TMI Blog1988 (5) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... gulation ) framed under Section 79(j) read with Section 49(1) of the Electricity (Supply) Act, 1948 ('Act'). The enhancement was to take effect from 16.8.1968. The period to which the challenge pertains is between 16.8.1968 and 1.1.1970. The appellant assailed this enhancement before the High Court on grounds, inter alia, that the terms for the supply of electricity to appellant's industrial unit manufacturing fertilizers were governed by an agreement dated 21.10.48 entered into with the erstwhile Travancore State; that the agreement, in terms of Section 60 of the Act, should be deemed to have been entered into by the Board referable to statutory powers under Section 49(3) of the Act; that during the subsistence of the agreement the rates fixed therein were immune from any unilateral upward revision even if the purported enhancement was pursuant to the statutory regulations under Section 49(2) and that, at all events, the enhancement, being selective and discriminatory, was violative of Article 14 of the Constitution. 2. We may refer, briefly, to the factual antecedents: Appellant is a company registered under the Companies Act with its Registered Office at Elo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one under Section 49(3) of the Act, the supplemental agreement dated 10.5.1965, however, was entered into by the Board in exercise of the Statutory powers under Section 49(3) and was, therefore, immune from any alteration during its tenure. The principal controversy in this appeal is whether the agreement dated 21.10.1948 could be said to be one within the contemplation of Section 49(3) of the Act; and whether the enhancement of the tariff under Exhibit P-2 was impermissible. Another contention which was not urged before the learned Single Judge of the High Court, but which was permitted to be raised in appeal before the Division Bench was whether by the said enhancement appellant was subjected to a hostile and invidious discrimination. Both contentions have been repelled by the High Court. Appellant has come up by special leave. 3. We have heard Shri G.L. Sanghi, learned Senior Advocate for the appellant and Shri P.S. Potti, learned Senior Advocate for the Board. The submissions of counsel spread over a much wider field than was covered before the High Court. On the contentions urged at the hearing, the points that fall for consideration in the appeal are: (a)(i) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectricity to any person not being a licencee upon such terms and conditions as the Board thinks fit and may for the purpose of such supply frame uniform tariffs. (2)... (3) Nothing in the foregoing provisions of this section shall derogate from the power of the Board if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licencee, having regard to the geographical position of any area, the nature of the supply and purpose for which supply is required and any other relevant factors. (4)... Section 59: The Board shall not, as for as practicable and after taking credit for and subventions from the State Government under Section 63, carry on its operation under this Act at a loss, and shall adjust its charges accordingly from time to time. Section 79: The Board may make regulations not inconsistent with this Act and the rules made thereunder to provide for all or any of the following matters, namely: (a)] to] (i)] Omitted as irrelevant (j) principles governing the supply of electricity by the Board to persons other than licensees under Section 49. (k)... We may also notice Section 60: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power under Section 49(3), they could not, during the subsistence of the agreement, be varied unilaterally by exertion of another statutory power under the same Statute. It was observed: Now, fixation of special tariffs can be unilateral act on the part of the Board, but more often than not, it would be the result of negotiation between the Board and the consumer and hence a matter of agreement between them. It would, therefore, seem clear that the Board can, in exercise of the power conferred under Sub-section (3) of Section 49, enter into an agreement with a consumer stipulating for a special tariff for supply of electricity for a specific period of time. Such a stipulation would amount to fixing of special tariff and it would clearly be in exercise of the power to fix special tariff granted under Sub-section (3) of Section 49. To put it differently, where a stipulation in a contract is entered into by a public authority in exercise of a statutory power, then, even though such stipulation fetters subsequent exercise of the same statutory power or future exercise of another statutory power, it would be valid and the exercise of such statutory power would pro tanto stand rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been entered into for purposes of the Act within the meaning of Section 60. The point that Shri Potti particularly emphasised was that the element of recognition of the agreement under and for purposes of Section 60(1) which in the case of the Indian Aluminium Company consisted in the Board, after the commencement of the Act, having treated and adopted the agreement by conscious overt acts which comprised of the subsequent modifications of its terms, -- were lacking in the present case. The additional agreement dated 10.5.1965 in the present case was for an independent purpose and that the action of the Board in entering into this agreement did not constitute any such act, in relation to the original agreement, as would constitute a conscious adoption by the Board of the original agreement, so as to attract Section 60(1). 7. On a consideration of the matter, we are of the view that it is unnecessary to examine the merits of these contentions as we think that the point could be decided with reference to an aspect which goes to the root of the matter. That is, whether the agreement, even if attracts Section 60(1), qualifies itself to be recognised as one under Section 49(3). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial agreement, however precarious its tenure, that excludes the power under Section 49(1) of the Act. According to Shri Sanghi even an agreement which is not in terms bound for a fixed period and which is terminable by either side by notice, is eligible for recognition as one under Section 49(3) and that till the Board puts an end to the agreement in a manner provided by the agreement, the agreement qualifies itself for such protection under Section 49(3). 9. If an agreement, entered into by the Board does not contain any stipulation as to the specific period for which a particular rate should apply or, after so providing, also contains a specific stipulation that the rates agreed upon under it could unilaterally, be altered at the instance of the Board, then it becomes merely academic whether such an agreement does not qualify itself to be considered as one entered into by the Board in exercise of its statutory power under Section 49(3) or even if so qualified, yet, it does not have the effect of excluding the exertion of the other statutory powers under Section 49(1). The real question is whether a unilateral increase could be effected or not. In such a case, from the point o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the Board the assurance of a fixed-rate to the consumer could be denuded, that circumstance, in itself, would be such as to detract from the agreement being considered as one entered into in exercise of power under Section 49(3). The importance of the period-factor was again referred to in Delhi Cloth General Mills Co. Ltd. v. Rajasthan State Electricity Board [1986] AIR SC 1126. It was observed: ...In the Indian Aluminium Company's case, the Court speaking through Bhagwati, J. held that agreements for supply of electricity to the consumers for a specified period at a special tariff are the result of negotiations between the Board and the consumers and hence a matter of agreement between them. Such agreements for the supply of electricity to the consumers must therefore be regarded as having been entered into by the Board in exercise of the statutory powers conferred under Section 49(3) and thus there could be no question of such stipulation being void as fettering the exercise of the statutory powers of the Board under Section 49(1) .... The agreement in this case was precarious in regard to the period of its operation and was susceptible to termination at the vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain circumstances, terminability by notice even in the absence of an express provision in that behalf, upon a construction of the contract. In the case cited by Shri Sanghi, Lord Denning invoked the doctrine of frustration. Learned authors in Cheshire and Fifoot's Law of Contract, 10th Edition, call that case 'a difficult case' and that the learned Judge Master of Rolls 'reached an interesting and controversial decision'. A contract which contains no express provision for its termination may well be terminated by reasonable notice by one or the other party depending upon the implication of a term or upon a true construction of the agreement. That principle has no application to the present case. Accordingly, on contentions a (i) and (ii) we hold that Exhibit P-1 did not qualify to be recognised and protected under Section 49(3) of the Act. 12. Re: Contention (b): Appellant raised the contention of a hostile discrimination before the Division Bench in appeal. In the course of the additional grounds raised on 31.5.1971 the appellant averred: I respectfully submit that the 1st respondent being committed to supply Indian Aluminium Company Limited qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tension consumers to support a further classification, not contemplated by the Regulation itself was impermissible. Shri Sanghi relied upon the case of Indian Metal Ferro Alloys Ltd. State of Orissa [1987] 3 SCR 265 where a further purported classification in the matter of the benefit of clubbing of the allotments of electricity based on considerations which were not recognised for purposes of the statutory classification of the consumers was held impermissible. In that case amongst similarly circumstanced consumers who fell under the same classification of power intensive units, a further classification for the denial of the benefit of clubbing on the ground that the particular consumer, being an export oriented unit had failed to furnish the required export performance, was held impermissible. this Court held: ...When all other power intensive units termed as 'domestic units' are being allowed the benefit of clubbing, it would not be legally proper to deny the same facility to an industry classified as 'power intensive unit' merely on the ground that being an export oriented unit, it has failed to fulfil the conditions pre-requisite for allocation of additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the person assailing it to plead and prove the contrary. (See Kasturi Lal Lakshmi Reddy v. State of J K [1980] 3 SCR 1338). But here allegations are in general terms. Even so, the respondent-board has made categorical statement that in all those cases referred to in para 6 of the appellant's reply affidavit, tariff had been increased except where the consumer had the protection of an agreement under Section 49(3) which prevented an unilateral increase. That apart the circumstance that respondent Board was rendered, by virtue of the subsistence of an agreement under Section 49(3), powerless to make an unilateral increase, can form a valid ground for differential treatment as between cases covered by Section 49(3) on the one hand and those in which the Board was competent and was at liberty to give effect to the increase, on the other. In Bisra Stone Lime Co. v. Orissa State Electricity Board [1976] 2 SCR 307, this Court, in similar context, held: ...A plea of discrimination which is available when Article 14 is in free play is not at par with the interdict of 'undue favour' under Section 49 of the Act. Apart from this, when law makes it obligatory for certa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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