Case Note & Summary
The dispute arose between a public limited company engaged in manufacturing two-wheelers and the Kanpur Electricity Supply Company regarding the reduction of contracted electricity load. The Respondent-Company, facing financial difficulties, sought to be declared a 'Relief Undertaking' under the U.P. Industrial Undertaking (Special Provisions for Prevention of Unemployment) Act, 1966, which was granted by the State Government. Following this, the Respondent applied for a reduction of its power load from 8 MVA to 1.25 MVA, which was agreed upon in a meeting with KESCO on 19th April 2006, but KESCO later raised bills based on the original load. The Respondent filed a writ petition for enforcement of the load reduction, which the High Court allowed, leading to the present Special Leave Petition. The Supreme Court analyzed the provisions of the U.P. Electricity Supply Code, particularly Clauses 4.41 and 4.49, and determined that the Respondent was entitled to the load reduction as per the agreement made with KESCO. The Court noted that the insistence on a Bank Guarantee was not justified given the circumstances of the Respondent's financial distress and the prior agreement. The Supreme Court upheld the High Court's decision and dismissed the petition, allowing the Respondent to continue its operations without the threat of disconnection, provided it adhered to the payment schedule set by the BIFR. The Court emphasized the need for a liberal interpretation of provisions aimed at preventing unemployment and supporting sick industries.
Headnote
A) Electricity Law - Load Reduction - Entitlement to Load Reduction - U.P. Electricity Supply Code, 2005, Clause 4.41 and 4.49 - The Respondent-Company applied for a reduction of load due to financial distress and was granted a decision for reduction, which was not implemented by KESCO due to non-acceptance of a Bond as security for dues. The High Court held that the load reduction was effective from 1st April 2006, and the Supreme Court dismissed the petition challenging this interpretation. (Paras 5-29)
Issue of Consideration
Whether the Respondent-Company was entitled to a reduction in contracted load from 8 MVA to 1.25 MVA under the U.P. Electricity Supply Code, 2005 despite outstanding dues.
Final Decision
The Supreme Court dismissed the Special Leave Petition, upholding the High Court's order that the load reduction was effective from 1st April 2006. The Court noted that KESCO could not insist on a Bank Guarantee given the financial distress of the Respondent-Company and the prior agreement made.
Law Points
- Interpretation of statutory provisions
- Sick Industrial Companies Act
- Electricity Supply Code compliance
- Relief Undertaking status
- Bank Guarantee requirements
