IMPORTANT POINT
Electricity Supply Agreement – Contract cannot be amended unilaterally – Unilateral addition or alteration of a contract can never be foisted upon an unwilling party, nor can a party to agreement be liable to perform a bargain not entered into with other party.

JUDGMENT :

SANJAY KAROL, J.

1. The questions that this Court has been called upon to decide are, whether the action of the Respondents in taking considerable time from when the application was made for reduction to 10000 KVA, to when the revised agreement was entered into, was arbitrary and unreasonable? Contingently, whether the Appellant is entitled to refund of the amount of difference between the amounts payable for 23000 KVA and 10000 KVA which, have been paid under protest?

2. This judgement will dispose of a cluster of appeals arising out of a judgment and order dated 15th December, 2008, in WA Nos.3806, 3807 and 3808 of 2003 passed by the High Court of Madras.¹[Hereafter, “the impugned judgment”]

3. By way of the impugned judgment, the Court below sitting in Writ Appellate Jurisdiction upheld the judgment and order passed by the Learned Single Judge in WP Nos. 19050-19052 of 2002, dismissing the said writ petitions, holding that the petitioners (Appellant herein, The Madras Aluminum Co. Ltd.) were bound to pay charges as per the contract irrespective of the consumption of 23000 KVA²[Kilovolt-ampere] being the maximum contracted load of electricity. The High Court, in appeal held that such a dispute is not one to be adjudicated under Article 226 of the Constitution of India.

4. Past events require recall to lend context to the instant appeals.

4.1.The Appellant is a company set up in 1965 for the manufacture of aluminium, which is a power and electricity intensive process. With the passage of time, it was declared a ‘sick industrial unit’ as per Section 3(1)(O) of the Sick Industrial Companies Act, 1985 by the Board for Industrial and Financial Reconstruction, Government of India³[Abbreviated as BIFR. Hereafter, “the Board”], vide order dated 8th September, 1987.

4.2.In 1994, the present management approached the Board with a plan for revival, pursuant to which a fresh scheme with certain additional concessions was issued in terms of the Government Office Memoranda bearing numbers 165 dated 21st December 1994 and 37, dated 10th February, 1995 respectively. With affairs so taken over by the present management, production commenced in February, 1995.

4.3. Originally, the maximum demand for electricity of the Appellant’s plant as per the agreement was 67000 KVA. Given that cost of consumption of such power constituted more than 40 percent of the cost of production, and that the company itself had established a captive power plant, a request was made and consequently agreed to, to reduce the contracted maximum demand to 23000 KVA. This was done vide agreement 3rd May,1999⁴[Hereafter, the “1999 Agreement”].

4.4.The Appellant then made a further request on 24th December, 2001, to reduce the contracted maximum demand to 10000 KVA with effect from 27th January, 2002, along with an offer to pay the one-time charge payable on effecting such a reduction.

4.5. Despite such request being made and some initial communication, no steps effectuating such request were taken. Therefore, the Appellant was being forced to pay as per the contracted demand of 23000 KVA @ 320 Rupees per KVA.

4.6.With the previous concessional power tariffs withdrawn and repeated high value demands apart from Seventy-Eight Lakhs (78,00,000) already paid on 25th May, 2002 as also the amounts paid subsequently, forced the filing of the petitions before different fora.

The Impugned Judgement

5. The Impugned Judgment records the stand of the Respondents, placing reliance on various clauses of the 1999 agreement and the Terms and Conditions of Supply of Electricity to justify their stand as being entirely permissible. Having referred to the contents of the clauses, the High Court held that it was not open for the Appellant to pay lesser charges than that of the contracted demand in absence of a sanction in respect thereof by the board.

5.1 It was further held that simply because the board took time in consideration of the application of the Appellants, this would not enable them