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SUPREME COURT OF INDIA
A.Alagiriswami : P.K.Goswami : P.N.Bhagwati
Titagarh Paper Mills: Orissa Textiles Mills
Versus
Orissa State Electricity Board
Case No. : 1653 of 1974
Date of Decision : 7/23/75
Advocates Appeared: Bhagat Vinoo : Parthasarathi B. : Parthasarathy B. : Rathi G.
Electricity Act, 1948 - Section 5(1), 60 , 26 and 57 - Indian Electricity Act, 1948 - Section 49 and 59 - Arbitration Act, 1940 - Section 34 - Business - Levy Coal Surcharge - Appellant is a limited liability company carrying on business of manufacture of board and paper - Appellant wanted to set up its factory at a place which would be convenient from point of view of availability of facilities such as electric power - State had, about this time, commissioned hydroelectric station at site of Hirakud dam with a view to stepping up production of electricity and making it available for industrial purposes - It offered to supply electricity to appellant at reasonable rates as also to make other facilities available to appellant if appellant set up its factory - Whether levy is justified under agreement is a matter well within scope of arbitration proceeding - Whether any of these provisions of Supply Act empowered Board to levy coal surcharge - Whether Board had power under S. 49 and 59 and Sixth Schedule to Supply Act to levy coal surcharge - Whether Board had power of agreement to levy any coal surcharge at all when no such power was conferred on it by Act, whether action of Board in levying coal surcharge on appellant under clause (13) of agreement was arbitrary and unreasonable or whether it was based on extraneous and irrelevant considerations and whether, on facts and circumstances of case, Board was justified – Held, On facts and circumstances of case, Board was justified under clause (13) of agreement to levy coal surcharge on appellant, are plainly questions arising under agreement and they are covered by arbitration provision contained in clause (23) of agreement - All contentions raised by appellant against claim to justify levy of coal surcharge by reference to clause (13) of agreement would, therefore, seem to be covered by arbitration agreement and there is no reason why appellant should not pursue remedy of arbitration which it has solemnly accepted under clause (23) of agreement and instead invoke view that High court was right in exercising its discretion against entertaining writ petition on merits, in so far as it was directed against validity of levy of coal surcharge under clause (13) of agreement - Merits of contentions raised by appellant would have to be decided by arbitration 3s provided in clause (23) of agreement - Appeal dismissed.
P.N.BHAGWATI, J.
(1) THIS appeal, by special leave, is brought against an order of the High court of orissa dismissing a writ petition filed by the appellant for quashing a press note dated 1/02/1971, levying a coal surcharge at the rate of 0.62 p. per unit on electricity supplied by the orissa State Electricity Board from the Talcher Hirakud grid. The writ petition came to be filed by the appellant in the following circumstances.
(2) THE appellant is a limited liability company carrying on business of manufacture of board and paper. The appellant wanted to set up its factory at a place which would be convenient from the point of view of availability of facilities such as electric power. The State of orissa had, about this time, commissioned hydroelectric station at the site of Hirakud dam with a view to stepping up the production of electricity and making it available for industrial purposes. It offered to supply electricity to the appellant at reasonable rates as also to make other facilities available to the appellant if the appellant set up its factory at Choudwar in Cuttack district. An agreement dated 3/12/1960 was accordingly entered into between the appellant and the State of orissa for supply of electricity at certain mutually agreed rates and on the terms and conditions set out in the agreement. Clause (1) of the agreement provided that it shall be deemed to be in force for a period of five years from the date of supply of hydro-power, i.e. 1/02/1958 and thereafter shall so continue unless and until the same shall be determined by either party giving to the other six calendar months notice in writing of his intention to terminate the agreement: It was common ground between the parties that neither had given notice terminating the agreement as contemplated in clause (1) and in the circumstances, the agreement continued to be in force. Clauses (7), (14) and (22) specified the charges payable by the appellant for the electricity supplied by the State Electricity Board under the agreement. Clause (13) provided that:
THE tariff and conditions of supply mentioned in this agreement shall be subject to any revision that may be made by the supplier from time to time.
Clause (23) laid down the machinery of arbitration. It said:
ANY dispute or difference arising between the consumer and the supplier or their respective Electrical Engineer as to the supply of electrical energy hereunder or the pressure thereof or as to the Supplier or the Consumer respectively to determine the same or any question, matter or thing arising hereunder shall be referred to a single arbitration (sic arbitrator) who shall be mutually agreed upon by both parties.
And lastly, clause (24) declared that the supply of electrical energy under this agreement shall be subject to the provisions of all Acts of the Union Parliament and the rules made thereunder and the special orders of the government of orissa for the time being in force with reference to the supply of electrical energy from the Hirakud hydroelectric station and the provisions of such Acts of the Union Parliament and the rules made thereunder and Special Orders of the government of orissa shall be deemed to be incorporated with and form part of this agreement so far as they are not inconsistent therewith. This last mentioned clause clearly posited that under the agreement electricity was to be supplied by the State from the Hirakud hydroelectric station a position reinforced by the use of the words "hydro-power" in clause (1). In view of this agreement, the appellant set up its factory for manufacture of board and paper at Choudwar, a backward area, even though it is situated far from the source of raw materials and the consumer market and the State supplied electricity to the appellant at the rates stipulated in the agreement.
(3) IN or about 1962 the State government, by a notification issued under S. 5, Ss. (1) of the Electricity (Supply) Act, 1948 (hereinafter ref
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