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2015 DIGILAW 508 (JHR)

Shree Nanak Ferro Alloys (P) Ltd. v. Jharkhand Urja Vikas Nigam Limited

2015-04-22

SHREE CHANDRASHEKHAR

body2015
ORDER I.A. No. 1801 of 2015 Seeking incorporation of a prayer in the writ petition, the present application has been filed. Initially, the writ petition was filed objecting to the demand raised in letter dated 17.01.2015 and for a direction upon the respondent-Jharkhand Urja Vikas Nigam Limited to permit the petitioner to deposit the security amount by furnishing bank guarantee. The learned counsel for the petitioner submits that in view of the arbitrary demand raised by the respondent-Nigam, the petitioner has filed I.A. No. 1801 of 2015 for incorporating the following prayer: “For declaration that the quantum of security provided under Clause 10.2 and 10.4 of the Supply Code Regulations, 2005 is in the teeth of the provisions of Section 47 of the Electricity Act, 2003 and the amount of security required by the respondents cannot be said to be a reasonable security.” It is stated that the foundational facts have been pleaded by the petitioner in the writ petition and the additional prayer for which the petitioner has filed I.A. No. 1801 of 2015 is a pure question of law. If the present application is allowed, it would not cause any prejudice to the respondent-Nigam. Considering the above facts, I.A. No. 1801 of 2015 is allowed. W.P.(C) No. 599 of 2015 Aggrieved by demand for furnishing additional security in terms of Clause 10.2 of the Electricity Supply Code Regulations, 2005 whereby, the petitioner has been directed to deposit the balance security amount of Rs. 2,98,22,863/, the petitioner has sought quashing of letter dated 17.01.2015. A further prayer directing the respondent-Nigam to permit the petitioner to furnish bank guarantee for paying the additional security has also been made in the writ petition. 2. The petitioner is a HTSS consumer which has been sanctioned a contract demand of 6200 KVA. The petitioner has Ingot Manufacturing Arc furnace Unit at Rauta, Ramgarh. Initially, the petitioner made payment of Rs. 55,67,750/- as security deposit. Thereafter, the petitioner has enhanced its load from 3000 KVA to 6200 KVA in the month of April, 2012 and at the time of enhancement of load it has further deposited Rs. 78,00,000/- by way of security deposit and it is stated that the petitioner has been making regular payment of the electricity bills raised by the respondent-Nigam. Vide letter dated 18.04.2012, a demand for additional security of Rs. 78,00,000/- by way of security deposit and it is stated that the petitioner has been making regular payment of the electricity bills raised by the respondent-Nigam. Vide letter dated 18.04.2012, a demand for additional security of Rs. 1,23,43,473/- was raised, against which the petitioner submitted a representation on 09.05.2012 however, the respondent-Nigam reiterated the demand vide letter dated 23.05.2012. The action of the respondent-Board was challenged by the petitioner in Case No. 08 of 2012 which was dismissed vide order dated 10.09.2012. In the meantime, the respondent-Nigam permitted the HTSS consumers to furnish bank guarantee for the balance amount of security deposit however, the provision for furnishing bank guarantee was also subsequently withdrawn and therefore, batch of writ petitions were filed vide W.P.(C) No. 7497 of 2012 and batch cases. The Writ Court permitted the writ petitioners to deposit the additional security amount in six installments. The order passed in W.P.(C) No. 7497 of 2012 and batch cases was challenged in L.P.A. No. 26 of 2013 along with analogous cases which were also dismissed on 30.01.2013. The respondent-Nigam has now issued letter dated 17.01.2015 directing the petitioner to furnish additional security deposit as indicated above. 3. Heard the learned counsel for the parties and perused the documents on record. 4. The learned counsel for the petitioner submits that Section 47 of the Electricity Act, 2003 provides that a distribution licensee may require any person, who requires supply of electricity to give “reasonable security”. Stressing on the expression “reasonable security”, the learned counsel for the petitioner submits that the provision under Clause 10.2 of the Electricity Supply Code Regulations, 2005 whereunder, a consumer is required to deposit security amount equal to 3 months' average billing amount is unreasonable and arbitrary. It is further submitted that Clause 10.1 of the 2005 Regulations provides for prepayment meter to be provided to the consumer however, the respondent-Nigam has failed to provide a prepayment meter and therefore, it cannot insist upon furnishing security deposit as provided in Clause 10.2 of the Regulations. Taking exception to Clause 10.4 of the Regulations, the learned counsel for the petitioner submits that on the basis of Clause 10.4, the respondent-Nigam has raised demand vide letter dated 17.01.2015. 5. As against the above, Mr. Taking exception to Clause 10.4 of the Regulations, the learned counsel for the petitioner submits that on the basis of Clause 10.4, the respondent-Nigam has raised demand vide letter dated 17.01.2015. 5. As against the above, Mr. Ajit Kumar, the learned counsel for the respondent-Nigam refers to Clause 10.1 of the Regulations and submits that the petitioner has been sanctioned HTSS electric connection on the condition of depositing security amount. A postpaid meter has been installed at the Unit of the petitioner-Company and therefore, the petitioner cannot raise a grievance that no prepayment meter has been installed at the petitioner's Unit. It is further submitted that a bill for additional security deposit has been raised on the basis of average of monthly actual billing and accuracy of the monthly bill has not been objected to by the petitioner and therefore, the petitioner cannot raise a grievance as to provision under Clause 10.4 of 2005 Regulations. It is further submitted that the provision under Clause 10.1, 10.2 and 10.4 are in consonance with the power conferred upon the respondent-Nigam under Section 47 of the Electricity Act, 2003. The learned counsel for the respondent-Nigam relies on decision in “Ferro Alloys Corpn. Ltd. Vs. A.P. State electricity Board & Anr.”, 1993 Supp. (4) 136. 6. The relevant clauses of Jharkhand Electricity Supply Code Regulations, 2005 are extracted below: 10.1 Distribution Licence may require any person to whom supply or additional supply of electricity has been sanctioned to deposit security amount. Provided that a person to whom supply of electricity has been sanctioned through prepayment meter shall not be required to deposit any security amount. Provided further that a consumer who has deposited security amount and subsequently opts and is allowed to receive supply through a prepayment, shall be refunded such security deposit by way of adjustment to the prepayment credit to the account of such consumer from which the value of his future consumption is to be deducted. 10.2 The amount of security mentioned in Clause 10.1 of these Regulations above shall be equal to the three months average billing amount. For the purpose of determining the average billing under these Regulations, the average of the billing of the consumer for the last twelve months or in case where supply has been given for the shorter period, the average of the billing of such shorter period, shall be calculated. For the purpose of determining the average billing under these Regulations, the average of the billing of the consumer for the last twelve months or in case where supply has been given for the shorter period, the average of the billing of such shorter period, shall be calculated. Provided that in the case of seasonal consumer, the average of the billing for the season for which supply is provided shall be calculated. Explanation “seasonal consumer” means consumer who normally use electricity supply for a purpose which operates for a particular part of the year not exceeding nine (9) months. 10.3 Where the distribution licensee requires security from a consumer at the time of commencement of service, the amount of such security shall be estimated by distribution licensee based on the tariff, Contract Demand/Sanctioned Load, Load Factor, Diversity Factor, and number of working shifts. 10.4 The Distribution License shall recalculate the amount of security based on the Actual billing of the consumer once in each financial year. Where the amount of security deposited by the consumer is more than 110% of such calculated security for the financial year the licensee shall refund the excess amount over the calculated security amount to the consumer by way of adjustment in the minimum possible number of succeeding bills of the consumer. In case where the amount of security deposited by the consumer is less than 90% of the such security calculated for the financial year the licensee shall be entitled to serve notice to the consumer to deposit the amount of shortfall in security from the calculated security amount which 30 days and if the consumer fail to deposit the security amount within due dated his service connection may be disconnected. 6. Before adverting to the rival contentions, provisions of the Electricity Act, 2003 may usefully be noticed. Section 43 of the Act casts a duty upon the distribution licensee to give supply of electricity within one month to an applicant. In consonance with the duty cast upon the distribution licensee, power has been conferred upon the distribution licensee under Sections 45, 46 and 47 of the Act. Section 45 empowers the distribution licensee to recover charges of tariff fixed and to fix the condition for supply. Section 46 empowers the distribution licensee to recover charges from a person requiring supply of electricity or any other expenses reasonably incurred. Section 45 empowers the distribution licensee to recover charges of tariff fixed and to fix the condition for supply. Section 46 empowers the distribution licensee to recover charges from a person requiring supply of electricity or any other expenses reasonably incurred. In continuation to the powers conferred upon the respondent-Nigam by the aforesaid provisions, the Act further provides requiring a consumer to furnish “reasonable security” as may be determined by the 2005 Regulations. In the Electricity Supply Code Regulations, 2005, as noticed above, under Clause 10.2 a consumer is required to deposit security amount equal to 3 months' average billing amount. Clause 10.4 provides the manner of calculation which would be based on the actual billing of the consumer. The Electricity Supply Code Regulations, 2005 has been framed in exercise of power under Section 181(2)(x) read with Section 50 of the Electricity Act, 2003. Section 86 of the Electricity Act, 2003 deals with functions of the State Commission which includes determination of tariff, regulation of electricity purchase and procurement process of distribution licensees, facilitating intra-State transmission and wheeling of electricity, licences to persons, promotion of cogeneration and generation of electricity from renewable sources of energy, adjudication of the dispute between the licensees and generating companies, levy of fee etc. Thus, a wide range of functions are discharged by the State Commission. The State Commission in exercise of power conferred by 2003 Act has formulated the Electricity Supply Code Regulations, 2005. As noticed above, in Clause 10.1, 10.2 and 10.4 of the Regulations, sufficient mechanism has been indicated safeguarding the interest of the consumer. Merely because a consumer is required to furnish security deposit equal to 3 months' average billing amount would not make the provision under Clause 10.2 arbitrary or unreasonable. In “Ferro Alloys Corpn. Ltd.” (supra), the Hon'ble Supreme Court has held that the Electricity Board is competent to make regulations prescribing condition of security deposit by consumers for supply of electricity. Though, the issue of “security deposit” was examined by the Hon'ble Supreme Court prior to enactment of the Electricity Act, 2003, while holding that, “three months' security deposit cannot be characterized either unreasonable or arbitrary”, the Hon'ble Supreme Court has taken note of the factors for the same in the following words: 105. “In practice, some time is also taken between the period allowed for payment and the notice of disconnection. “In practice, some time is also taken between the period allowed for payment and the notice of disconnection. At the same time, there is no obligation that the consumer must use only a particular quantum of electricity. He could even consume more than the average consumption. The Board after 2 1/2 months recovers amount for the electricity supplied by it. It could charge late surcharge in case of high tension tariff after the expiry of the said period. 106. Thus, it will be clear that the true nature of the transaction in these cases is one of advance payment of charges for consumption of electricity estimated for a period of approximately three months. Such an advance is liable to be made good and kept at the stipulated level from month to month. It is open to the consumer to permit adjustment of the advance in the first instance. Thereafter, he could make good the shortfall in consumption charges and the security deposit before actual disconnection. Actually speaking, it is only after three months the disconnection takes place. Hence, it is like a running current account. 107. The cycle of billing by the Board demonstrates that in the very nature of things, the consumer is supplied energy on credit. The compulsory deposit in the context of billing cycle is hardly adequate to secure payments to the Board by the time the formal bill by the Board is raised on the consumer. In one sense, the consumption security deposit represents only a part of the money which is payable to the Board on the bill being raised against the consumer. Thus, the Board secures itself by resorting to such deposit to cover part of the liability”. 7. The issue of furnishing bank guarantee in lieu of cash deposit for “security deposit” has been answered against the consumers in earlier writ proceeding. It is not in dispute that a postpaid electric meter has been installed at the petitioner's unit and it has furnished “security deposit” initially. Considering the above facts, I am of the opinion that the demand raised by the respondent-Nigam is just, legal and proper and Regulation 10.2 is not in the teeth of Section 47 of the Electricity Act, 2003. Accordingly, the writ petition is dismissed. The petitioner shall deposit the aforesaid amount in 6 equal installments, of which the first installment would be paid within 15 days. Accordingly, the writ petition is dismissed. The petitioner shall deposit the aforesaid amount in 6 equal installments, of which the first installment would be paid within 15 days. The subsequent installments would be paid within 7 days of each calendar month.