TMI Blog1973 (11) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1, the Electricity Company, holds a licence to generate, transmit and distribute electrical energy within the licenced area of Ahmedabad. 3. On September 11, 1963 the Electricity Company intimated to the Board and the State Government of its intention to revise the rates of electricity with effect from November 16, 1963 on the ground that the cost of operation had increased and it anticipated that the clear profit for the year 1963-64 ending on March 31, 1964 would clearly fall short of the reasonable return. Along with this notice the Electricity Company sent some financial data also. The State Government informed the Electricity Company that the financial data was not correct and there was no justification for the proposed increase of the rates. The Board also by its letter dated November 14, 1963 informed the Electricity Company that they were not satisfied with the data given and considered that there was no justification for revising the rates. The Electricity Company informed the Government and the Board that it did not agree with the view taken by them and, in the meantime, brought the new rates into effect from 16-11-1963. 4. After applying its mind in greater detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween the Board and the Electricity Company were enclosed with the letter. 6. The Board not being satisfied with the explanation given to the show-cause notice appointed a Rating Committee on 30-4-1964 as per Ext. H. Since the Rating Committee was likely to proceed with the enquiry, the Electricity Company filed the special Civil Application No. 388 of 1964 to quash its appointment and to restrain it from functioning. 7. The High Court held that a dispute or difference between the Board and the Electricity Company was referable to the arbitration of the Authority under para XVI of the Sixth Schedule, and since pending such arbitration no Rating Committee could be constituted under the second proviso to Section 57A, the Constitution of the Rating Committee by the Board was illegal and the Committee had no power to function. These findings are challenged in this Court. 8. Though we are chiefly concerned with the Electricity (Supply Act, 1948 a reference is also necessary to the Indian Electricity Act. 1910 because it was under the latter Act that the licence was issued by the State Government to the Electricity Company the licensee. Section 3 of that Act empowers the State Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson as provided in the Act. The Central Electricity Authority is called the Authority in the rest of the Act. Under Section 5 power is given to the State Government to constitute by notification in the Official Gazette a State Electricity Board. Its Constitution and jurisdiction are given in Chapter III of the Act, Section 12 of which says that the Board shall be a body corporate having perpetual succession and common seal with power to acquire and hold property and to sue and be sued. Chapter IV provides for the powers and duties of the State Electricity Board and we may only refer to Section 26 therein which says that subject to the provisions of the Act the Board shall in respect of the whole State have all powers and obligations of a licensee under the Indian Electricity Act, 1910 and the Supply Act of 1948 is deemed to be the licence of the Board for the purposes of the Indian Electricity Act, 1910. 10. The principal question before us is whether the claim made by the Electricity Company that its dispute with the Board was legally referable to the Authority is sustainable in law. For such a claim, there must be either an agreement between the parties to refer any particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of the licence granted by the State Government to the licensee to the extent of the inconsistency. Section 57-A gives a direct hand to the Board to interfere by the appointment of a Rating Committee if it is satisfied that the licencee has failed to comply with any of the provisions of the Sixth Schedule i.e., in other words, over-charged the consumer by committing a breach of any of the financial principles mentioned in the Schedule. It will be the function of the Rating Committee Under-section 57-A to examine the licensee's charges for the supply of electricity and to make recommendations in that behalf to the State Government. The section has three provisos. The first proviso requires that when it is proposed to constitute a Rating Committee on the ground that the licensee had failed to comply with any provisions of the Sixth Schedule the Committee shall not be constituted unless the licensee had been given a notice in writing of 30 clear days, to show cause against the action proposed. In the present case the show-cause notice was given and nothing turns on it. The third proviso also is not applicable. It is the second proviso which is important and the Electricity C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion clause. It is as follows: Any dispute or difference as to the interpretation or any matter arising out of the provisions of this Schedule shall be referred to the arbitration of the Authority; Provided that where a Rating Committee has been constituted under Section 57-A no such dispute or difference shall be referred to the arbitration of the Authority during the period between the date of the Constitution of such Committee and the date of the Order of the State Government made on the recommendations of the Committee. 13. Since para XVI i.e. the arbitration clause is incorporated in the licence to which the State Government, on the one hand, and the Electricity Company, on the other are parties the plain construction of the arbitration clause would be that the alleged dispute or difference should be between the two and that dispute or difference alone is referable to the Authority. That view was taken by this Court in The Amalgamated Electricity Company Ltd. v. N.S. Bathena [1959] Supp. 2 S.C.R. 213. In that case this particular clause was sought to be pressed into service by the Electricity Company in a regular suit filed by a consumer against the Electricity Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Authority only those referred to in Sub-clause (a) of Sub-section (2) i.e. to say only those cases for which the Act provides. There are some cases where the Act provides for the Arbitration by the Authority between the Board and the licensee. See : for example Sections 44(3), 45(3) and 55(2). No similar provision has been brought to our notice which makes a reference to the Authority compulsory in a dispute between them relating to the non-compliance of the provisions of the Sixth Schedule. 18. It was however, contended for the Electricity Company-a contention which found favour with the High Court-that by virtue of Section 60(1) of the Act the Board stepped into the shoes of the State Government. That Sub-section reads: 60(1) All debts and obligations incurred, all contracts entered into and all matters and things engaged to be done by, with or for the State Government for any of the purposes of this Act before the first Constitution of the Board shall be deemed to have been incurred, entered into or engaged to be done by, with or for the Board; and all suits or other legal proceedings instituted or which might but for the issue of the notification under Sub-section (4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (3) and such difference or dispute has been referred by the licensee to the arbitration of the Authority under paragraph XVI of that Schedule before a certain date. 20. In the present case there is no doubt that there is an allegation by the Board that the licensee had failed to comply with the provisions of the Sixth Schedule. As regards the second condition there is considerable dispute as to what exactly it means. It is contended by the learned Additional Solicitor General on behalf of the Board that the dispute or difference should be one as to the interpretation of the provisions or any matter arising therefrom i.e. the interpretation. On the other hand, it is contended by Mr. Chagla on behalf of the Electricity Company that the expression any matter arising therefrom is not limited to interpretation only, and in this connection he has referred to para XVI itself. The wording of para XVI is rather complicated. But it seems it may be possible to re-write it in this form Any dispute or difference as to the interpretation of the provisions of this Schedule or any matter arising out of the provisions of this Schedule. Mr. Chagla contends that para XVI contains cognate wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s another matter. The present reference, to the Authority against the Board however could not be described as a reference under paragraph XVI of the Schedule. That proviso puts an embargo on the Constitution of the Rating Committee if at that time there is already a reference to the Authority of a dispute between the State Government and the licensee for the interpretation of any of the provisions of the Sixth Schedule. The object is clear. There would be no point in constituting a Rating Committee if the interpretation of the provisions is referred to the Authority in a reference competently made as between the State Government and the licensee. All the three conditions of the second proviso were necessary to co-exist if the Rating Committee was not to be constituted by the Board. But since the third condition is absent it must be concluded that there could be no bar to the appointment of the Rating Committee by the Board. 21. As a branch of the same argument it was pointed out that if the Board had not been constituted and the power under Section 57A were left to be exercised by the State Government it would have been possible for the licensee to go to the arbitration of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me importance to the appointment of the Rating Committee and must have intended that the enquiry by the Committee should be expeditious. The Board takes the decision to appoint the Committee only when it is satisfied that the provisions of the Sixth Schedule are not complied with that is to say, the licensee was overcharging the consumer. The proviso to para XVI of the Sixth Schedule also emphasizes this. It says that even if there be any dispute or difference between the State Government and the licensee with regard to the interpretation of any provision or any matter arising out of the provisions, no such dispute or difference would be referred to the arbitration of the Authority when a Rating Committee has been constituted and is making the necessary enquiry. Having regard to the urgency of the matter and the proviso to para XVI just referred to, it seems more likely that Parliament did not want to prevent the Constitution of the Rating Committee except when there was an important dispute involving the interpretation of the provisions of the Schedule and such a dispute was already before the Authority. The matter is not free from difficulty. It is perfectly arguable that if the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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