1. Electricity supply agreement — Request for reduction of contracted load — Refusal by Board — Claim for damages under Consumer Protection Act, 1986. (Para 1 , 2 )
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1999 Supreme(SC) 1105
SUPREME COURT OF INDIA
R.P.Sethi : S.Saghir Ahmad
M.P.Electricity Board
Versus
Manju Singh Chauhan (Mrs) Managing Director, Silencers India (P) Limited
Case No. : 4528 of 1991
Date of Decision : 9/23/99
Important Points
A service provider's exercise of unqualified contractual discretion to refuse a request, when done in accordance with the agreement, does not constitute a "deficiency of service" under the Consumer Protection Act, 1986.
Subject
Consumer Law - Deficiency of Service
Act Referred
Headnote
(A) Consumer Protection Act, 1986 - "Deficiency of service" - Contractual discretion - Where a written agreement grants unqualified discretion to a service provider to allow or refuse a request for reduction of contracted load, and such discretion is exercised in accordance with the terms of the contract, there is no "deficiency of service" as contemplated under the Act. (Paras 5, 6, 9)
Facts of the case:
A consumer contracted for a specific electricity load through a written agreement which stipulated that the load could be reduced at the discretion of the service provider. The consumer requested a reduction in the maximum contracted load, which was rejected by the provider based on the agreement's terms. The consumer approached a consumer commission for damages and billing adjustments. While the commission disallowed compensation, it directed the provider to bill the consumer at the requested lower load for a specific period. This direction was challenged by the provider.
Findings of Court:
The action of the provider in refusing the reduction of the load was wholly in consonance with the terms of the agreement. The fact that the provider later reduced the load for the consumer or others based on representations from an industry federation does not constitute a binding precedent.
Issues: Whether the refusal to reduce the contracted electricity load, pursuant to a discretionary clause in the agreement, constitutes a "deficiency of service" under the Consumer Protection Act, 1986.
Ratio Decidendi: If a contract gives unqualified discretion to a party to take an independent decision, and that decision is made after consideration of relevant material and in accordance with the contract, no legal grievance regarding "deficiency of service" can be raised.
Result: Appeal allowed.
Facts of the case:
A consumer contracted for a specific electricity load through a written agreement which stipulated that the load could be reduced at the discretion of the service provider. The consumer requested a reduction in the maximum contracted load, which was rejected by the provider based on the agreement's terms. The consumer approached a consumer commission for damages and billing adjustments. While the commission disallowed compensation, it directed the provider to bill the consumer at the requested lower load for a specific period. This direction was challenged by the provider.
Findings of Court:
The action of the provider in refusing the reduction of the load was wholly in consonance with the terms of the agreement. The fact that the provider later reduced the load for the consumer or others based on representations from an industry federation does not constitute a binding precedent.
Issues: Whether the refusal to reduce the contracted electricity load, pursuant to a discretionary clause in the agreement, constitutes a "deficiency of service" under the Consumer Protection Act, 1986.
Ratio Decidendi: If a contract gives unqualified discretion to a party to take an independent decision, and that decision is made after consideration of relevant material and in accordance with the contract, no legal grievance regarding "deficiency of service" can be raised.
Result: Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether refusal to reduce contracted load based on contractual discretion constitutes a deficiency of service under the Consumer Protection Act, 1986. (Para 2 , 5 , 8 )
3. Contractual clauses granting unqualified discretion to a provider to refuse load reduction preclude legal grievances when decisions are based on relevant material. (Para 6 , 8 )
4. Exercise of contractual discretion in accordance with the agreement does not constitute a deficiency of service under the Consumer Protection Act, 1986. (Para 6 , 9 )
5. Appeal allowed — Direction for retrospective billing at reduced load set aside. (Para 10 )
6. Does the exercise of contractual discretion to refuse a request for load reduction constitute a deficiency of service?
No. If the agreement grants the service provider unqualified discretion to allow or refuse a reduction in contracted load, and the decision is made after considering relevant material, such action is in consonance with the contract and does not constitute a deficiency of service. (Para 6 , 9 )
7. Does a subsequent reduction of load granted to a consumer or others create a binding precedent for earlier requests?
No. A reduction granted based on specific representations or special circumstances, such as representations from a Chamber of Commerce, does not create a binding precedent that necessitates granting similar reductions for other periods or requests. (Para 8 )
8. Is a claim maintainable under the Consumer Protection Act, 1986, if the service provider acts within the terms of a written contract?
No. When a service provider's actions are wholly in consonance with the terms of the written agreement between the parties, there is no deficiency of service, and consequently, a claim petition under the Act is not maintainable. (Para 9 )
(1) THE respondent had contracted with the Madhya Pradesh State Electricity Board for the supply of 168 KVA electricity load through an agreement in writing which, inter alia, stipulated that on the request of the consumer, namely, the respondent, the load could be reduced.
(2) ON 23-3-1987, the respondent requested the Board for reduction of the maximum contracted load from 168 KVA to 100 KVA. This request was rejected by the appellants by their letter dated 23-5-1987 on the basis of clause 13(d) of the agreement. The respondent then approached the National Consumer Disputes Redressal Commission for damages to the tune of Rs 20.05 lakhs. The claim was contested by the Board which also raised the question of maintainability of the claim petition on the ground that there being a contract in writing between the parties and the discretion having been left to the Board to reduce or not to reduce the load, there was no "deficiency of service" and the claim petition was not maintainable.
(3) THE National Commission by the impugned judgment, while disallowing the claim of the respondent for compensation, directed that the Board would bill the respondent from 23-5-1987 to 31-10-1987 on the basis of the maximum power demand of 100 KVA instead of 168 KVA. It is this direction which is challenged before us in this appeal.
(4) MR G.L. Sanghi, learned Senior Counsel appearing on behalf of the Electricity Board has invited our attention to clause 13(d) of the agreement which is to the following effect:
"13. (d) On being satisfied that for certain compelling reasons the consumer is not or will not be in a position to consume electricity sufficient to have maximum demand equal to his contract demand, the Board may in its discretion allow the consumer, when request in writing is received in this regard, to reduce his contract demand to such extent and from such date as the Board may decide. Such reduction in the contract demand will be allowed not more than once during the period the agreement remains in force, but it shall not affect the consumers liability to pay the amount of the minimum guarantee mentioned in clause 21 (a) hereof."
(5) HE contended that in view of the discretion left to the Board under the aforesaid clause, it was open to the Board either to allow or refuse the request of the respondent for reduction of the load. It is contended that the Board considered the request of the respondent and then by a speaking order rejected the request. This was done wholly in accordance with the terms of the contract and, therefore, there was no "deficiency in service" as contemplated by the Consumer Protection Act, 1986 and consequently, the claim petition before the National Commission was not maintainable.
(6) THE contention raised by Mr Sanghi is fully borne out by clause 13(d) of the agreement which gives an unqualified discretion to the Board to take its own independent decision whether it would allow a reduction in the sanctioned load agreed in writing to be supplied to the consumer. Once the Board, on a consideration of the relevant material, took the decision not to reduce the load, the consumer (respondent) cannot legally raise a grievance.
(7) OUR attention was invited by the learned counsel for the respondent to the following observation of the National Commission:
"ON 14-7-1988, the opposite party (Electricity Board) while reiterating that the request for reduction of contract demand was not found feasible as being justified by compelling reasons, however, as a special case, reduction in the contract demand was permitted from 168 KVA to 143 KVA w.e.f. 1-8-1987 and to 126 KVA w.e.f. 1-4-1988. The contract demand was scaled down retrospectively and in the additional submissions of 5-9-1991 the respondent has explained that this was done in the light of the decisions taken by the M.P. Electricity Board on the representation of the Federation of M.P. Chambers of Commerce and
