Case Note & Summary
The dispute arose between the Bihar State Electricity Board and Dhanawat Rice and Oil Mills regarding the payment of annual minimum guarantee charges for electricity supply from 1973-74 to 1982-83. The Electricity Board had served bills for these years, but the respondents claimed they were not liable due to the Board's failure to provide a constant supply of electricity as stipulated in their agreement. The Chief Engineer of the Electricity Board rejected their claims, leading to writ petitions in the Patna High Court. The High Court ruled that the Electricity Board was obligated to provide constant electricity and that the respondents were not liable for the charges if the Board failed to supply power as per the agreement. The Electricity Board appealed to the Supreme Court, arguing that 'constant supply' did not imply 'continuous supply' and that the respondents could not deny liability due to circumstances beyond the Board's control. The Supreme Court held that the High Court was incorrect in stating that the respondents had no liability to pay the annual minimum guarantee charges. It clarified that the respondents were entitled to a proportionate reduction based on the hours of non-supply as indicated in the High Court's judgment. The Chief Engineer was directed to assess this reduction, and until then, the power supply would not be disconnected for non-payment of the minimum guarantee bills. The court emphasized that the inability of the Board to supply electricity due to power cuts or other uncontrollable circumstances would be considered a valid reason for the consumers' inability to utilize electricity as per the contract. The decision reinforced the need for a fair assessment of the charges based on actual supply conditions.
Headnote
A) Electricity Law - Supply Agreements - Interpretation of Constant Supply - Electricity (Supply) Act, 1948, Sections 18, 26, 28, 29, 49, 54, 60 - The agreement stipulated a constant supply of electricity, but the court clarified that 'constant' does not equate to 'continuous'. The respondents were entitled to a proportionate reduction of the minimum guarantee bill due to the Board's inability to supply electricity as per the agreement. Held that the High Court's conclusion of no liability was incorrect (Paras 173-175).
Issue of Consideration
Whether the respondents were liable to pay annual minimum guarantee charges despite the Electricity Board's failure to provide constant electricity supply.
Final Decision
The Supreme Court allowed the appeals, holding that the respondents were liable to pay annual minimum guarantee charges but were entitled to a proportionate reduction based on the actual hours of non-supply. The Chief Engineer was directed to assess this reduction, and until then, power supply would not be disconnected for non-payment of the minimum guarantee bills.
Law Points
- Electricity supply agreements
- constant supply interpretation
- minimum guarantee charges
- proportionate reduction
- circumstances beyond control
