JUDGMENT

B. P. JEEVAN REDDY, J :—Leave granted, Heard counsel for the parties.

The Orissa State Electricity Board is questioning in this appeal the correctness of the judgment of the Orissa High Court declaring the proviso to Regulation 46 of the Orissa State Electricity Board (General Conditions of Supply) Regulations 1981, (hereinafter referred to as "Regulations") as unreasonable, arbitrary and illegal. Having struck down the proviso - i.e., the proviso as substituted by Notification dated June 25, 1987 - the High Court has directed the Board to revise the bills issued to the respondent - writ petitioner "on the basis of proportionate reduction taking into account the actual consumption of energy."

2. The respondent-writ petitioner (M/s. IPI Steel Limited) has a mini steel plant in Orissa. On August 16, 1984, it had entered into an agreement with the appellant-Board whereunder the Board undertook to supply "up to but not exceeding a maximum demand of 7778 KVA/7000 KW". The agreement contains the following stipulations among others :

(1) "The consumer has perused a copy of the Orissa State Electricity Board (General Conditions of Supply) Regulations, 1981, understood its contents and undertakes to observe and abide by all the terms and conditions stipulated therein including all future modifications thereto to the extent they are applicable to him. The Orissa State Electricity Board General Conditions of Supply) Regulations, 1981 as modified from time to time shall be deemed to from part of this Agreement" (Vide Clause (2) (Emphasis added).

(2) "The consumer shall pay to the Engineer for the power demand and electrical energy supplied under this Agreement in accordance with the tariff as mentioned below, subject to any revision that may be made by the Board from time to time.

Large Industries

(a) The monthly charges shall be :-

Demand charges at Rs. 35.00 per KVA of maximum demand plus energy charges at the following rate on units metered less units billed separately under (c) and (d) below :

Paise 36.00 (sic) for each unit without prejudice to payment of monthly minimum charges indicated below :

(b) The monthly minimum charges shall be calculated at the above rates, on a demand of 80 percent contract demand and on units calculated at an average power factor of 0.9 and an average load factor of 15 per cent on the said contract demand. (Vide Clause (7))". (The remaining portion of Clause (7) is omitted as unnecessary.)

3. The respondent complains that notwithstanding the agreement, the Board was in no position to supply the full quantity of energy stipulated in the agreement. It is, however, not necessary to consider the said plea, since we are concerned herein with the period January 1989 to August, 1990 alone. During this period an order under Section 22-B of the Indian Electricity Act, 1910 read with Section 78(A) of the Electricity (Supply) Act, 1948 issued by the Government of Orissa on February 14, 1990 was in force. It would be appropriate to notice the relevant contents of the Order. The Order recited that since the total availability of power from the generating stations in Orissa will fall short of the total requirement of power in the State substantially, the State Government is of the opinion that for maintaining the supply and securing equitable distribution of energy, it is expedient to regulate the supply, distribution, consumption and use of energy from the Orissa grid. The Order directed "the Orissa State Electricity Board to reduce the supply of energy so as to allow the consumer to avail to the extent as specified in the Annexure anything in any contract agreement or requisition for supply or increase in the supply of energy notwithstanding." Contravention of the provisions of the Order rendered the consumer liable for disconnection of service line without notice and for payment of energy charges at double the highest rate of energy charges for any category in addition to the penalties. In the Annexure to the said or