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Nava Bharat Ferro Alloys Ltd. Versus Transmission Corporation of A.P. Ltd. and anr.

2010 (11) TMI 1059 - SUPREME COURT OF INDIA

2011 AIR 538, 2010 (14) SCR 900, 2011 (1) SCC 216, 2010 (12) JT 554, 2010 (12) SCALE 161 - Dated:- 18-11-2010 - Markandey Katju And T. S. Thakur, JJ. JUDGMENT T. S. Thakur, J. 1. These appeals by special leave arise out of an order dated 6th June, 2002 passed by the High Court of Andhra Pradesh whereby Writ Petitions No.9081 of 1999 and 13458 of 1993 filed by the appellant have been dismissed and the demand for additional charges/surcharge payable on the delayed payment of outstanding electricit .....

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tially agreed to supply power to the appellant @ 6 paise per unit but revised the said rate to 11 paise per unit in the year 1975. The revised rate was in the beginning applicable only to four consumers who were similarly situate but the number of such power intensive consumers gradually rose to 84. On 13th December, 1983 the Board revised the general tariff but a separate order applicable to power intensive consumers like the appellant was issued on 29th January, 1984. Aggrieved by the said ord .....

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he condition if the writ petitioner pays at the rate of 47.89 paise per unit with effect from April 1984 onwards, furnishing Bank guarantee for the balance to the satisfaction of the Superintending Engineer concerned in four weeks from today. In default of any of the conditions, the stay stands vacated. The bank guarantee furnished shall be renewed for every 3 months. If the petitioner has already paid the demand for the month of April, on the basis of the impugned order, this order passed by me .....

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nsel for the parties we felt that the order passed by the High Court dated 24.4.1984 which operated during the pendency of the writ petitions will continue to operate during the pendency of the appeals with the modification that the rate of 47.89 paise per unit mentioned in the order is rounded to 48 paise per unit. We would, however, like to make it clear that because of the High Court's order dated 13.4.1985, for a couple of months, there was no such orders in regard to future payments and .....

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ls, eventually failed and were dismissed by this Court by an order dated 2 nd May, 1991. In I.As. filed by the appellant post- dismissal of the appeals, this Court passed an order on 9th May, 1991 to the effect that the appellants could after paying outstanding 50% of the amount due under the subsisting bank guarantee make representation to the Board for payment of the balance amount in instalments keeping in view the circumstances and the hardships in each individual case. Consequently, the app .....

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2,83,53,120.93 thereby leaving a balance of ₹ 2,74,13,218.25 due and payable which amount the appellant was requested to arrange. The communication also pointed out that in addition to the above amount arrears of ₹ 4,45,63,903.21 for the period from August 1987 to July 1989 were also payable besides additional charges for delayed payments of the said amount which the latter proposed to communicate separately. 5. The request made by the appellant for payment of the balance amount of .....

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d petitions have been dismissed by the High Court. The High Court held that the Terms and Conditions of Supply (TCS) were statutory in character and were not in conflict with any provision of the Electricity Supply Act or the Constitution of India. It also held that Clause 32.2.1 and Clause 34 of the said Terms and Conditions of Supply upon which the Board placed reliance for its demand did not violate any constitutional or statutory provision. The stipulated terms and conditions were, according .....

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anoria Chemicals and Industries Ltd. v. U.P. State Electricity Board (1997) 5 SCC 772 were of no assistance to the appellants. The High Court noted the factual background in which the said decisions were rendered and found that in cases before it there was no justification for nullifying the effect of the Clauses 32.2.1 and 34 of the T.C.S. 7. Appearing for the appellants Mr. Sudheer Chandra Agarwal, learned senior counsel, strenuously agued that the High Court had fallen in error in declining r .....

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contended that this Court had in the above case and in Kanoria Chemicals's case (supra) dealt with a similar fact situation and granted relief, by awarding interest @ 18% to the Board to compensate it for the monetary loss that it may have suffered on account of delay in the making of such payment and to prevent any prejudice and consequent injustice to the Board on account of the direction issued by the Court. It was argued that the appellant-company was ready and willing to pay interest @ .....

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elief was granted in those cases was different from that of the present case. It was further argued that the additional charges and interest were payable in terms of the TCS which was statutory in character and to which the appellant had agreed to abide by. The amount which the appellant had not paid would have been utilized by it in its commercial ventures to make profits. Non-payment of the dues recoverable from the appellant would, therefore, expose the Board to serious financial prejudice an .....

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asic fallacy in the analogy which the appellant draws between its case and the cases referred to above. What is overlooked by the appellant is the fact that the decision of this Court in the Kerala State Electricity Board's case (supra) has enforced the terms under which the supply of energy was made to the consumers in that case. Award of interest @ 18% p.a. is not an innovation of this Court. The consequence of non-payment of the amount within the time stipulated was on the contrary prescr .....

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Board's case (supra) was delivered. 11. MRF was engaged in manufacturing automobile tubes and tread rubber in the State of Kerala. The company entered into an agreement with the Kerala State Electricity Board for supply of power to the factory set up by it. The agreement contained a provision for payment of power and energy supplied to the company by the Board within 15 days from the date of the receipt of the invoice by the consumer-company. The agreement further provided that in the event .....

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ck down. Consequently MRF Limited and other consumers became entitled to the refund of the excess amount paid by them pursuant to the revised tariffs. The High Court of Kerala directed the adjustment of such amounts towards future bills to be issued by the Board. 13. Aggrieved by the order passed by the Kerala High Court the Board filed special leave petitions before this Court which were entertained by this Court and an interim order passed, inter alia, directing that pending disposal of the ap .....

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consumers became liable to pay the amounts due on the basis of the revision of tariffs including those that had since been adjusted by them pursuant to the interim directions of this Court. Consequently, the Board raised a demand for the payment of the amount inclusive of interest @ 18% p.a. While the company did not challenge the liability to pay the excess amount pursuant to the revision that had been upheld by this Court it refused to pay the interest and challenged the demand to that extent .....

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iew that while the consumers had no obligation to take notice of the revised tariffs and to make any payment on the basis thereof after the judgment of the High Court of Kerala till the said decision was reversed by this Court, yet no sooner the decision of this Court upheld the upward revision of the tariffs, the Board's entitlement to draw bills on the basis of the revisions and consequently enforce payment of such bills by the consumers revived with full force. This Court repelled the con .....

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is Court is in this regard apposite: "But after the decision of this Court upholding upward revisions of tariffs, the Board's entitlement to draw bills on the basis of upward revisions and consequential enforceability of payment of such bills by the consumers revived with full force. Hence, it would not be correct to contend that although the Company or for that matter other consumers were required to pay on the basis of revisions of tariffs from the dates when such revisions became eff .....

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of restitution as enunciated by the Privy Council in Rodger v. Comptoir D'Escompte de Paris 1871 (3) PC 465 and held that it will be the endeavour of the Court to ensure that a party who had suffered on account of a decision that is finally reversed should be put back in the same position as far as the same is practicable, in which he would have been if the decision of the Court adversely affecting him had not been passed. This Court observed: "In giving full and complete relief in an .....

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h a manner as may be reasonable, fair and practicable and does not bring about unmerited hardship to either of the parties." 17. Applying the above principle to the case before it this Court held that the consumer-company was an on-going business concern who must have gainfully utilized the money saved on account of the decision of the High Court, in its commercial activities. The Court further held that the Board had to suffer financial loss because of the erroneous decision delivered by t .....

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sed the amount saved for being not required to pay on the basis of revised tariffs. The Board had to suffer financial loss because of the said erroneous decision of the High Court. In the aforesaid circumstances, it will be lawful, conforming to equity and well-established principle of restitution for the Board to claim interest at 18% on the unpaid portion of the Bill drawn on the basis of revised tariffs. The Company had agreed to pay interest at 18% on the bills if not paid when it became due .....

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om the consumer if the latter failed to pay the amounts within the time stipulated. It is also manifest that this Court had in no uncertain terms held that even after the upward revisions of the tariffs had remained unenforceable for a certain period on account of erroneous judgment of the High Court, the moment the said judgment was set aside in appeal, the liability to pay revived with full force from the date the revisions were made effective. The very fact there was during the intervening pe .....

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or delayed payment of the amount recoverable by the Board. 19. Suffice it so say that the decision of this Court in the case of Kerala State Electricity Board (supra) does not grant any relief to a defaulting consumer once the demand is upheld nor does it interfere with the principle of restitution which would entitle the successful party to be relegated back to the position it would hold had there been no judgment adverse to it. 20. Super added to all this is the fact that this Court was deali .....

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d would in our opinion stand on a different footing than cases where the party obtains an order granting interim protection to it. While there is an element of finality in the case of a final adjudication by a competent Court in so far as that Court is concerned, an interim order can be vacated at any stage. The interim order may not even prevent a prudent party from paying the charges according to the revised tariffs if it does not propose to take any chance and suffer recovery of an additional .....

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r results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however, lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence." 21. Suffice it to say that the decision of this Court in Kerala State Electricity Board's case ( .....

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. State Electricity Board revising the electricity rates/tariffs under Section 49 of the Electricity (Supply) Act, 1948 was challenged by the consumers. Interlocutory applications filed in the writ petitions for stay of the operation of the impugned notification were eventually dismissed by the High Court whereupon the consumers deposited the differential amount between the pre-revised and the revised electricity rates. Consumers did not, however, deposit the late payment surcharge "recover .....

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matter the writ petitions were finally dismissed. That contention was rejected by a Division Bench of the High Court of Allahabad. The matter was then brought up to this Court in appeal by the consumers, inter alia, contending that the stay of the operation of the impugned notification relieved the consumers of the obligation to pay the revised tariffs/rates and consequently additional charges for late payment, if any. Reliance in support of that submission was placed by the consumers upon the .....

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Court observed: "..............We, therefore, agree with the High Court that Adoni Ginning1 cannot be read as laying down the proposition that the grant of stay of a notification revising the electricity charges has the effect of relieving the consumers/petitioners of their obligation to pay late payment surcharge/interest on the amount withheld by them even when their writ petitions are dismissed ultimately. Holding otherwise would mean that even though the Electricity Board, who was the .....

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eved of the obligation to pay the late payment surcharge for the period of stay, which he is liable to pay according to the statutory terms and conditions of supply-which terms and conditions indeed form part of the contract of supply entered into by him with the Board. We do not think that any such unfair and inequitable proposition can be sustained in law..........." 23. This Court further clarified that the terms in which the prayer in the stay application was made by the consumers did n .....

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he Court for otherwise it would give rise to unjust results. This Court said: "..............It is equally well settled that an order of stay granted pending disposal of a writ petition/suit or other proceeding, comes to an end with the dismissal of the substantive proceeding and that it is the duty of the court in such a case to put the parties in the same position they would have been but for the interim orders of the court. Any other view would result in the act or order of the court pre .....

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