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Orissa Fibre v/s Orissa State Electricity Board

Company & Directors' Information:- S S S FIBRE LIMITED [Active] CIN = U17110PB2005PLC027818

Company & Directors' Information:- G L FIBRE PRIVATE LIMITED [Strike Off] CIN = U17112PB2010PTC033873

Company & Directors' Information:- INDIA FIBRE PVT LTD [Active] CIN = U17232WB1968PTC027401

    Original Jurisdiction Case 119 of 1971

    Decided On, 17 August 1972

    At, High Court of Orissa


    For the Appearing Parties: G. Rath, K.N. Sinha, R.C. Pradhan, R.K Patra, S. Mohanty, Advocates.

Judgment Text

(1.) A partnership firm -- M/s. Orissa Fibre runs a factory near Sakhigopal in the district of Puri for manufacture of coir products and fibre materials. It entered into an agreement with the Orissa State Electricity Board -- opposite party No, 1 for supply of electric energy to the factory. The agreement was dated 9-7-1964 and was to be enforced for three years. In terms of that agreement, the petitioner undertook to consume a minimum quantity of energy being 131. 75 KVA at the rate of Rs. 5-50 per KVA which amounted to Rs. 722/- per month. In January, 1965, supply of energy began. In November. 1966, the petitioner was required to pay the minimum charge of Rs. 2,093,28 per month. The petitioner protested against the revision of rates made unilaterally by the Board. When the Board took the stand that the higher rate was the outcome of the revised tariff, the petitioner raised a dispute and wanted the matter to be referred to arbitration in terms of the agreement. On 15-11-1967. a fresh agreement was executed for supply of energy to -the petitioner and the agreement came into force with effect from 112-1967 for a period of 15 years. According to the petitioner it has paid all the demands raised for supply made under the new agreement. It called upon the board to refer the dispute arising out of the revised tariffs under the old agreement in respect of the supply made between November. 1966 and november, 1967. The opposite party Board instead of getting the dispute resolved in the manner indicated in the agreement threatened to discontinue the supply and ultimately issued a notice on 11-1-1970, in terms of Section 24 (1) of the indian Electricity Act, 1910. Thereupon the petitioner came before this Court with the present petition asking for a writ a mandamus not to give effect to the notice of disconnection.

(2.) THE State Electricity Board in Its affidavit of opposition does not dispute the fact that the non-payment of the dues leading to the notice of disconnection relates to the period between August, 1966 and November, 1967 -- a period under the old agreement. It is stated that the rate of tariff was revised from 1-8-1966 by the board. Under the Act as also the agreement in question unilateral revision of tariffs is provided and the petitioner is not entitled to question the revision of tariffs. Even though there is no provision in the new agreement that arrears of energy charges under the old agreement can be realised, by necessary implication, the terms dealing with default would equally apply to default in respect of the demands raised under the old agreement. Again, on the admitted position that the petitioner is a defaulter, action under Section 24 (1) of the Indian Electricity Act can be taken by the opposite party-Board,

(3.) IT is conceded by both sides that the provisions of Section 24 (2) of the Indian electricity Act. 1910. do not apply to the present case. The Board exercises statutory powers. It is not disputed that the Board is a licensee within the meaning of the Act. Statutory powers are vested in the Board. It is well settled in law that a public body invested with statutory powers must take care not to exceed or abuse such powers. It must keep itself within the limits of the authority committed to it and it must act reasonably. (See Westminster Corporation v. London and North western Rly. 1905 AC 426). The power conferred under Section 24 (1) of the indian Electricity Act of 1910, is intended to be exercised as a coercive measure to force the consumer to pay the charges to the licensee, Arrear dues in respect of energy bills are certainly claims recoverable through Court. The power vested under Section 24 (1) of the Act is to ensure payment of the energy charges without forcing the licensee to resort to a suit. While the intention of the statute in providing for discontinuance of supply to consumers neglecting to pay charges is clear it cannot be overlooked that such power because it vests cannot be abused.

(4.) THERE is no dispute before us by counsel for the petitioner that the tariff rates could be revised by the Board unilaterally. In fact provision therefore has been made in the Electricity Supply Act of 1948. The agreement of 1964 also stipulated for the same. While the demands at the revised rate would thus not be incompetent, there may be room for raising a bona fide dispute against the rates charged. The petitioner's counsel relies upon two decisions of the Bombay High court in support of his contention that there was in fact a bona fide dispute in regard to the rates payable and until such dispute was determined, the disputed claim could not be taken as an arrear and action could not be taken under Section 24 (1) of the Indian Electricity Act for discontinuance of supply of energy by treating the petitioner as a defaulter. In the case of Nagpur Corporation v N. E L. and p. Co. Ltd. , AIR 1958 Bom 498 Mudholkar, J. (as his Lordship then was) said that if there was a bone fide dispute between the parties as to what was payable, the failure to pay cannot amount to a neglect to pay within the meaning of Section 24 (1) of the Act and, therefore, action could not be taken by the electrical undertaking to discontinue the supply. A writ of mandamus was issued against the licensee not to give effect to the notice under Section 24 (1) of the Act. In a later case M. S. E. Board v. M/s. Madhusudandas. AIR 1966 Bom 160. another Division bench of the Bombay High Court held that even where the agreement prescribed the rates and provided that there could be a revision from time to time by the licensee when a new system of Charging was introduced, the consumer could honestly believe that it was not liable to the charge according to the new tariffs. There could be a bona fide dispute even though according to the Board the demand was wholly justified on the basis of the agreement and until the dispute was resolved there would be no scope for action under Section 24 (1) of the Act. Learned counsel for the petitioner on the authorities referred to above contends that the Board acted high-handedly in refusing to refer the dispute raised by the petitioner for arbitration and at the same time forcing the petitioner to pay the demand raised by it. which was not payable according to the petitioner, by threatening action under Section 24 (1) of the Act. We find the petitioner has really a genuine grievance against the action of the opposite party-Board.

(5.) SECTION 24 (1) of the Act, as we have already indicated, is an additional power vested in the licensee to enforce collection of its dues, Under this scheme of the act. monopoly rights are vested in a licensee and in order that the public utility service may be carried on without inconveniences and with efficiency provision has been made under Section 24 (1) of the Act to effect discontinuance of supply of energy when there is negligence to pay the energy dues. Such a provision is justified on the basis that taking the matter to Court for realisation of the dues would involve lot of time and expenses. In the present case the dues are said to be for the period between August. 1966 and November, 1967. The Board for some reason or other did not enforce the demand by taking action under Section 24 (1)of the Act soon after there was negligence as alleged by it on the part of the petitioner, to satisfy the demand. A new agreement was entered into and according to the petitioner there has been no default at all in the matter of payment of the demands raised under the new a

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greement. In regard to such old claim which is in dispute, the provisions of Section 24 fl) of the Act should indeed not be applied. (6.) WE would accordingly hold that there is a dispute raised by the petitioner in regard to the demands raised by the opposite party No. 1 under the old agreement and it is difficult to hold that the petitioner has neglected to pay such dues. We would accordingly allow the writ application and issue a writ of mandamus restraining the opposite party-Board from enforcing its notice made-under Section 24 fl) of the Indian Electricity Act of 1910. We, however, make it clear that it would be open to the Board to recover its dues in any other manner open to it under the law and our present order would not stand in the way. We do not make any order as to costs. B. K. Ray, J. (7.) I agree.