Case Note & Summary
The dispute arose between the Bihar State Electricity Board and Dhanawat Rice and Oil Mills regarding the annual minimum guarantee charges for electricity supply from 1973-74 to 1982-83. The agreement stipulated a constant supply of electricity, with provisions for minimum charges and circumstances under which consumers could seek reductions. The Electricity Board served bills for minimum guarantee charges, which the consumers contested, claiming that the Board's failure to provide constant electricity due to trippings and power cuts exempted them from liability. The Chief Engineer rejected their claims, leading to writ petitions in the High Court. The High Court ruled that the Board was obligated to provide constant supply and that consumers were liable for charges only if the Board fulfilled its obligations. The Electricity Board appealed, arguing that 'constant supply' did not imply 'continuous supply' and that consumers were still liable for minimum charges despite occasional power shortages. The Supreme Court held that the High Court erred in absolving consumers of all liability, affirming that they were entitled to a proportionate reduction based on actual supply levels. The Chief Engineer was directed to assess the reduction based on the hours of non-supply as indicated in the High Court judgment, and until this assessment was completed, consumers' power supply would not be disconnected for non-payment of minimum guarantee bills. The court emphasized that the inability of the Board to supply electricity due to circumstances beyond its control should be considered when determining consumer liability (Paras 173G-175E).
Headnote
A) Electricity Law - Supply Agreements - Definition of Constant Supply - Electricity (Supply) Act, 1948, Sections 18, 26, 28, 29, 49, 54, 60 - The court clarified that 'constant supply' does not equate to 'continuous supply' and consumers are liable for minimum guarantee charges unless the Board fails to supply as per the agreement. The High Court's conclusion that consumers were not liable was incorrect; they are entitled only to a proportionate reduction based on actual supply (Paras 173E-175E).
Issue of Consideration
Whether the consumers are liable to pay the 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 High Court erred in concluding that consumers were not liable for annual minimum guarantee charges. The court directed the Chief Engineer to assess the proportionate reduction of the annual minimum guarantee bills based on actual supply levels and stated that power supply would not be disconnected pending this assessment.
Law Points
- Electricity supply agreements
- constant supply definition
- minimum guarantee payment
- proportionate reduction
- circumstances beyond control
