Judgment

GAJENDRAGADKAR, C.J.I. : The principal question of law which arises in this group of 37 civil appeals relates to the construction of S. 3 of the Madras Essential Articles Control and Requisitioning (Temporary Powers) Act, 1949 (No. 29 of 1949) (hereinafter called the Act ). The dispute which has given rise to these appeals centers round the validity of two notified orders issued by the respondent, State of Andhra Pradesh on January 28, 1955, and January 30, 1955 respectively, and it is the contention of the appellants that the said notified orders are outside the purview of S. 3. The appellants in all these appeals are supplied electricity by the respondent for many years past and several individual agreements have been passed between them and the respondent during the period 1946 to 1952 prescribing the terms and conditions on which the said supply would be made to them. One of these terms stipulated the rate at which the supply of electricity had to be charged against the consumers. The impugned orders have purported to increase this rate, and the appellants contend that the respondent had no authority to change this important term of the contract to their prejudice by taking recourse to S. 3(1) and issuing notified orders in that behalf. That, in substance, is the nature of the controversy between the parties before us.

2. It appears that the Government of Madras, and subsequently, its successor, the respondent, had a single power grid system for the whole State comprising Tungabhadra and Machkund Hydro Electric Systems and the Thermal Systems of Nellore. The entire energy was integrated into one power system. The Government of Madras entered into agreements with several consumers in the State, including the appellants, for the supply of energy in bulk at the specified rates which were called tariffs, for the years 1951 and 1952. These agreements were to be in operation for ten years. It is common ground that these agreements did not contain any provision authorising the Government to increase the rates during their operation. The charges fixed were calculated at graded regressive rates according to increasing slabs of consumption units, and the overall unit rates including the demand charge were not to exceed 66 annas without prejudice to the monthly minimum payment and the guaranteed consumption. The Government of Andhra then issued the two impugned orders relating to Machkund and Nellore, and Tungabhadra and Chittoore District areas respectively, enhancing the agreed rates. These enhanced rates were specified in Schedules A and B attached to the said orders. According to these orders, these increased tariffs were to take effect from the date on which meter readings were to be taken in the month of February, 1955 and were to operate for the future. The increase in the rates effected by these orders was thus to operate not retrospectively, but prospectively. The impugned orders indicate that the main reason which inspired the said orders was the knowledge that the existing electricity tariffs which were formulated nearly 15 years before, had become completely uneconomic; the charges of labour and the price level of all material had enormously increased; and that inevitably meant continuously growing loss to the Government. The Accountant-General made queries in respect of this recurring loss and drew pointed attention of the State Government to the deficits in the working of the Power System. Accordingly, the question of revision of tariffs was considered in the State of Madras, but was not decided because reorganisation of the States was then in contemplation. After the respondent State was born, its Chief Engineer submitted proposals for revision of tariffs in all the areas covered by the relevant schemes. That is how the impugned notified orders came to be issued by the respondent.

3. The appellants were naturally aggrieved by these orders, because they added to their liability to pay the rates for the supply of