Supreme Court Allows Electricity Board's Appeal in Minimum Guarantee Dispute, Setting Aside High Court Writ Order. Contractual Clause Requiring Application to Chief Engineer for Proportionate Reduction of Demand and Guaranteed Energy Charges Was Not Followed, Making High Court's Direct Relief Premature.

Civil appeal by special leave against a High Court order allowing a writ petition challenging an electricity minimum guarantee bill; contract dispute under an electricity supply agreement.

Appellant Electricity Board sought setting aside of the High Court order that directed a fresh bill with proportionate reduction without requiring the respondent to apply to the Chief Engineer.

Respondent company objected to the minimum guarantee bill on the ground of erratic electricity supply, claiming it was not liable to pay minimum guarantee charges under the contract.

High Court of Patna in CWJA No.2811/93 dated September 21, 1993 allowed the writ petition, relying on an earlier order in CWJC No.3642/92 which directed the Board to raise a fresh bill with proportionate reduction but was not complied with.

Whether the respondent was entitled to proportionate reduction in minimum guarantee charges under Clause 13 of the agreement without making an application to the Chief Engineer and obtaining his decision. Whether the High Court correctly exercised writ jurisdiction to quash the bill relying on an earlier order not complied with, bypassing the contractual mechanism requiring application and investigation.

Appellant Board contended that Clause 13 required the respondent to apply to the Chief Engineer for proportionate reduction and obtain his decision; until then, the Board was obliged to demand minimum guarantee and the respondent obliged to pay. Respondent contended that due to erratic supply and the Board's inability to supply the required quantity, it was not liable for minimum guarantee, and relied on an earlier High Court order directing proportionate reduction which had not been complied with.

Under Clause 13 of the electricity supply agreement, proportionate reduction in demand charge and guaranteed energy charge is available only if one of the enumerated causes (strike, riots, fire, floods, explosions, act of God or other cause reasonably beyond control) prevented supply or receipt; the consumer must make an application to the Chief Engineer, who is to investigate and whose decision is final. Unless such application and decision are obtained, the Board is obliged to demand and the consumer must pay the minimum guarantee amount. The High Court erred in granting relief without following this contractual mechanism.

13. - if at any time the consumer is prevented from receiving or using the electrical energy to be supplied under this agreement either in whole, or in part due to strike, riots, fire, floods, explosions, act of God or any other case reasonably beyond control or if the Board is prevented from supplying or unable to supply such electrical energy owing to any or all of the cause mentioned above then the demand charge and guaranteed, energy charge set out in the Schedule shall be reduced in proportion to the ability of the consumer to take or the Board to supply such power and the decision of the Chief Engineer, Bihar State Electricity Board, in this respect shall be final. Note: The term Chief Engineer includes additional Chief Engineer for the area concerned. unless an application is made to the competent authority to investigate into the matter, the board in terms of clause 13 of the contract is necessarily obliged to demand and the consumer is to comply with the payment of minimum guarantee amount in terms of the agreement subject to the decision by the Chief Engineer.

The respondent entered into an agreement with the Board for electricity supply, which required payment of minimum guarantee charges. The respondent objected to a minimum guarantee bill citing erratic supply. Earlier, the High Court in CWJC No.3642/92 disposed of writ petitions on February 25, 1923 (as per judgment text), directing the Board to raise a fresh bill with proportionate reduction in annual minimum guarantee charges. Later, in CWJA No.2811/93, the High Court allowed the respondent's writ petition on September 21, 1993, holding that since the earlier direction had not been complied with, the impugned bill could not stand. The Board appealed by special leave to the Supreme Court. On July 15, 1996, the Supreme Court set aside the High Court order, granting liberty to the respondent to apply afresh to the Chief Engineer within one month, and directed the Chief Engineer to enquire and decide, with proportionate reduction if the Board was found responsible.