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1973 Supreme(SC) 385
SUPREME COURT OF INDIA
The Gujarat Electricity Board, Appellant
Versus
The Ahmedabad Electricity Co. Ltd. and
others, Respondents.
Civil Appeal No. 1797 of 1967, D/- 28-11-1973.
D.N.Mishra, F.S.NARIMAN, I.M.SHROFF, J.B.DADACHAN, M.C.CHAGLA
Headnote:
Electricity (Supply) Act, 1948 - Section 57A, 5, 76, 4, 4A, 52, 12 ,57, 60 and 71 (1) - Indian Electricity Act, 1910 - Section 3 - Arbitration Act, 1940 - Section 46 - Electricity Company - Licence to Generate Transmit and Distribute Electrical Energy - Revise Rates of Electricity - Whether a reference by respondent Electricity Co. of an alleged dispute, between itself and Appellant Board to Authority operates as a bar to constitution of a Rating Committee by Board - Whether Board have accepted explanations preferred by Company – Whether claim made by Electricity Company that its dispute with Board was legally referable to Authority is sustainable in law - Whether this engagement is contractual or statutory, for, in either case, it is between two of them only - Whether State Government had good ground to be satisfied that licensee had not complied with provisions of Sixth Schedule and thus held up constitution of Rating Committee - Whether Board could be compelled to submit to arbitration of Authority - Whether Parliament wanted for purposes for both provisions that Authority should be approached not merely for interpretation of provisions of Sixth Schedule but also sundry matters of detail arising out of provisions - Whether provisions of Sixth Schedule had been complied with or not and such a dispute was referred to Authority – Held, It is for Parliament to clear doubt and uncertainty - For present purpose Court shall proceed on assumption that in present case alleged failure raises a dispute or difference as to interpretation of said provisions or any matter arising therefrom - Coming to third condition Court find that reference must be by licensee to arbitration Authority under paragraph XVI of Sixth Schedule - No doubt dispute had been referred by licensee to arbitration of Authority within time allowed by Statute - It is true that if arbitration for any sort of non-compliance of provisions of Sixth Schedule fell within second condition of proviso, and, otherwise, there was a competent arbitration between licensee and State Government licensee could have possibly prevented constitution of Rating Committee by State Government - Mere fact that in similar circumstances State Government could, perhaps, have been compelled to submit to arbitration of Authority is no adequate answer - If this is a lacuna in legislation it is for Parliament to correct it – Court may, however, point out that in enacting Section 57A Parliament seemed to attach some importance to appointment of Rating committee and must have intended that enquiry by Committee should be expeditious - Board takes decision to appoint Committee only when it is satisfied that provisions of Sixth Schedule are not complied with i.e. to say, licensee was over-charging consumer - In Court opinion second proviso to Section 57A does not contemplate holding up of constitution of Rating Committee merely on ground that there is a dispute or difference between Board and licensee - High Court on which relief was given to respondent No. 1 cannot be sustained in law - It appears that some other issues had been also raised before High Court but they were not dealt within view of finding recorded - Parties, therefore, are agreed that case will have to go back to High Court for disposal in accordance with law after considering other issues raised in Special Civil Application - Accordingly case is remanded to High Court for disposal - Case remanded.
Certainly. Based on the provided legal document, here are the key points:
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The case concerns whether a reference by the Electricity Company to arbitration of the Central Electricity Authority (the Authority) constitutes a bar to the constitution of a Rating Committee by the Electricity Board under Section 57A of the Electricity (Supply) Act, 1948 (!) .
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The dispute originated from the Electricity Company's notice to revise electricity rates, which was contested by the Board and the State Government, leading to disagreements over financial data and the justification for rate increases (!) (!) .
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The Electricity Company claimed that a dispute existed between it and the Board, which was referred to arbitration of the Authority within the statutory timeframe, thus preventing the Board from constituting a Rating Committee (!) (!) .
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The High Court held that such a dispute was referable to arbitration under the relevant provisions, rendering the subsequent constitution of the Rating Committee illegal and without jurisdiction (!) .
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The legal question centers on whether disputes between the Board and the licensee are arbitrable under the statutory provisions, especially considering that the arbitration clause in the license was primarily between the licensee and the State Government, not the Board (!) (!) .
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The statutory framework indicates that disputes under the license are generally to be arbitrated between the licensee and the State Government or the Board, but only if explicitly provided; there is no clear statutory obligation for disputes between the Board and the licensee to be arbitrated before the Authority (!) (!) .
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The arbitration clause in the license (paragraph XVI of the Sixth Schedule) explicitly applies to disputes between the licensee and the State Government, not the Board, and thus does not automatically extend to disputes between the Board and the licensee (!) (!) .
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The second proviso to Section 57A of the Act restricts the constitution of a Rating Committee if there is an existing dispute or difference as to the interpretation of the Schedule's provisions that has been referred to arbitration before the notice for the Rating Committee is issued (!) (!) .
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The dispute in question was not a reference made under paragraph XVI of the Schedule by the licensee against the State Government but was a reference by the licensee against the Board, which does not fall within the scope of the arbitration clause (!) (!) .
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The Court concluded that, in the absence of an explicit statutory provision or agreement, disputes solely between the Board and the licensee are not arbitrable before the Authority under the provisions discussed, and therefore, the High Court's decision was not sustainable in law (!) (!) .
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The case was remanded to the High Court for further disposal, considering other issues raised, with the understanding that the dispute did not fall within the scope of the statutory arbitration provisions as interpreted (!) (!) .
Please let me know if you require further analysis or clarification on any specific aspect.
Judgment
PALEKAR, J. :- This appeal by certificate from the judgment and Order of the High Court of Gujarat in Special Civil Application No. 388 of 1964 raises the question whether a reference by the respondent Electricity Co. of an alleged dispute, between itself and the Appellant Board to the Arbitration of the Central Electricity Authority (hereinafter called the Authority) operates as a bar to the constitution of a Rating Committee by the Board under Section 57A of the Electricity (Supply) Act, 1948 (hereinafter called the Act).
2. A few facts may be necessary to be stated. The appellant Board is constituted under Section 5 of the Act and has several functions to perform under the Act. Respondent No. 1, the Electricity Company, holds a licence to generate transmit and distribute electrical energy within the licenced area of Ahmedabad.
3. On September 11, 1963 the Electricity Company intimated to the Board and the State Government of its intention to revise the rates of electricity with effect from November 16, 1963 on the ground that the cost of operation had increased and it anticipated that the clear profit for the year 1963-64 ending on March 31, 1964 would clearly fall short of the reasonable return. Along with this notice the Electricity Company sent some financial data also. The State Government informed the Electricity Company that the financial data was not correct and there was no justification for the proposed increase of the rates. The Board also by its letter dated November 14, 1963 informed the Electricity Company that they were not satisfied with the data given and considered that there was no justification for revising the rates. The Electricity Company informed the Government and the Board that it did not agree with the view taken by them and, in the meantime, brought the new rates into effect from 16-11-1963.
4. After applying its mind in greater detail the Board proposed to appoint a Rating Committee under Section 57A of the Act, being of the view that the Electricity Company was over-charging the consumers which it was not entitled to do. But before constituting the Rating Committee it gave a notice to the Electricity Company, as required by the first proviso of Section 57A, to show cause why the Committee should not be constituted. The notice was issued on 7-3-1964. The notice, in short, informed the Electricity Company that by bringing into effect the enhanced rates of supply from September 16, 193 the Electricity Company was over-charging the consumers and had thus failed to comply with the provisions of the Sixth Schedule to the Act. Therefore, the Board proposed to appoint a Rating Committee to make recommendations to the Government regarding charges for electricity which the Company could make to its consumers. However, before proceeding to constitute the Committee the show-cause notice was being given. This brought a reply from the Electricity Company dated March 26, 1964 in which some attempt was made to justify the increase and it was alleged that the Company cannot be regarded as having breached the provisions of the Sixth Schedule. The letter was closed on this note: "We have endeavoured to answer all the points raised by the Board in the hope that the issues raised will be appreciated in the proper context and that the Board would not pursue the matter further. If therefore, the Company fails to hear from the Board, say, by 6th April, 1964, that the explanations offered are accepted, the issues involved will be referred to the arbitration of the Central Electricity Authority in terms of para XVI of the Sixth Schedule read with Section 76 of the Electricity (Supply) Act. 1948.
5. The threat held out in the above letter was carried out on 6-4-1968 (See: Ext. D) by which the reference was made to the Authority in the following words: ".....As the company has no information as to whether the Board have accepted the explanations preferred by the Company, we hereby refer the "disputes raised by the
