JUDGMENT

SHARMA, J. :— The dispute in these appeals is in regard to the additional demand of electric charges made by the respondent No. 1 on the appellant No. 1 for energy consumed. By a writ application filed before the Madhya Pradesh High Court the appellant challenged the demand of Rs. 1,80,97,880.97 for the period 12-11-1979 to 30-6-1981. Except for granting a minor relief as indicated in paragraph 45 of its judgment, the High Court dismissed the writ application. The writ petitioner-appellants have impugned the judgment before this Court by special leave.

2. The appellant No.1 Jiyajeerao Cotton Mills Ltd. (hereinafter referred to as the Company) which runs a textile mill in Gwalior, entered into an agreement dated 27-10-1971 with the respondent No. 1 Madhya Pradesh Electricity Board (in short the Board) a licensee under the Indian Electricity Act, 1910 (hereinafter referred to as the 1910 Act) to supply of electricity in accordance with the terms and conditions mentioned therein. The quantity of electricity to be supplied varied from time to time under. supplementary agreements and the Board had to supply 2500 K.W. on H.T. basis with effect from 1-11-1973. Since 1975 the Board is not able to generate sufficient electricity to meet the full demand of the consumers and with a view to ease the situation two orders were issued by the State of Madhya Pradesh under S. 22B of the 1910 Act on 4-4-1975 called as the Madhya Pradesh Electricity (Supply and Consumption Regulation) Order, 1975 and the Madhya Pradesh Electricity (Generation, Control and Consumption) Order, 1975. The learned counsel for the parties have in their arguments referred to these orders as Regulation Order and Generation Order respectively. By the Regulation Order, the consumers were asked to reduce their consumption in accordance with the provisions therein. It was further provided that without prejudice to the Boards power to disconnect the supply in the event of any violation thereof, the consumer will have to pay the charges at penal rates for the excess energy consumed. The Generation Order said that if a consumer had an alternative source of generating power from his own generating set (described as captive power by the parties) it may be required to generate electricity to the maximum extent technically feasible and the supply by the Board would be reduced to that extent. The order in Cl. 3 provided for assessment of the generating. capacity of the captive power of the consumer. The contract demand under the agreement was directed to remain reduced accordingly. Sub-clause (iii) of Proviso to Cl. 3 said that if in certain contingencies, there was reduction in the generation of electricity by the consumer, the Board would try to make good the deficit against an appropriate charge for it. An arbitration clause with respect to any dispute was included in the 6th paragraph of the order as its last term.

3. Both the orders came into force with effect from the 7th of April, 1975. The Divisional Engineer, Gwalior informed the appellant Company by the letter dated 17-5-1975 (marked as Annexure B page 121, Vol. 11 of the paper book) that its additional generation capacity technically feasible by its own generating sets had been assessed at 2700 KW. In view of the contract under which the Board was to supply 2500 KW. with effect from 1-11-1973, the Company was directed to generate additional electricity to that extent, thus reducing the demand on the Board to nil. After several letters passed between the parties, which will be dealt with at some length later, another letter dated 10-10-1975 (marked as Annexure O, page 136, Vol. 11 of the paper book) was sent to the Company issuing a fresh direction for generating additional electricity to the extent of 2500 K.W. with effect from 31-10-1975.

4. It appears that the Board did not bill the appellant Company for any additional energy supplied at the penal rate for the next several years. According to its case the Company