w w w . L a w y e r S e r v i c e s . i n



The Southern Power Distribution Company of Telangana Limited v/s M/s. Sarwottam Ispat Limited

    Writ Appeal Nos. 120, 121, 122, 123, 136, 173, 174, 175, 177, 179, 180, 181, 183, 184, 185, 186, 187, 188, 190, 191, 192, 193, 194, 195, 196, 197, 198, 200, 203, 206, 207, 208, 209, 210, 211, 212, 213, 214, 215, 217, 218, 219, 221, 222, 223, 224, 225, 226, 227, 228, 229, 230, 231, 232, 234, 235, 236, 237, 239, 240, 241, 242, 243, 247, 257 & 262 of 2021

    Decided On, 25 January 2022

    At, High Court of for the State of Telangana

    By, THE HONOURABLE CHIEF JUSTICE MR. SATISH CHANDRA SHARMA & THE HONOURABLE MR. JUSTICE N. TUKARAMJI

    For the Petitioner: R. Vinod Reddy, SC for TSTRANSCO. For the Respondent: D.V. Nagarjuna Babu, Advocate.



Judgment Text

Common Judgment:

Satish Chandra Sharma, CJ.

Regard being had to the similitude in the controversy involved in the present cases, the writ appeals were analogously heard and by this Common Judgment, they are being disposed of by this Court.

2. The present writ appeals have been filed by the Southern Power Distribution Company of Telangana Limited and others being aggrieved by the Judgment dated 18.01.2021 passed in W.P.No.7130 of 2020 and other connected matters, by which the learned Single Judge has allowed the writ petitions filed by the respondent and others and held that the action of the appellants herein in levying and demanding the minimum charges, both on maximum demand and energy during the closure period on account of Covid-19 pandemic restrictions from the respondents (petitioners in the writ petition) who are high tension consumers as illegal. The learned Single Judge also directed the appellant company to adjust the amounts collected from the HT consumers (writ petitioners). Meaning thereby, the appellant company has been restrained from levying and demanding minimum charges, both on maximum demand and energy in respect of lockdown period.

3. The facts of the cases reveal that the respondent No.1 company (W.A.No.120 of 2021) before this Court is having a manufacturing unit and entered into an Agreement with the appellant company in respect of electricity supply (High Tension Service Connection). The terms and conditions of the agreement in respect of the all the writ petitioners are the same and the clause relating to contracted maximum demand and levy of minimum charges is the same in respect of all consumers. The facts further reveal that the Telangana State Electricity Regulatory Commission (TSERC) has approved the General Terms and Conditions of Supply (GTCS) with effect from 01.01.2006 and various agreements have been executed between the appellant herein as well as the respondents in the writ appeals from time to time. The undisputed facts also reveal that on account of Covid-19 pandemic, the Government of India as well as the respective State Governments have issued various orders in respect of closure of various activities, i.e., declaring the lockdown keeping in view the provisions of the Disaster Management Act, 2005 and the consumers on account of the orders issued by the Government of India as well as the respective State Governments were forced to close down their commercial establishments with effect from 23.03.2020. The restrictions were extended from time to time and the dispute in all the cases relates to Twin Part Tariff System (TPTS), i.e., levying of maximum demand charges and energy charges during the lockdown period. The writ petitioners before the learned Single Judge has prayed for the following reliefs:-

“For the reasons stated in the accompanying affidavit, the petitioner herein prays that this Hon’ble Court may be pleased to issue a writ or order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the respondents 2 to 4 in not collecting the Maximum Demand charges for the month of April, 2020 on pro-rata basis, i.e., working and nonworking periods (closure days) as highly illegal, arbitrary, unjust, irrational, void and in violation of Articles 14, 19(1)(g), 21, 265 and 300-A of the Constitution of India and pass such other order or orders as this Hon’ble Court may deem fit and proper in the circumstances of the case.”

4. The writ petitioners in the light of the aforesaid relief clause came up with an argument that they are entitled for waiver of maximum demand charges and energy charges under the TPTS as the lockdown was beyond their control and the lockdown was imposed on account of the orders issued by the Government of India as well as the State Government. The writ petitioners have stated in the writ petitions that the Government of India has announced the package of Rs.20.00 lakh crores for relief to various industries and Rs.6,900 crores have been allocated to support various power distribution companies in the country and therefore, as TSSPDCL will also get a sum from the amount allocated to the power distribution companies, the same should be given as relief to the writ petitioners also. The writ petitioners also took shelter under Section 18 of the Sale of Goods Act, 1930 and prayed for waiver of the maximum/ minimum demand charges. They also took shelter of force majeure situation by placing reliance upon the Judgment delivered in the case of Northern India Iron and Steel Company v. State of Haryana (1976) 2 SCC 877)and Orissa State Electricity Board v. IPI Steel Limited (AIR 1995 SC 1553)and also placed heavy reliance upon the Judgment delivered by the Madras High Court in the case of South India Spinners Association v. The Chairman-cum-Managing Director, Tamil Nadu Generation & Distribution Corporation Limited (W.P.No.7678 of 2020 & batch, decided on 14.08.2020)on the same subject.

5. The prayer of the writ petitioners was opposed by the appellant herein by placing reliance upon the Judgment delivered in the case of Vijay Syal v. State of Punjab (2003) 9 SCC 401)and Prestige Lights v. State Bank of India (2007) 8 SCC 449)and heavy reliance has been placed upon the agreement, which does not have any such provision to waive maximum/minimum demand charges. It was also argued that the TSSPDCL has supplied the power during the lockdown period and in case the petitioners have not been able to utilise, they will have to pay maximum/minimum demand charges and energy charges and the Distribution Company has paid their dues to the generators for the contracted period. They have paid the applicable fixed charges to generators and also transmission charges.

6. The learned Single Judge has allowed the writ petitions and paragraphs 67 to 85 are reproduced as under:-

“67. The sum and substance of the contentions of the petitioners in the entire batch of cases is that they are H.T. Consumers and they were prevented from consuming electricity due to circumstances beyond their control. Therefore, they were forced to close their Industrial / Commercial Units. There are penal provisions in the lock down restrictions imposed by the Central and State Governments. Thus, they have not consumed the electricity.

68. On the other hand, the sum and substance of the contentions of the TSSPDCL is that it has been purchasing the power from Generators and it was ready to supply the electricity as per the contracted power. It has expressed its readiness and willingness to supply the electricity. It has paid the cost to the generators. Thus, the petitioners, consumers, have to pay the contracted maximum demand and minimum demand as per the agreements entered between the petitioners and the TSSPDCL and also as per GTCS.

69. As stated above, the agreements entered into by the petitioners, the consumers are silent on the aspect of ‘force majeure’, and the doctrine of frustration and the force majeure are the cases which are to be determined on the basis of factual examination. As stated above, the COVID-19 pandemic is a force majeure as declared by the Government of India. In view of the same, the contention of the TSSPDCL that the agreements entered into between the petitioners and the TSSPDCL are silent on the aspect of force majeure and the doctrine of frustration are to be invoked when the lis deals with purely contractual matter cannot be accepted. It is also relevant to note that the State of Telangana, on one hand, issued proceedings asking all the Industrial / Commercial activities to be closed and thus prevented the consumers from consuming electricity, and on the other hand, it cannot claim that it is ready to supply the power etc. Thus, the contentions of the TSSPDCL are self-contradictory.

70. As held by Madras High Court in South India Spinners Association (supra) the HT consumers were actually caught between the devil and deep sea. On the one hand the Government asked them to shut down their establishment and on the other hand TSSPDCL was levying the Maximum Demand from the consumers. If this is allowed to be continued, it will virtually lead to permanent shutting down of the industries. The Madras High Court further held that the financial crunch that is being faced by almost all industries due to the lockdown and the huge challenge they are going to face post the pandemic is now made worse by TANGEDCO by levying the Maximum Demand Charges. TANGEDCO must understand that its attitude will kill the industries and closing down of industries will ultimately have a financial implication on TANGEDCO also. And TANGEDCO was virtually killing the goose that was laying the golden eggs.

71. With the said discussion, the Madras High Court held that the maximum demand charges and the consumption charges levied by TANGEDCO against the HT Consumers is illegal, unsustainable and in violation of the statutory regulations, and accordingly, the Maximum Demand Charges and the compensation towards low PF that have been questioned in the impugned bills raised by the TANGEDCO for each of the consumers who are parties in the batch of writ petitions, is by quashed with certain directions, which are as under:

“a) TANGEDCO shall issue a revised bill to the petitioners by applying Regulation 6 (b) of the Supply Code for the entire period when the establishment was under shut down;

b) If TANGEDCO has already recovered the entire dues from any of the petitioners, the bill shall be reworked in accordance with the direction given in Clause (a) and the excess amount shall be adjusted towards the future bills;

c) If the demand made by TANGEDCO has been adjusted from the security deposit and any of the petitioner has been asked to pay any amount towards additional security deposit on that count, the said claim shall be withdrawn forthwith and the calculation of the additional security deposit shall be independently done under Regulation 5 of the Supply Code and demand/ adjustment shall be done in accordance with the said Regulation;

d) The TANGEDCO shall not levy compensation charges towards low PF from the petitioners during the period of lockdown. Even if such levy is made in future, show cause notice shall be issued to the consumer and an opportunity shall be given to the consumer before levying any compensation under Clause 6.1.1.6 of the Tariff Regulation;

e) If any amount has already been recovered towards levy of compensation charges for low PF from any of the petitioners, the said amount shall be adjusted towards future bills;

f) These directions will apply only for the period during which the establishment was under total lockdown due to the orders issued by the Government and it is made clear that it pertains only to the Minimum Charges payable under Regulation 6(b) of the Supply Code and there is no exemption or concession insofar as the charges payable for the actual consumption of electricity (Energy Charges); and

g) If any of the establishments continue to be under lockdown due to the Government Orders passed in this regard, the minimum charges alone shall be collected till the lifting of the lockdown.”

72. Therefore, the contention of the TSSPDCL that the petitioners herein have agreed to pay all the charges levied by the Company and the Company’s right to vary terms and conditions of the agreement and the Consumers have to pay monthly minimum charges etc. in accordance with the GTCS is not acceptable.

73. The TSSPDCL shall appreciate the fact that running an Industry / Business by any consumer is not that easy. It has to make investment, face labour, pollution and other problems. It has to pay taxes to the departments concerned and also loans to the financial institutions apart from making statutory payments. In the said process, Industries/Commercial establishments are being suffered in many ways including Government Policies, Labour issues, Pollution issues and some times with man-made force majeure, such as dharnas, riots, agitations, strikes etc. The TSSPDCL without appreciating the said aspects, levying maximum demand charges and without considering the requests of the consumers that they have to collect maximum demand charges on pro-rata basis i.e., working and non-working days (closure days). The said approach of the TSSPDCL is unsustainable.

74. The contention of the TSSPDCL is that it would follow the instructions / orders issued by the State and the TSERC. The TSERC has considered the requests of the consumers and also the reduction or deration as specifically mentioned in Clause - 5.9.4.2 of the GTCS and passed certain orders dated 23.04.2020 and 29.04.2020. The consumers without applying for deration of power in compliance of the said orders passed by the TSERC in O.P. Nos.16 and 17 of 2020, dated 23.04.2020 and 29.04.2020 respectively, approached this Court straightaway.

75. As stated above, COVID-19 pandemic is a force majeure. Nobody knows when normalcy is going to be restored. Both the Central and the State Governments have issued lock down restrictions by invoking the powers under Epidemic Diseases Act, 1897. Therefore, the petitioners, HT consumers, are not in a position to apply for deration of power. In Clause 5.9.4.2 of the GTCS, specific procedure is laid down with regard to reduction or deration of power. It is an uncertain situation. Therefore, the petitioners, HT Consumers, cannot be expected to apply for reduction or deration of power, and once normalcy is restored, it can again approach the TSSPDCL with a request to restore the normal power. The said exercise is not within the purview of the petitioners, HT Consumers. The TSSPDCL without appreciating the said fact, insisting the petitioners to comply with the orders of the TSERC mentioned above. Thus, the said approach of the TSSPDCL is not appreciable. The TSSPDCL being instrumentality of the State is expected to be reasonable towards its consumers. In the present case, the TSSPDCL is unreasonable and it is not expected to.

76. It is also relevant to note that when the matters were listed for admission, the learned Standing Counsel for TSSPDCL has submitted that the petitioners have to make a similar representation to the State Government and the TSERC and it is for them to consider and pass appropriate orders. In view of the said submission, this Court has passed interim order granting liberty to the petitioners to make similar representations to the State Government and the TSERC. The State Government and the TSERC were also directed to consider the representations and dispose of the same within a period of ten days. Accordingly, they have passed orders rejecting the request of the petitioners and requested the petitioners to pay the balance amount.

77. In view of the aforesaid contention, the reasons given by the State Government, TSSPDCL and the TSERC in the orders passed by it are not satisfactory and the same are unsustainable in law, more particularly, in view of the law laid down by the Apex Court in Satyabrata Ghose v. Mugneeram Bangur and Company (AIR 1954 SC 44), Energy Watchdog v. Central Electricity Regulatory Commission (2017) 14 SCC 80)and National Agricultural Co-Operative Marketing Federation of India v. Alimenta S.A. (AIR 2020 SC 2681).

78. In view of the above discussion, the action of the respondents in not collecting the maximum demand which is on pro-rata basis i.e., working and non-working period (closure days) is illegal and contrary to the law laid down by the Apex Court.

MINIMUM DEMAND CHARGES:

79. In view of the above discussion, it is apt to refer to Section - 72 of the Act, 2005, which is as under:

“72. Act to have overriding effect.—The provisions of this Act, shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. The provisions of this Act, shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act."

Thus, the provisions of the Act, 2005, are having overriding effect. In view of the same, the contention of the TSSPDCL that the petitioners cannot claim that the agreements entered into by the petitioners, HT Consumers, do not become impossibility on account of the lock down, as long as the relation between the petitioners and respondent No.2 subsists, respondent No.2 is bound to supply power to the petitioners and the petitioners are liable to bound to pay the same etc. is unsustainable. The provisions of the Act, 2005 is having over-riding effect to the provisions of the Electricity Act, 2003 and GTCS and the terms and conditions of the agreement for supply of power entered into between the petitioners, HT Consumers, and the TSSPDCL. As discussed supra, the lockdown restrictions were imposed by the State of Telangana by invoking the powers vested upon it under Section - 2 of the Act, 2005, which is having over-riding effect.

80. Thus, the contention of the TSSPDCL that the petitioners’ claim that maximum demand charges for the month of April, 2020 should be collected on pro-rata basis i.e., working and non-working charges (closure days) is not tenable and goes beyond the GTCS and the regulations framed under the Act, 2003 is also unsustainable. Union of India vide its Notification, dated 19.02.2020, has declared COVID-19 pandemic as a ‘force majeure’. Due to COVID-19 pandemic, the Central Government and the State Governments have issued various orders from time to time declaring the lockdown of various activities including industrial activity under the provisions of the Act, 2005. On account of the said mandatory orders, according to the petitioners, they have closed down their industrial operations w.e.f. 23.03.2020. The said lockdown restrictions were extended from time to time by both the Central and State Governments.

81. It is also relevant to note that considering various aspects, more particularly, the situation of COVID-19 pandemic and the mitigating impact thereof, and also the problems being faced by the electricity consumers, the Government of Punjab vide proceedings dated 07.04.2020, granted certain reliefs to the electricity consumers including the relief that fixed charges for Medium Supply (MS) and Large Supply (LS) Industrial Consumers be exempted for next two months from 23.03.2020 and energy charges may be fixed to commensurate with reduction in fixed charges (single rate), and revised energy charges would be paid by consumers and not to be considered for subsidy.

82. It is also relevant to note that the State of Gujarat has struck a balance by granting concessions to consumers during the pandemic crisis and the electricity charges have been directed to be collected as per the consumption till normalcy is restored. By referring to the same and also various other aspects, the Madras High Court in South India Spinners Association (supra) held that similar formula can be adopted by the State of Tamil Nadu also and the TANGEDCO can be directed to collect the recorded demand till normalcy is restored.

83. In view of the above discussion, it is also declared that the action of the TSSPDCL in levying and demanding the minimum charges, both on the maximum demand and energy during the closure period on account of COVID-19 restrictions from the petitioners - HT Consumers as illegal.

84. To sum up, the Writ Petitions are allowed with the following findings /directions:

(a) COVID-19 pandemic is a force majeure;

(b) since there is no force majeure clause in the agreements, Section - 32 of the Act, 1872 does not apply. However, Section - 56 of the Act, 1872 operates and the doctrine of ‘frustration’ is applicable.

(c) the action of the TSSPDCL in not collecting the maximum demand charges on pro-rata basis i.e., working and non-working days (closure days) as illegal;

(d) the action of the TSSPDCL in levying and demanding the minimum charges, both on the maximum demand and energy during the closure period on account of COVID-19, pandemic restrictions from the petitioners - HT Consumers, as illegal;

(e) the TSSPDCL is directed to adjust the amount collected by it towards minimum charges, both on maximum demand of energy for the closure period by making appropriate calculation;

(f) liberty is given to the respective petitioners to make a representation along with calculation statement to the respondents’ authorities including TSSPDCL to enable them to adjust the same;

85. Accordingly, all the Writ Petitions are allowed to the extent indicated in the above. However, in the circumstances of the case, there shall be no order as to costs.”

7. The learned counsel for the appellants has vehemently argued before this Court that the learned Single Judge has erred in law and on facts in allowing the writ petition by placing heavy reliance upon the Judgment delivered by the Madras High Court in South India Spinners Association (supra). It has been argued that in the aforesaid case, the challenge was on the ground that the TANGEDCO was levying charges in violation of the orders passed by TNERC and also in violation of Regulation 6 of the Tamil Nadu Electricity Supply Code, 2004. It is further contended that a Single Judge of Madras High Court has held that TANGEDCO is bound by the Regulations and Tariff orders and since the TANGEDCO was not acting in conformity with the statutory provisions, the writ petitions were entertained and whereas no such discrepancy was arising in the facts and circumstances of the present case.

8. It has been further contended that the relief claimed by the petitioners cannot be granted as there is a corresponding financial liability upon the appellants. The power is supplied to the writ petitioners pursuant to the agreements executed with the appellants and the appellant is bound to pay the cost of power to the generating units irrespective of the fact that whether the power is consumed or not. The power purchased has necessarily to be used and there is no concept of storage of power and the learned Single Judge has not taken into account the aforesaid crucial aspect while granting relief to the writ petitioners. It has been vehemently argued that the supply agreement being a contract as defined under Section 2(e) and 2(h) of the Contract Act, 1872, Section 56 of the Contract Act and the doctrine of frustration cannot be made applicable in the peculiar facts and circumstances of the case keeping in view the settled proposition of law laid down by the Hon’ble Supreme Court in the case of Naihati Jute Mills Limited v. Khyaliram Jagannath (AIR 1968 SC 522), wherein it has been held that the Courts have no general power to absolve a party from the performance of his part of the contract merely because its performance has become onerous on account of an unforeseen turn of events. It has also been argued that clauses 8 and 10 of the Supply agreement makes it very clear that the writ petitioners have undertaken to pay the maximum demand charges, energy charges in accordance with the tariff orders issued by TSERC and to pay monthly charges even if no electricity is consumed for reasons whatsoever and they are under obligation to comply with the GTCS. It has been further contended that the concept of pro-rata basis is not envisaged in the agreement nor in the GTCS or in the Electricity Act, 2003 and therefore, the finding of the learned Single Judge that the action of the TSSPDCL in not collecting the maximum demand charges on pro-rata basis i.e., working and non-working days (closure days) as illegal is bad in law.

9. It has also been argued that the lis between the parties pertains to financial liability of the writ petitioners and could not have been decided in exercising jurisdiction under Article 226 of the Constitution of India. The writ jurisdiction of the High Court cannot be invoked whereas there is a financial implication de hors the provisions of the statute and the contractual issues in dispute could have been dealt with by the Civil Court and not by the High Court in the manner and method it has been done. It has also been argued that in cases of dispute of private character or purely contractual field or commercial in nature and where no public duty element is involved, a mandamus does not lie and therefore in the light of the fact that the demand raised by the appellants is supported by law, i.e., the tariff issued by the TSERC and the GTCS, the order passed by the learned Single Judge deserves to be set aside. It has also been argued that the competent regulatory authority, i.e., TSERC has rejected the claim for waiver of the maximum demand charges and in the light of the orders passed by the TSERC, the High Court could not have been interfered in the matter especially in the light of the agreements executed between the parties. A prayer has been made for dismissal of the writ petition.

10. The respondents before this Court, who are the consumers, have vehemently argued that the lockdown restrictions were imposed under the provisions of the Disaster Management Act, 2005 and the Epidemic Diseases Act, 1897 by the Central Government and by the State Governments, Section 72 of the Disaster Management is having overriding effect and therefore, the agreements between the appellants and the respondents and the Electricity Act, 2003 will not come in the way of waiving the minimum charges/energy charges. It has also been argued keeping in view the lock down restrictions, consumers were not able to operate industrial establishments/commercial establishments and the distribution companies were also not supposed to supply power during the lockdown period and therefore, the learned Single Judgment was justified in allowing the writ petitions. It has also been vehemently argued that the appellants having failed to place any material before this Court to show that the electrical energy procured by the appellants/distribution companies during the lockdown period got wasted due to non-consumption of power by the industries/commercial establishments during the lockdown period and especially in the light of the fact that the Central Government has sanctioned Rs.6,900 crores to the distribution companies to make good the loss suffered by the distribution companies, the benefit should flow down to the consumers.

11. It has been further argued by learned counsel for the respondents/writ petitioners that the circumstances were beyond the control of the consumers and therefore, they are entitled for proportionate reduction of maximum demand charges and energy charges as held by the Hon’ble Supreme Court in the case of Northern India Iron and Steel Company (supra) even though there is no force majeure clause in the agreement for providing proportionate reduction of maximum demand charges and energy charges. Reliance has also been placed on the Judgment delivered in the case of Orissa State Electricity Board (supra) and it has been argued that in case the consumers are not able to consume the power due to the circumstances beyond their control on account of power restrictions, they are entitled for reduction of maximum demand charges. It has been vehemently argued that keeping in view the impossibility to perform the obligation on the part of the consumer, the contract gets frustrated and in view of Section 56 of the Contract Act, the learned Single Judge was justified in granting relief to the writ petitioners. It has been further argued that the appellants cannot compel the consumers to pay the maximum demand charges and energy charges in full by placing reliance upon the clauses 8 and 10 of the agreements since the said clauses get eclipsed during the lockdown period and the action of the appellants/distribution companies becomes arbitrary and irrational when tested on the touchstone of the Article 14 of the Constitution of India. It has also been argued that during the lockdown period, the consumers suffered heavily as they could not carry out their business activities, they have incurred heavy expenditure in the matter of payment of labour and other ancillary expenditure and therefore, the learned Single Judge was justified in granting relief to the writ petitioners.

12. Lastly, it has been argued that in case the distribution companies have suffered losses on account of the lockdown, the loss can be made good by adjusting the tariff under Section 62 of the Electricity Act, 2003 or by alternatively approaching the State Government for grant of concession. It has been vehemently argued that the order passed by the learned Single Judge does not suffer from illegality, irregularity and the writ appeals deserve to be dismissed.

13. Heard the learned counsel for parties and perused the records. These matters are being disposed of with the consent of the parties at admission stage itself.

14. The facts of the case reveal that large numbers of writ petitions have been filed by companies, partnership firms, proprietary concerns who have obtained High Tension (HT) service connections from the distribution companies with a contracted maximum demand. The undisputed facts of the case make it very clear that on account of Covid-19 pandemic, various orders were passed by the Central Government or by the State Government keeping in view the statutory provisions as contained in Disaster Management Act, 2005 and lockdown was imposed with effect from 23.03.2020. The Central Government has issued various orders from time to time in exercise of powers conferred under the Epidemic Diseases Act, 1897 and the Disaster Management Act, 2005 keeping in view the Covid-19 pandemic and the Government of Telangana has issued G.O.Ms.No.45, General Administration Department, dated 23.03.2020 notifying the lockdown in the entire State of Telangana with immediate effect and also incorporated Regulations in the said Government Order. Regulation 7 of the G.O.Ms.No.45 is reproduced as under:-

“7. All shops, commercial establishments, offices, factories, workshops, godowns etc, shall close their operations. However, production and manufacturing units which require continuous process such as pharmaceuticals, API etc may function. Further, manufacturing units engaged in production of essential commodities like dal and rice mills, food and related units, dairy units, feed and fodder units etc will also be permitted to operate.”

15. The aforesaid regulation makes it very clear that there were relaxations in respect of certain operations and certain industries, which were functional, subject to the terms and conditions mentioned in the Regulations. The writ petitioners, being HT consumers are subjected to TPTS which empowers the appellants/Distributions Companies to collect two types of charges from the consumers viz., maximum demand charges for billing demand (i.e., 80% of CMD or RMD, whichever is higher) and energy charges for actual energy consumed or 50 units per KVA per month for the billing demand, whichever is higher.

16. Section 62 of the Electricity Act, 2003 reads as under:-

“62. Determination of tariff:- (1) The Appropriate Commission shall determine the tariff in accordance with the provisions of this Act for-

(a) supply of electricity by a generating company to a distribution licensee”

Provided that the Appropriate Commission may, in case of shortage of supply of electricity, fix the minimum and maximum ceiling of tariff for sale or purchase of electricity in pursuance of an agreement, entered into between a generating company and a licensee or between licensees, for a period not exceeding one year to ensure reasonable prices of electricity;

(b) transmission of electricity;

(c) wheeling of electricity;

(d) retail sale of electricity;

Provided that in case of distribution of electricity in the same area by two or more distribution licensees, the Appropriate Commission may, for promoting competition among distribution licensees, fix only maximum ceiling of tariff for retail sale of electricity.

(2) The Appropriate Commission may require a licensee or a generating company to furnish separate details, as may be specified in respect of generation, transmission and distribution for determination of tariff.

(3) The Appropriate Commission shall not, while determining the tariff under this Act, show undue preference to any consumer of electricity but may differentiate according to the consumer’s load factor, power factor, voltage, total consumption of electricity during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply and the purpose for which the supply is required.

(4) No tariff or part of any tariff may ordinarily be amended, more frequently than once in any financial year, except in respect of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified.

(5) Notwithstanding anything contained in Part X, the tariff for any inter-State supply, transmission or wheeling of electricity, as the case may be, involving the territories of two States may, upon application made to it by the parties intending to undertake such supply, transmission or wheeling, be determined under this section by the State Commission having jurisdiction in respect of the licensee who intends to distribute electricity and make payment therefor.

(6) A tariff order shall, unless amended or revoked, continue to be in force for such period as may be specified in the tariff order.”

17. The aforesaid statutory provision of law reveals that the electricity tariff is determined by the State Electricity Regulatory Commission and the same has to be adhered to by the Distribution Companies. The Distribution Companies are not entitled to deviate from the tariff order issued by the Telangana State Electricity Regulatory Commission. Section 64(6) of the Electricity Act reads as under:-

“64(6) A tariff order shall, unless amended or revoked, continue to be in force for such period as may be specified in the tariff order.”

18. The aforesaid provision of law makes it very clear that the tariff order unless amended or revoked continues to be in force for such period as specified in the tariff order.

19. Regulation 2(c) of the Andhra Pradesh Electricity Regulatory Commission (Electricity Supply Code) Regulation, 2004 (hereinafter referred to as ‘Supply Code, 2004’) defines ‘consumption charges’, which reads as under”-

“2(c) ‘Consumption Charges’ means energy charges for consumption of electrical energy (calculated on the basis of kWh or kVAh rate as applicable) and includes Demand/Fixed charges, Fuel Surcharge Adjustment (FSA) charges, customer charges, wherever applicable.”

20. Regulation 3.4 of the Supply Code, 2004 reads as under:-

“3.4 The consumer shall pay, in additional to the charges fixed in the Tariff determined by the Commission, all surcharges, additional charges if any and any other charges payable relating to the supply of energy to the consumer as per the tariff conditions in force from time to time. The consumer shall also pay all the amounts chargeable by the Government by way of tax/duty etc, to the appropriate authority as specified by the Government.”

21. The aforesaid regulation makes it very clear that the consumer is liable to pay all charges as stipulated in the Supply Code, 2004. It is again an undisputed fact that the A.P. Electricity Regulatory Commission has approved the GTCS vide proceedings dated 06.01.2006 and the same is having a statutory force. The Distribution Companies are under obligation to follow GTCS in respect of supply of electricity and the Contracted Maximum Demand (CMD) is defined under clause 2.2.11 of the GTCS and the same reads as under:-

“2.2.11 – Contracted Demand or the Contracted Maximum Demand means the Maximum demand the consumer intends to put on the system, as described in clause 2.2.35 and is so specified in the supply agreement between the parties.”

22. The writ petitioners have entered into agreement with the appellants/Distribution Companies and clauses 7, 8, 9 and 10 of the aforesaid agreement reads as under:-

“7. Determination of Agreement:- I/We shall be at liberty to determine the Agreement by giving in writing three months notice expressing such intention at any time after the period of two years. If for any reasons, I/We choose the Three months to derate/terminate the Agreement before the expiry of the minimum two years period of the Agreement, the duration/termination will be done with effect from the date of expiry of the three months notice period or expiry of the initial two years period whichever is later. I/We agree that the Company may terminate this Agreement at any time giving three months notice. If I/We violate the terms of this Agreement or the General Terms and Conditions of Supply notified by the company with the approval of the Commission from time to time or the provision of any law touching this Agreement including the Electricity Act, 2003, the Rules and Regulations framed thereunder. This Agreement shall remain in force until it is terminated as above indicated. In computing the period of 2 years referred to the above periods or periods for which the annual minimum guarantee has or have been waived or reduced shall be excluded.

8. Obligation of Consumers to pay all charges levied by Company:- From the date this agreement comes into force, I/We shall be bound by and shall pay the company maximum demand charges, energy charges, surcharges, meter rents and other charges if any, in accordance with the tariffs applicable and this general terms and conditions of supply prescribed by the Company from time to time for the particular class of consumers to which I/We belong.

9. Company’s Right to vary terms and agreement:- I/We agree that the company shall have the unilateral right to vary, from time to time tariffs scale of general and miscellaneous charges and the general terms and conditions of supply under this Agreement by special or general proceedings. In particular, the Company shall have the right to enhance the rates chargeable for supply of electricity according to exigencies.

10. Monthly Minimum Charges:- I/We shall pay minimum charges every month as prescribed in tariff and the general terms and conditions of supply even if no electricity is consumed for any reasons whatsoever and also if the charges for electricity actually consumed are less than the minimum charges. The minimum charges shall also be payable by me even if electricity is not consumed because supply has been disconnected by the Company because of non-payment of electricity charges. Theft of Electricity or unauthorised use of Electricity or for any other valid reasons.”

23. The aforesaid agreement, which has been executed between the parties, makes it very clear that the writ petitioners have undertaken to pay maximum demand charges, energy charges in accordance with the tariffs applicable and the GTCS prescribed by the company from time to time. Clause 10 makes it very clear that the minimum monthly charges are payable even if electricity is not consumed and the same is in existence.

24. It is true that on account of Covid-19 pandemic lockdown was imposed in the State of Telangana keeping in view the Disaster Management Act, 2005 and it was extended from time to time and the State Government has issued G.O.Ms.No.4, dated 22.04.2020, which reads as under:-

GOVERNMENT OF TELANGNA ABSTRACT

Industries and Commerce Department – COVID-19 – Lockdown – Relief to Industries – Orders – Issues.

INDUSTRIES AND COMMERCE (IP&INF) DEPARTMENT

G.O.Ms.No.4 Dated 22.04.2020

Read the following:-

1. The Epidemic Diseases Act, 1897.

2. G.O.Ms.No.45, General Administration Department, dated 22.03.2020.

3. G.O.Ms.No.46, General Administration Department, dated 22.03.2020.

4. G.O.Ms.No.54, General Administration Department, dated 28.03.2020.

5. G.O.Ms.No.57, General Administration Department, dated 12.04.2020.

6. G.O.Ms.No.60, General Administration Department, dated 19.04.2020.

7. Representations from various Industry Associations.

ORDER:

In the references 2nd and 3rd read above, Government of Telangana in exercise of the powers conferred under Section 2 of the Epidemic Diseases Act, 1897, read with all other enabling provisions of the Disaster Management Act, 2005, has notified lockdown In the entire State of Telangana till 31st March, 2020. Subsequently, vide references 4th to 6th read above, the lockdown period has been extended upto 07-05-2020 for containment of COViD-19epidemic in the State.

2. Government of Telangana has issued orders for closure of all shops, commercial establishments, offices, factories, workshops, godowns pertaining to nonessential commodities in view of social distancing for containment of the pandemic C0VID-19.

3. Industrial Associations, in this regard, have represented to the Government that the industrial units work on a precarious state of finances and any minor disruptions in their regular flow of works will upset their production and cash flows and their overall health is affected, While the loss and difficulties of workers and employees is predictable, it is equally difficult for units and businesses to pay the salaries and wages by taking additional loans while foregoing the production and revenues. The Industrial associations have informed that the Micro, Small, Medium Enterprises (MSME) units with zero/minimum financial reserves may be worst hit by the current prevailing situation and requested for relief measures to save the MSME sector in the state.

4. The requests of the Industry Associations were discussed in the cabinet meeting held on 19-04-2020. After detailed discussions, Government hereby decides to extend the following relief measures to the Industries in Telangana:

"Electricity Bills during the lockdown period will be collected as per actual consumption only and the fixed charges for the same period shall be deferred till 31.05.2020 without any penalty and Interest. Further, those industries which pay the bills within due date shall get 1 percent rebate of billed amount".

5. The Energy Department is requested to take necessary action accordingly.

(BY ORDER AND IN THE NAME OF THE GOVERNOR OF TELANGANA)

JAYESH RANJAN

PRINCIPAL SECRETARY TO GOVERNMENT AND COMMISSIONER FOR INDUSTRIAL PROMOTION (FAC)

To

The Special Chief Secretary to Government, Energy Department.

Copy to:

The Special Chief Secretary to Government, Revenue (CT & Excise) Department.

The Principal Secretary to Government, Finance Department.

The Commissioner of Industries, Hyderabad. The VC&MD; TSIIC, Hyderabad for necessary action.

The Principal Secretary to Hor’ble Chief Minister.

The P.S.to the Hor’ble Minister for Industries & Commerce.

The P.S.to Chief Secretary.

//FORWARDED :: BY ORDER//

25. The aforesaid executive instructions makes it very clear that after discussions with the industry associations, it was resolved to collect electricity bills for the lockdown period as per the actual consumption only and the payment of fixed charges for the same period, have been deferred till 31.05.2020 without any penalty and interest. It was also resolved to grant 1% rebate in respect of the bill amount to those industries which pay the bills within due date. Meaning thereby, keeping in view the genuine hardship, concession has already been granted to the writ petitioners by the State Government.

26. The learned Single Judge has taken into account the Judgment delivered in the case of Northern India Iron and Steel Company (supra). In the aforesaid case, the consumer was prevented from consuming electricity as per the contract and the consumer was not able to consume the electricity due to the inability of the Board to supply electricity energy due to power cut or any other circumstances. The Hon’ble Supreme Court in the aforesaid case has held as under:-

“9. We are, therefore, of the view that the inability of the Board to supply electric energy due to power cut or any other circumstance beyond its control as per the demand of the consumer according to the contract will be reflected in and considered as a circumstance beyond the control of the consumer which prevented it from consuming electricity as per the contract and to the extent it wanted to consume. The monthly demand charge for a particular month will have to be assessed in accordance with sub-clause (b) of clause 4 of the tariff and therefrom a proportionate reduction will have to be made as per sub-clause (f). We hope, in the light of the judgment, there will be no difficulty in working out the figures of the proportionate reduction in any of the cases and for any period. In case of any difference or dispute as to the quantum of the demand charge or the proportionate reduction, parties will be at liberty to pursue their remedy as may be available to them in accordance with law.”

27. In the considered opinion of this Court, the Judgment is distinguishable on facts, as in the present case, the appellant/Distribution Company was constantly and regularly supplying electricity to the writ petitioners. It has discharged its liability by paying statutory dues to the transmission companies and generating companies, and therefore, the order passed by the learned Single Judge in declaring the action of the appellant/Distribution Company in levying and demanding minimum charges both on maximum demand charges and energy charges as illegal is certainly bad in law. The contract executed between the parties makes it very clear that the writ petitioners are required to pay minimum charges and energy charges and therefore, no such relief could have been granted in exercise of writ jurisdiction under Article 226 of the Constitution of India.

28. The learned Single Judge has placed heavy reliance upon the Judgment delivered by the Madras High Court in the case of South India Spinners Association (supra) and the Madras High Court has allowed the writ petitions by referring to the principle laid down by the Hon’ble Supreme Court in the case of PTC India Limited v. CERC (2010) 4 SCC 603)and Reliance Infrastructure Limited v. State of Maharashtra (2019) 3 SCC 352). The Madras High Court held that the Covid-19 pandemic is a force majeure.

29. In nutshell, the writ petitioners before the learned Single Judge contended that on account of force majeure situation created by Covid-19 lockdown imposed by the Government of India in March, 2020, the maximum demand charges by TSSPDCL are arbitrary, unjust and the same should be recovered on equitable and pro-rata basis in respect of lockdown period. It was also contended that since the writ petitioners were compelled to close down the industries/commercial establishments, the TSSPDCL is not entitled to collect maximum charges under the GTCS and ought to have considered the working and nonworking period of the writ petitioners and billed accordingly on pro-rata basis. The learned Single Judge has allowed the writ petitions. The learned Single Judge held that Covid-19 has been recognised by the Government of India as force majeure vide its Office Memorandum dated 19.02.2020 and accordingly Section 56 of the Contract Act would apply to the case on hand. As already stated earlier, the learned Single Judge has also placed heavy reliance upon the Judgment delivered by the Madras High Court in the case of South India Spinners Association (supra), wherein in similar circumstances, the Madras High Court held that the levy of maximum charges by the TANGEDCO was illegal.

30. In the considered opinion of this Court, the learned Single Judge has erred in law by granting relief to the writ petitioners. The learned Single Judge has observed that the contracts in question do not contain a force majeure clause. Having observed so in paragraph 43 of the impugned Order, the learned Single Judge held that Section 32 of the Contract Act will apply only when force majeure clause is there and in the absence of same, Section 56 of the Contract Act will apply. In fact, there is a categorical finding in paragraph 84 of the impugned order that Section 32 of the Contract Act does not apply to this case since there is no force majeure clause and the doctrine of frustration under Section 56 of the Contract Act will apply.

31. In the considered opinion of this Court, the doctrine of frustration cannot be invoked to direct the TSSPDCL to levy charges on pro-rata basis under the GTCS. In essence, Section 56 of the Contract Act contemplates that an agreement to do an act impossible is void or it becomes impossible to perform an act after the contract is made. In paragraph 62 of the impugned order of the learned Single Judge, reliance has been placed upon the Judgment delivered in the case of Govindbhai Gordhanbhai Patel v. Gulam Abbas Mulla

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Allibhai (1977) 3 SCC 179), wherein it has been held that the contract becomes void under Section 56 of the Contract Act if there are supervening circumstances, which makes the performance of the contract impossible. Therefore, Section 56 of the Contract Act contemplates that the entire contract will become void if performance becomes impossible due to change in circumstances. It is not the case of the writ petitioners that the contracts have become frustrated due to the lock down or that the same has to be declared void. Therefore, the learned Single Judge ought not to have relied upon Section 56 of the Contract Act in holding that the action of the TSSPDCL in not collecting the maximum demand charges on pro-rata basis i.e., working and non-working days (closure days) is illegal. 32. In the considered opinion of this Court, in any event, the payment of the impugned charges has not been pleaded to be impossibility. The writ petitioners contend that levy is unreasonable. Unreasonableness of actions are not contemplated under Section 56 of the Contract Act and therefore, the said provision has no application to the case on hand. In short, unless the contract provided for the occurrence of a force majeure event and the manner in which the charges will be levied if such an event occurs, the learned Single Judge ought not to have held that the action of the TSSPDCL is illegal as the action of the TSSPDCL is within its contractual right to levy the charges. Section 56 of the Contract Act would not come to the aid of the writ petitioners as the said provision contemplates to voiding of a contract in case performance becomes impossible due to unforeseen eventuality. The learned Single Judge has placed heavy reliance upon the Madras High Court Judgement in South India Spinners Association (supra). In the aforesaid case, the charges were governed by the statutory Regulations, namely Regulation 6(b) of the Tamil Nadu Electricity Supply Code. In paragraph 32 of the aforesaid Judgment, it has been noted that the petitioners’ specific case is that the proviso to Regulation 6(b) of the TN Electricity Supply Code should be applied and the said proviso reads as under:- “6(b) xxxxx Provided that where the Licensee is prevented from supplying electricity owing to cyclone, floods, storms, fire, strike or lockout in the Licensees’ establishment or other occurrences beyond the control of the Licensee, or if the consumer is prevented from consuming electricity is either in whole or in part for similar reasons, the Licensee may recover from the consumer a minimum charge at twenty percent of the contracted demand or recorded demand whichever is higher besides charges for the actual consumption of electricity.” 33. In the case before the Madras High Court a statutory provision provided for the contingency of force majeure event and the charges that can be collected on happening of such an event. Admittedly there is no statutory regulation or a clause in the contract in the case on hand. Therefore, as the facts of the said case are distinguishable, the question of granting relief to the writ petitioners based upon the Judgment delivered by the Madras High Court in the case of South India Spinners Association (supra) does not arise. 34. Much has been argued by the learned counsel for the writ petitioners/consumers by placing reliance upon the Judgment delivered in the case of Sri Kamadhenu Traders v. State of Telangana (2022 (1) ALT 112 (DB) (TS). The aforesaid case was delivered in a different facts and circumstances. It was an issue relating to ban on tobacco products and the notifications/orders issued under Regulation 2.3.4 of the Food Safety Regulations, 2011, which relates to ban of sale of gutkha and pan masala (containing tobacco or nicotine). The Judgment does not help the writ petitioners in any manner as the demand is being raised by the appellant/ Distribution Company based upon the statutory tariff orders and the agreement executed between the parties. 35. In the considered opinion of this Court, the Order passed by the learned Single Judge deserves to be set aside and is accordingly set aside. Section 65 of the Electricity Act, 2003 empowers the State Government to grant subsidy to any consumer or class of consumers subject to the orders of the State Government and the writ petitioners shall certainly be free to take recourse to the statutory provisions as contained in Section 65 of the Electricity Act, 2003. Not only this, Section 108 of the Electricity Act empowers the State Electricity Regulatory Commission to issue directions in matters of policy involving public interest as the State Government may give it in writing and the Electricity Regulatory Commission shall be free to take a decision if they so desire or if the circumstances so warrants keeping in view Sections 65 and 108 of the Electricity Act. 36. This Court keeping in view the contractual dispute between the parties and as there is a specific clause for recovery of dues, is of the opinion that no relief can be granted to the writ petitioners as has been done by the learned Single Judge and therefore, the impugned Order deserves to be set aside. 37. In the light of the aforesaid, the writ appeals are allowed and the Common Order, dated 18.01.2021, in W.P.Nos.7130 of 2020 and other connected matters passed by the learned Single Judge, is set aside. Miscellaneous applications, if any pending, shall stand closed. There shall be no order as to costs.
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