Managing Director, Southern Electricity Supply Company of Orissa Ltd. ,(SOUTCO), At/P. O. /P. S. -Berhampur, Dist. -Ganjam
2010-03-03
B.P.RAY
body2010
DigiLaw.ai
JUDGMENT B.P. RAY, J. : The petitioner in this writ petition chal¬lenges the demand charges under Annexure-1 series and as well as the disconnection notice under Annexure-9 as illegal, arbitrary and against the principles laid down in the Orissa Electricity Regulatory Commission Distribution (Condition of Supply) Code, 1998. 2. The main contention raised by the petitioner in this writ petition is that the action of the opp. parties in raising the demand charges for the month of October and November, 1999 in their energy bills dated 3.11.1999 and 2.12.1999 and the subse¬quent disconnection notice dated 16.3.2000 are illegal, arbitrary and contrary to the provisions of the Orissa Electricity Regula¬tory Commission Distribution (Conditions of Supply) Code, 1998. 3. The fact of the case is that on 17th October, 1999, due to Super Cyclone, three numbers of 132 KV Electric distribution Towers of Chhatrapur Sub-station supplying power to the petition¬er’s factory were uprooted causing complete disruption of power supply to the petitioner’s factory for 36 days. The power was restored to the premises of the petitioner’s unit on 27th Novem¬ber, 1999. Therefore, the contention of the petitioner is that in absence of supply of power to the petitioner’s premises, the opp. parties cannot levy any demand against the petitioner for the said period. The demand charges as defined in Orissa Electricity Regula¬tory Commission Distribution (Conditions of Supply) Code, 1998 is quoted as hereunder. “85. (1) Monthly demand charges shall be payable by the consumer on the basis of maximum demand and contract demand as determined in the tariff notification. In case maximum demand me¬ter is not provided or the meter has become defective, the month¬ly demand charges shall be payable on the basis of contract demand as determined in the tariff notification. (2) Such monthly demand charges shall be payable during the continuance of the agreement under Regulation 15 even if no elec¬tricity is consumed for any reason whatsoever or supply has been disconnected due to default of the consumer. (3) During statutory power cuts and power restrictions imposed by the licensee, if the restriction on demand is imposed for a period exceeding sixty hours in a month,the monthly demand charges shall be prorated in accordance with the period and quantum of demand restrictions imposed. In all other cases the consumer shall be liable to pay the full demand charges.” 4. Mr.
In all other cases the consumer shall be liable to pay the full demand charges.” 4. Mr. Tripathy,learned Senior Counsel for the petitioner states that in view of the provision laid down in Regulation 85(3), the demand against the petitioner is illegal and arbitrary inasmuch as there was no supply of electricity. Regulation 2(o)-”demand charge” refers to a charge on the consumer based on the capacity reserved for him by the licensee, whether the consumer utilizes such reserved capacity in full or not. Mr. Tripathy,learned Senior Counsel for the petitioner argues that since no power was reserved for the petitioner, there is no question of liability for demand charges. Therefore, the impugned demand cannot be sustained. 5. Mr. Pattnaik, learned counsel for the opp. parties vehemently argues that the provision of Section 85 Sub-Section (3) can be utilized only when there is a statutory power cut and power restriction, which is not the act of God. This being an act of God, the aforesaid provision will not be applicable to the petitioner’s case. 6. Aforesaid provisions go to show that the demand charge relates to a charge on the consumer for keeping reserve the energy to supply him to the extent of contractual demand of energy. A consumer is liable to pay the same if the energy is supplied to the consumer by the licensee whether he draws or utilizes the same or not. The aforesaid relationship of the consumer with the supply company arises out of a contract entered into between them, having mutual obligations. Herein this case, it is seen that by the act of the God, it became impossible for the supply company to supply the power to the consumer. The supervening circumstances in which neither of the parties had any control, made the contract for the same impossible of being per¬formed and as such during the said period, it can be said that the contract was hit by the “doctrine of frustration”. In such a situation the supply company has no obligation to supply power and if any claim would have been made by the consumer for non-supply of energy, it goes without saying that the company could have escaped from the liability thereof taking the resort to the aforesaid doctrine of frustration.
In such a situation the supply company has no obligation to supply power and if any claim would have been made by the consumer for non-supply of energy, it goes without saying that the company could have escaped from the liability thereof taking the resort to the aforesaid doctrine of frustration. When the company could have escaped from the liability by availing of the doctrine of frus¬tration, in such premises, it is fallacious to say that it could have pressed the consumer to pay the tariff charge even though,it has not supplied the power to the petitioner. In this regard Section 56 of the Indian Contract Act, 1872 envisages as follows:- “56. Agreement to do impossible act - An agreement to do an act impossible in itself is void. Contract to do act afterwards becoming impossible or unlaw¬ful. - A contract to do an act which,after the contract is made, becomes impossible, or, by reason of some event which the promi¬sor could not prevent, unlawful, becomes void when the act be¬comes impossible or unlawful. Compensation for loss through non performance of act known to be impossible or unlawful. - Where one person has promises to do something which he knew, or, with reasonable diligence, might have known, and which the promise did not know to be impossible or unlawful, such promisor must make compensation to such promise for any loss which such promise sustains through the non-performance of the promise.” In the case of Satyabrata Ghose v. Mugneeram Bangur and Co. and another reported in A.I.R. 1954 S.C. 44, the Hon’ble apex Court in this regard has held as follows:- “The essential idea upon which the doctrine of frustration is based is that of impossibility of performance of the contract; in fact impossibility and frustration are often used as inter¬changeable expressions. The changed circumstances make the per¬formance of the contract impossible and the parties are absolved from the further performance of it as they did not promise to perform an impossibility. The doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of S.56.
The doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of S.56. To the extent that the Contract Act deals with a particular subject, it is exhaustive upon the same and it is not permissible to import the principles of English law ‘dehors’ these statutory provisions. The decisions of the English Courts possess only a persuasive value and may be helpful in showing how the Courts in England have decided cases under circumstances similar to those which have come before Indian Courts. In deciding cases in India the only doctrine that we have to go by is that of supervening impos¬sibility or illegality as laid down in S.56, taking the word ‘impossible’ in its practical and not literal sense. Section 56 lays down a rule of positive law and does not leave the matter to be determined a according to the intention of the parties. In cases, where the Court gathers as a matter of construction that the contract itself contained impliedly or expressly a term, according to which it would stand discharged on the happening of certain circumstances, the dissolution of the contract would take place under the terms of the contract itself and such cases would be outside the purview of S.56 altogether. They would be dealt, with under S.32 which deals with contingent contracts or similar other provisions contained in the Act. In the large majority of cases, however, the doctrine of frustration is ap¬plied not on the ground that the parties themselves agreed to an implied term which operated to release them from the performance of the contract. The relief is given by the Court on the ground of subsequent impossibility when it finds that the whole purpose or basis of a contract was frustrated by the intrusion or occur¬rence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement. When such an event or change of circumstance occurs which is so fundamental as to be regarded by law as striking at the root of the contract as a whole, it is the Court which can pronounce the contract to be frustrated and at an end.
When such an event or change of circumstance occurs which is so fundamental as to be regarded by law as striking at the root of the contract as a whole, it is the Court which can pronounce the contract to be frustrated and at an end. The Court undoubtedly has to examine the contract and the circumstances under which it was made. The belief, knowledge and intention of the parties are evidence, but evidence only on which the Court has to form its own conclusion whether the changed circumstances destroyed altogether the basis of the adventure and its underlying object. This is really a rule of positive law and as such comes within the purview of S.56 of the Contract Act.” (quoted from the placitum of the judgment) 7. In view of the aforesaid authoritative pronouncement, in this case, as during the period in dispute there being no contractual obligation on either of the parties, levy of demand on the petitioner as made by the opposite party-Company cannot be sustained. 8. In the above circumstances, the writ application stands allowed, consequentially, the demand raised by the opp. party-Company from the petitioner for the period in question stands quashed. There will be no order as to cost. Application allowed.