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M/s. Jetfab Industries v/s Dakshin Gujarat Vij Co. Ltd.

    Second Appeal No. 234 of 2013

    Decided On, 09 July 2014

    At, High Court of Gujarat At Ahmedabad


    For the Appellant: Tarak Damani, Advocate. For the Respondent: Lilu K. Bhaya, Advocate.

Judgment Text

1. Whether the appellant herein, who was a consumer of respondent electricity company, could dispute and deny the liability to pay minimum electricity charges on the ground of non supply and non-consumption of electricity, is the question involved and addressed in the present appeal.

2. The appellants-original defendants challenge judgment and decree dated 19th December, 2012, of learned 4th Additional District Judge, Bharuch, allowing the appeal of the plaintiff company-respondent herein, in turn setting aside the judgment and order of the trial court dismissing the suit. The first appellate court in other words decreed the suit, and directed the appellants to pay Rs. 1,04,870.81 ps. towards the bill for minimum electricity charges, with 9% interest from the date of the suit till realisation.

3. Only the relevant facts, shorn off unnecessary details, may be stated. The plaintiff-the erstwhile Gujarat Electricity Board, later converted into a company, a statutory entity, instituted Special Civil Suit before the court of Joint Civil Judge (S.D.), Bharuch, for recovery of amount of minimum electricity charges. The appellants-defendants had applied to the Deputy Engineer, GIDC, Sub-division, GEB, Ankleshwar, for getting electricity connection of 50 H.P. for industrial purpose. The defendants consumer was a partnership firm engaged in the business of mining industry. He was registered as consumer at Consumer No. 08903/00469/8. He also paid security deposit amount. It was the case of the plaintiff electricity company that the defendants company was to be given the electricity supply on 26.07.1994. The plaintiff issued bill for Rs. 1,10,870.81 ps. towards minimum electricity charges after adjusting the security deposit Rs. 6000/-. The suit came to be filed for recovery of Rs. 1,04,870.81 ps. by the company stating that as per the condition in the agreement and written undertaking, for two years from September-October, 1994, the defendants-appellants-unconnected consumer was liable to pay the minimum charges.

3.1. In the written statement filed (Exh. 9), the main ground of contest of suit prayers by the defendants was that the electricity was not actually supplied and they never consumed electricity. It was contended that the cables were not fitted by the plaintiff. Hence, not liable to pay any charges. It was contended that in view of Section 26 and Section 49 of the Electricity Supply Act, 1948, the charges become payable only upon supply of electricity was given.

3.2. The trial court dismissed the suit of the Electricity Company by its judgment and decree dated 30.07.2001. As noted, the first appellate court allowed the plaintiff's appeal. The aggrieved appellants preferred this Second Appeal.

4. Learned advocate Mr. Tarak Damani for the appellants emphasised on the aspect that the appellant firm was an unconnected consumer and the electricity supply was not started. He vehemently submitted that when there was no actual consumption of the power, the appellant could not be fastened with liability of paying electricity charges under the guise of minimum electricity charges. According to learned advocate, even if there was a contract executed, such a condition therein regarding minimum guaranteed charges was quite unreasonable and could not be enforced to fix a liability to pay, and that the fact of non consumption could only be decisive. He further asserted that in his case even the supply was not commenced. It was further submitted that under the provisions of the Electricity Supply Act, 1948, the respondent company was entitled to charge and earn revenue only if the electricity was supplied and consumed. He submitted that the judgment of the Trial Court was a correct appreciation of facts and law.

4.1. On the other hand, learned advocate Ms. Lilu Bhaya for the respondent Electricity Company heavily relied on the Supreme Court decision in Bihar State Electricity Board, Patana v. M/s Green Rubber Industries and others [(1990) 1 SCC 731], to submit that this kind of condition is held to be reasonable and the consumer is liable to pay the minimum charges.

5. The facts revealed from the records showed that the appellant Jet-Fab Industries-a partnership firm, applied to the then Gujarat Electricity Board on 27th July, 1993 for getting electricity connection at its industrial place-plot No.7004, GIDC, Ankleshwar. The partnership agreement was at (Exh. 17). The said application (Exh. 15) signed by the partner acting on behalf of the firm, showed that it was for 50 H.P. alongwith Exh. 15 application. The appellant consumer executed separate undertaking/the agreement (Exh. 16) on 7th December, 1993, which was duly executed and signed for the firm and competent authority of the Board. Thereunder, the consumer agreed to pay the monthly minimum charges at the rate agreed and also at the enhanced rate, if in future the Board hikes rates. The appellants paid security deposit amount. The Board issued notice dated 5th September, 1994, to the appellants stating that it was ready for starting the supply of electricity and that all preparations were made and the consumer was asked to complete necessary formalities and get the electricity supply commissioned within three days. The supply was not received for some reason by appellants, consequently, the plaintiff Board sent bill for minimum charges (Exh. 20).

5.1. In Bihar State Electricity Board (supra), the facts were that the appellants Bihar State Electricity Board had entered into an agreement with M/s Green Rubber Industries, a partnership firm, upon later's application dated July 26, 1978, for supplying the electricity of 60 KVA. On April 13, 1981 gave electricity connection was given. The firm subsequently applied that it may be given 45 KVA instead of 60 KVA and it deposited the requisite sum of Rs. 2700. A fresh agreement was executed on May 2, 1981 and on May 29, 1981, the firm was given fresh connection of 45 KVA. According to the firm it requested the Board on June 19, 1981 to cut off the connection. The firm received the bills for minimum guaranteed charges for the months of June, July, August and September 1981, though according to it no electricity was consumed by it during that period. According to the Board on failure to pay the bills, the supply was disconnected on September 28, 1981. The firm ultimately received a demand notice in October 1981 for the minimum guaranteed charges from June 1981 to August 1981 amounting to Rs. 22,951.50. The firm having not paid the amount, the Board sent a requisition to the Certificate Officer who sent a notice to the firm on July 6, 1984. Rejecting the contention of the firm that it was not liable to pay, the Certificate Officer proceeded to pass an order for attachment of the firm's property wherefore the firm filed a writ petition in the High Court of Judicature at Patna under Articles 226 and 227 of the Constitution of India for quashing the bills as well as the certificate proceedings.

5.2. The Supreme Court interpreted section 22, 23 and 48 of the Electricity (Supply) Act, 1958, and held that the liability of the consumer to pay the minimum guaranteed charges under the agreement was irrespective of consumption of any electricity till termination of the contract. It observed that though the agreement was in standard form, the standard clause of the kind were widely adopted because experience showed that they facilitate the supply of electric energy. It was stated by the Supreme Court,

"It is a type of contract on which the conditions are fixed by one of the parties in advance and are open to acceptance by anyone. The contract, which frequently contains many conditions is presented for acceptance and is not open to discussion. It is settled law that a person who signs a document which contains contractual terms is normally bound by them even though he has not read them, even though he is ignorant of the precise legal effect. In view of clause 4 having formed one of the stipulations in the contract along with others it cannot be said to be nudum pactum and the maxim nudum pactum ex quo non oritur actio does not apply." (para 23)

5.2.1. The Apex Court held that the condition was not unreasonable, and explained and elaborated thus,

"Considered by the test of reasonableness it cannot be said to be unreasonable inasmuch as the supply of electricity to a consumer involves incurring of overhead installation expenses by the Board which do not vary with the quantity of electricity consumed and the installation has to be continued irrespective of whether the energy is consumed or not until the agreement comes to an end. Every contract is to be considered with reference to its object and the whole of its terms and accordingly the whole context must be considered in endeavouring to collect the intention of the parties, even though the immediate object of enquiry is the meaning of an isolated clause. This agreement with the stipulation of minimum guaranteed charges cannot be held to be ultra vires on the ground that it is incompatible with the statutory duty. Differences between this contractual element and the statutory duty have to be observed. A supply agreement to a consumer makes his relation with the Board mainly contractual, where the basis of supply is held to be statutory rather than contractual. In cases where such agreements are made the terms are supposed to have been negotiated between the consumer and the Board, and unless specifically assigned, the agreement normally would have affected the consumer with whom it is made, as was held in Northern Ontario Power Co. Ltd. v. La Roche Mines Ltd.[1938 (3) ALL ER 755 (PC)]"

5.3. Also in Raymond Ltd. v. M.P. Electricity Board [(2001) 1 SCC 534], the Supreme Court was dealing with a similar covenant in a contract between Electricity Company and its consumer providing for payment of minimum guaranteed charges of supply. The court observed and held,

"We have carefully considered the submissions of the learned counsel appearing on either side, in the light of the provisions of the 1910 Act and 1948 Act, the contract entered into between the parties, the general conditions for supply and the tariff rates prescribed as well as the governing principles as laid down by this Court. The terms and conditions of supply, as envisaged in the contract and the statutory provisions and general conditions have been standardised for uniform application among consumers with variations merely necessitated by the different classes or categories of consumers and there is no scope otherwise for expecting any scope for individual or free bargaining right in this regard by each consumer with the Board. Therefore, it is futile for a consumer to contend that the Board was at the dictating end and the parties were not equally positioned in settling the terms of the contract."

6. Re-visiting the present case, the factum of application for electricity connection made by the appellant and appellant having executed agreement (Exh. 15 and Exh. 16) were proved. In the agreement executed, the appellant undertook to abide by the conditions thereof, which included a condition regarding liability to pay the minimum charges. The contractual obligation was created. The plaintiff gave notice (Exh. 18) stating that it was all set to commission the supply of electricity. It was for the appellant consumer to underwent certain formalities and to receive the electricity. The appellant consumer did not reply or respond to said notice. Nor he stated to the company that it did not want electricity supply.

7. It was, therefore, immaterial whether the appellant actually consumed the electricity. Learned advocate for the appellant, however, harped on the aspect that the appellant was an unconnected consumer and that there was no actual supply. The distinction sought to be made out is misconceived. Once the obligation to pay minimum charges arose from the contract and the contract was not terminated, for the purpose of liability to pay the minimum charges agreed, non-supply of the electricity and non consumption of electricity are at the same pedestal. The following observation by the Aped Court in Raymond Ltd. (supra), brings home the point.

"The further attempt made to contend that the failure on the part of the Board to effect supply up to the contract demand level relieved the consumers from the obligation undertaken to pay a minimum guaranteed sum per month, as though the contract demand is the minimum guaranteed for supply, not only lacks any basis in law or on the terms of the contract governing the supply but also directly runs counter to the terms in the contract which makes different stipulations relating to contract demand and the minimum guarantee in the form of a portion or percentage of the contract demand only. The question of exonerating the consu

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mer from the liability undertaken to pay minimum guaranteed charges for a month and billing only for the actual consumption of energy or allowing a consumer to pay the rates on the actual consumption of electricity measured in units will and can arise and has also been considered for determination only in case the supply by the Board itself fell short of the minimum of energy, the consumption of which goes to make up the minimum guaranteed sum. It is well settled and there could be no controversy over the position that if only the supply was available for consumption but the consumer did not consume so much of energy up to the extent of the obligation cast upon him to pay the minimum charge, there is no escape from the payment of the minimum guaranteed charges, except in very exceptional cases envisaged under clause 23 of the contract and that too subject to the stipulations and restrictions contained therein" (para-16) 8. In view of the foregoing discussion, no ground exists for interference in the impugned judgment and decree. No question much less any substantial question of law arises in this appeal. 9. As a result the judgment and decree dated 19th December, 2012, passed by learned 4th Additional District Judge, Bharuch, in Regular Civil Appeal No. 123 of 2005 is upheld. 10. The appeal is dismissed. Notice is discharged. 11. Registry shall send back the record and proceedings.