Case Note & Summary
The dispute arose from a writ appeal filed by Chamundeshwari Electricity Supply Corporation Limited (CESCOM) against an order of the learned Single Judge that partially allowed a petition by J.K. Tyre and Industries Ltd. (JKTIL) for the relaxation of demand charges during the COVID-19 lockdown. JKTIL, a non-MSME entity, sought a waiver of demand charges for the period when its manufacturing plants were non-operational due to the lockdown imposed by the Central Government. The learned Single Judge had directed CESCOM to retain only a fraction of the demand charges and refund the remainder. CESCOM contended that the learned Single Judge erred in treating demand charges as synonymous with minimum charges and that the dispute should have been referred to the Consumer Grievance Redressal Forum under the Electricity Act, 2003. The court analyzed the agreements between the parties, particularly focusing on Clause 3, which allowed for alteration of contracted demand in the event of force majeure. The court found that while the lockdown was indeed a force majeure event, JKTIL failed to issue the necessary notice for alteration of demand as stipulated in the agreements. The court concluded that JKTIL was liable for the demand charges as per the agreements and that the learned Single Judge's interpretation was incorrect. Consequently, the appeal was allowed, and the impugned order was set aside.
Headnote
A) Contract Law - Force Majeure - Applicability of Clause 3 - Electricity Supply Agreements - The court held that the pandemic-induced lockdown constituted a force majeure event, but JKTIL did not provide the necessary notice for alteration of contracted demand as required under Clause 3 of the agreements. Therefore, the demand charges could not be waived or reduced based on the lockdown (Paras 12-32).
Issue of Consideration
Whether the demand charges levied during the lockdown period could be reduced under the agreements due to force majeure.
Final Decision
The appeal was allowed, and the impugned order was set aside, concluding that JKTIL was not entitled to a waiver or reduction of demand charges due to its failure to issue the necessary notice for alteration of contracted demand as required under Clause 3 of the agreements.
Law Points
- Contractual obligations
- force majeure
- demand charges
- minimum charges
- Electricity Act
- 2003
