Case Note & Summary
The dispute arose from an agreement for supply of electrical energy between the Uttar Pradesh Electricity Board and an industrial consumer, M/s. Triveni Engg. Works Ltd. The consumer initially contracted for 104 KW of mixed load for industrial purposes and for light and fans. Clause 8 of the agreement required the consumer to pay at rates enforced by the supplier from time to time and allowed the supplier to revise the rate schedule with notified applicability. Section 48 of the Electricity Supply Act, 1948 similarly empowered the Board to revise tariffs. On July 13, 1986, the Board revised tariffs and deleted the LMV-10 tariff category without providing a corresponding substitution. The rate schedule for HV-2, 'large and heavy power', provided that any other power consumption not covered by any other rate schedule would fall under HV-2. On October 10, 1989, at the consumer's request, the contracted load was increased from 104 KW to 404 KW and a separate contract was entered into, making revised rates applicable from that date. The dispute concerned the applicable rate for electricity consumed between August 1, 1986 and October 9, 1989. The consumer contended that after deletion of LMV-10, the applicable schedule must be LMV-2, and the Board had no power to charge HV-2. The Allahabad High Court accepted this contention and held that since the new agreement became effective only on October 10, 1989, the Board could not charge for previous supply under HV-2. The Board appealed by special leave to the Supreme Court. The core legal issues were whether the Board could demand HV-2 rates for the period before the new agreement and which tariff category applied after deletion of LMV-10. The Board argued that Section 48 and clause 8 gave it statutory and contractual power to revise tariffs; deletion of LMV-10 and absence of substitution triggered residuary HV-2 for industrial consumers. The consumer argued that LMV-2 applied and that the pre-existing agreement did not cover the disputed period so no demand could be made. The Supreme Court found the High Court's reasoning erroneous. It held that under the original contract, the consumer was liable to pay at rates provided in LMV-10. Upon deletion of LMV-10 with effect from July 31, 1986, for electricity consumed thereafter, the applicable rate had to be determined from the tariff schedule. Since LMV-2 was only for commercial establishments and the consumer was an industrial unit, HV-2 was the obvious applicable residuary rate. The Court observed that from February 1986 to July 31, 1986, the Board had already issued bills under HV-2 rates, which was incorrect because the revision became effective only from July 31, 1986/August 1, 1986; for that earlier period the consumer was liable at the previous pre-revision rates. The Supreme Court allowed the appeal, set aside the High Court judgment, and held the consumer liable to pay HV-2 rates for electricity consumed between August 1, 1986 and October 9, 1989. It directed the Board to revise the bills for February 1986 to July 31, 1986 to pre-revision rates and issue fresh demand. The consumer was permitted to pay the demanded amount within six months of receipt. No costs were awarded.
Headnote
A) Electricity Law - Tariff Revision - Section 48, Electricity Supply Act, 1948 - Board's Power to Revise Tariff - The Board had statutory power under Section 48 of the Electricity Supply Act, 1948 to revise tariffs from time to time, and clause 8 of the supply agreement reinforced this by allowing the supplier to revise the rate schedule and apply revised rates from the notified date. The dispute concerned deletion of LMV-10 tariff category without corresponding substitution, and whether the revised schedule applied to the disputed period. Held that the revised rates applied from August 1, 1986 after deletion. B) Electricity Law - Classification of Tariff Categories - Residuary HV-2 Rate Applies to Industrial Consumers - LMV-2 Tariff Limited to Commercial Establishments - Under the rate schedule for HV-2 "large and heavy power", any other power consumption not covered by any other rate schedule attracted HV-2. Since the respondent was an industrial unit and LMV-2 was only for commercial establishments, HV-2 was the applicable rate for electricity consumed between August 1, 1986 and October 9, 1989 despite absence of an express contract for that period. Held that the respondent was liable to pay at HV-2 rates. C) Electricity Law - Retrospective Application of Revised Rates - No Retroactive Applicability Before Revision Date - Bills for the period February 1986 to July 31, 1986 had been erroneously issued at HV-2 rates, but the revision became effective only from July 31, 1986/August 1, 1986. The consumer was liable only at the previous pre-revision rates for that earlier period. The Board was directed to revise the bills accordingly and issue fresh demand, and the respondent was permitted to pay within six months of receipt. Held that pre-revision bills must be corrected.
Issue of Consideration
Which tariff rate applied to electricity consumed by an industrial consumer between August 1, 1986 and October 9, 1989 after the Board deleted the LMV-10 tariff category, and whether the Board could demand payment at HV-2 rate for that period despite absence of an express contract and before the new agreement of October 10, 1989
Final Decision
The Supreme Court allowed the appeal, set aside the High Court judgment, and held that the respondent was liable to pay electricity charges at HV-2 rates for the period August 1, 1986 to October 9, 1989. The Board was directed to revise bills for February 1986 to July 31, 1986 to previous rates (not HV-2) and issue fresh demand; respondent allowed to pay within six months of receipt. No costs.
Law Points
- Section 48 of Electricity Supply Act
- 1948 empowers Board to revise tariffs from time to time
- clause 8 of supply agreement reinforces Board's power to revise rate schedule and apply revised rates from notified date
- deletion of specific tariff category without corresponding substitution triggers residuary HV-2 rate for industrial consumers
- LMV-2 tariff applicable only to commercial establishments
- not industrial units
- bills issued for period before tariff revision must be at pre-revision rates not revised rates
