Meghalaya Power Distribution Corporation Ltd. & Ors v. Pawan Casting (Meghalaya) Pvt. Ltd. & Ors
2022-09-05
SANJIB BANERJEE, W.DIENGDOH
body2022
DigiLaw.ai
JUDGMENT Sanjib Banerjee, CJ. - In view of the good grounds shown, the marginal delay of about 28 days in preferring the appeal is condoned. The appeal is received on board and taken up for immediate hearing. 2. The appeal is directed against a judgment and order of July 1, 2022 passed on the first respondent's petition under Article 226 of the Constitution. 3. There is no dispute that the first respondent is part of a collective body that goes by the name of Byrnihat Industries Association (BIA) and is registered under the Meghalaya Societies Registration Act, 1983. The members of BIA require electricity for industrial purpose and, as such, the society approached the appellant herein for obtaining electricity supply to the industrial units of its members at a concessional rate. It may be indicated at the outset that the tariff for supply of electricity is fixed by the Meghalaya State Electricity Regulatory Commission in accordance with the statutory requirements. 4. A memorandum of understanding was entered between the appellant and BIA for sale of power to its member industrial concerns at a special rate on or about October 7, 2020. Since the MoU provided for electricity to be supplied by the appellant to the members of BIA at a fixed but concessional rate, the approval of the State Electricity Regulatory Commission was necessary. An application was filed in such regard, which was disposed of by the State Electricity Regulatory Commission by an order of October 19, 2020. The relevant order of the Regulatory Commission incorporated the entirety of the MoU as a part thereof, including the key clause therein pertaining to the concessional rate of Rs.4.90 per kvah, inclusive of demand charges, for an initial period of three years from the date of implementation of the MoU. The supply at a concessional rate, in terms of the MoU, was to be made upon the member industries of BIA maintaining a minimum load factor of 68 per cent. The load factor was to be determined on an average basis and the relevant clause pertaining thereto provided that the load factor would be adjustable over a six- month consumption period between April and September and October and March.
The load factor was to be determined on an average basis and the relevant clause pertaining thereto provided that the load factor would be adjustable over a six- month consumption period between April and September and October and March. The MoU clearly stipulated, in its 17th clause, that the arrangement 'can be terminated by either of the two parties after giving 3 months advance notice.' The State Electricity Regulatory Commission endorsed the entirety of the agreement by setting it out and making it a part of its order dated October 19, 2020. To boot, two sub-paragraphs in the operative part of the order contained at paragraph 21 thereof specifically referred to the reduced rate of tariff and the requirement to meet the minimum load factor of 68 per cent. The Regulatory Commission also indicated that any amendment or modification of any clause in the MoU 'will only be done with the mutual consent of the parties involved and with the approval of MSERC.' 5. The order dated October 19, 2020 by which the MSERC approved the concessional rate at which the appellant would supply power to member industries of BIA signed off with the following observation: 'In the result the Commission approves the petition for special tariff for an initial period of 3 years to the industrial consumers of the Respondent, BIA as per the terms and conditions provided in details of the MOU executed between MePDCL and BIA, as reproduced at para 20 above.' 6. It appears that pursuant to the MoU with the body of the industrial manufacturers at Byrnihat, individual agreements were entered into between the appellant and the individual industrial units for drawing electricity at the concessional tariff. The individual agreements were, indeed, incidental to the MoU and incorporated the terms of the MoU or were completely based on the terms of the MoU.
The individual agreements were, indeed, incidental to the MoU and incorporated the terms of the MoU or were completely based on the terms of the MoU. Thus, the individual agreements which were executed under the umbrella of the MoU, essentially provided for three key matters: that the relevant unit would be entitled to a concessional rate of tariff of Rs.4.90 per kvah; that the relevant industrial unit would have to attain a load factor of 68 per cent calculated on an average basis during the two six-month periods indicated above; and, that either party could terminate the agreement with three months' notice, but till such time that termination became effective, uninterrupted supply would be enjoyed by the industrial unit. 7. According to the appellant, the writ petitioner herein could not meet the load factor of 68 per cent that was required to be maintained. As a consequence, a notice was issued in October, 2021 informing the writ petitioner that the agreement between the appellant and the writ petitioner would stand determined at the end of three months from the date of receipt of the notice. The writ petitioner now disputes that it did not adhere to the minimum guaranteed load factor, though the appellant claims that no objection in such regard was raised earlier. The writ petitioner responded to the notice and sought to raise several issues. Ultimately, by a letter dated January 17, 2022, the appellant herein reiterated that the notice to determine the agreement stood and that the agreement for supply of power under the special rate of tariff would end on January 25, 2022. It is necessary to notice the short letter of January 17, 2022 since the writ petitioner, in course of this appeal, has sought to give a twist to the letter which is impermissible on the plain English terms thereof: 'With reference to the subject and letter cited above, this is to inform you that in pursuance to the Termination Notice dated 26.10.2021, the Agreement for supply of Power under Special Tariff would end on 25th January 2022.
As such, if your Company desire to continue to avail power from the Meghalaya Distribution Corporation Limited (MePDCL), the same shall be considered as per the regular/normal tariff applicable to IHT/IEHT consumers as determined by the Hon'ble Meghalaya State Electricity Regulatory Commission (MSERC) vide order dated 01.04.2021 and after execution of fresh agreement and payment of security deposits as per the contract load. In this regard, in order to avoid discontinuation of power supply to your premises w.e.f. 26.01.2022 and to enable the Corporation to bill accurately, you are requested to take up the matter with the concerned Executive Engineer of MePDCL for completing the above procedures for availing power supply as per the normal/regular tariff applicable for IHT/IEHT consumers latest by 25th January 2022. This is for favour of your kind information and necessary action.' 8. It may do well, at this stage, to notice the prayer in the writ petition carried to this Court: 'In the premises of the aforesaid, it is most humbly prayed that your Lordships may be pleased to admit this Petition, call for records, issue Rule calling upon the Respondent to show cause as to why a writ in the nature of Mandamus not issue directing the Respondent to withdraw, recall and or otherwise forbear from giving effect to or acting under the impugned notice dated 17.01.2022 issued by the Respondent No.4 and further as to why a writ in the nature of Certiorari not issue quashing and setting aside the impugned notice dated 17.01.2022 issued by the Respondent No.4 and on cause or causes being shown and after hearing the parties be further pleased to make the Rule absolute and/or pass such further and or other order/orders as Your Lordships may deem fit and proper.' 9. Thus, the frontal attack made in the writ petition was to the decision of the appellant herein to terminate the agreement for supply of power to the writ petitioner's industrial unit at a concessional rate on the ground that the relevant unit failed to maintain the minimum guaranteed load factor as envisaged in the agreement. Significantly, the appellant did not insist that it would not supply any electricity to the writ petitioner; and gave the writ petitioner the opportunity to obtain electricity at the regular tariff. 10.
Significantly, the appellant did not insist that it would not supply any electricity to the writ petitioner; and gave the writ petitioner the opportunity to obtain electricity at the regular tariff. 10. One of the conditions in the agreement between the appellant and the writ petitioner or in view of the order passed by the State Electricity Regulatory Commission was that if there were any disputes pertaining to the implementation of the MoU, the parties would approach the Regulatory Commission in such regard. Though it is trite law that the mere existence of an alternative forum does not prohibit a party from approaching the writ court under Article 226 of the Constitution in case of any arbitrary action on the part of the State or other authority answering to the description of Article 12 of the Constitution, it is the self-imposed restraint exercised by the writ court to not entertain any disputed question of fact if there is a designated body agreed upon by the parties or statutorily mandated to address the disputes between them. 11. The MoU and, consequently, the agreement between the appellant and the writ petitioner in this case gave an unfettered right to either party to terminate the agreement upon giving three months' notice. It is true that the appellant as a State or other authority could not act arbitrarily and could not have whimsically terminated the agreement without there being some good reason therefor. Indeed, the appellant cited the failure on the part of the writ petitioner to meet the minimum guaranteed load factor as the reason to terminate the agreement. Due notice for three months was issued. It further appears that the appellant considered the writ petitioner's response to the notice and reiterated its position that the agreement with the writ petitioner would stand determined on January 25, 2022. 12. The prayer in the writ petition, read in the context of the subsequent letter of January 17, 2022, implied, in effect, that the writ petitioner approached this Court for specific performance of the agreement with the appellant. Since the agreement contained a termination clause and there were no strings attached thereto, the writ petitioner could never have obtained an order in the nature of specific performance of the contract that, by its very nature, was determinable.
Since the agreement contained a termination clause and there were no strings attached thereto, the writ petitioner could never have obtained an order in the nature of specific performance of the contract that, by its very nature, was determinable. Even if the appellant's status as a State is taken into consideration and it is held that despite the freedom in the termination clause, the appellant as a State had to act rationally and not whimsically, there was some modicum of reason which was furnished by the appellant as to what impelled the appellant to issue notice to determine the agreement. 13. The matter then boiled down to whether the justification proffered by the appellant to determine the agreement was in order. The appellant asserted that the writ petitioner in this case failed to maintain the minimum guaranteed load factor. The writ petitioner disputed the same in its reply and asserts even at this stage that the writ petitioner seriously disputes the appellant's submission that the writ petitioner failed to meet the guaranteed load factor. As a consequence of the appellant's assertion as to the load factor and the writ petitioner's denial thereof, a dispute on facts arose that was not amenable to be adjudicated upon conclusively on affidavit evidence in course of proceedings under Article 226 of the Constitution. 14. In any event, the agreement between the parties or the MoU or the order passed by the State Electricity Regulatory Commission provided for the disputes between the parties to be referred to the Regulatory Commission for adjudication. Once the writ court noticed that the appellant in this case was, in terms of the agreement with the writ petitioner, free to terminate the agreement and the appellant had exercised its right under the relevant clause and even indicated reasons therefor, when the basis for the termination was sought to be disputed on the ground that the assertion as to the failure to meet the minimum load factor was incorrect, the writ court ought to have exercised restraint and not gone into the matter to, in effect, disbelieve the appellant's contention that the minimum load factor had not been met. 15.
15. As is the wont of deviant business entities seeking to take undue advantage, an argument put forth in the appeal on behalf of the writ petitioner is that the MoU or the individual agreement provided for realisation of the additional amount or the quantum of loss occasioned to the appellant as a result of the load factor not being met. The argument is in the nature of a wild goose chase as the right of the distribution company to realise the loss that it has suffered as a consequence of the failure of the consumer to meet certain conditions, is quite distinct from the right of the distribution company to exercise its choice to determine the agreement as a result of its perception that certain conditions intrinsic to the agreement had not been met by the consumer. 16. Just as the appellant in this case will not have been vindicated merely by enforcing the termination but the appellant would still have to pursue the writ petitioner to realise the loss that the appellant has suffered on account of the writ petitioner's perceived failure to meet the minimum load factor, the two aspects cannot be confused for the consumer to suggest that merely because there is a mechanism to realise the loss, the consumer is absolved of its obligation to meet the guaranteed load factor. 17. There is no basis to the writ petition and the writ petitioner appears to have failed to meet a condition precedent as indicated in its governing agreement to be entitled to the beneficial tariff. Since the writ petitioner raised disputes pertaining to the failure to meet the load factor, the writ petitioner had to carry the grievance to the State Electricity Regulatory Commission and not invite the writ court to go into the disputed facts. 18. For the reasons aforesaid, the judgment and order dated July 1, 2022 are set aside and the writ petition is dismissed with liberty to the parties to approach the State Electricity Regulatory Commission in accordance with law. 19. It is made clear that the observations herein are for the purpose of adjudication of the appeal and will not prejudice either party in course of any future proceedings before any other authority, including the State Electricity Regulatory Commission. 20. WA No.33 of 2022 is allowed as above. 21. MC (WA) No.13 of 2022 stands disposed of. 22.
19. It is made clear that the observations herein are for the purpose of adjudication of the appeal and will not prejudice either party in course of any future proceedings before any other authority, including the State Electricity Regulatory Commission. 20. WA No.33 of 2022 is allowed as above. 21. MC (WA) No.13 of 2022 stands disposed of. 22. There will, however, be no order as to costs.