The petitioner is a cement factory and bulk consumer of electricity. Its Contracted Maximum Demand (CMD) is 15000 KVA. It is stated that the respondents imposed power cuts till August 1988. Thereafter, orders were issued, lifting of the power cuts. A bill was served for the month of September, indicating that the recorded maximum demand was 16320 KVA. In addition to levying penalty for exceeding the CMD, the respondents have charged a sum of Rs.9,92,466-91 ps., in terms of Clause (7) of B.P.Ms.No.671, dated 10.06.1987.

The grievance of the petitioner is that though the respondents are entitled to levy double the charges in terms of Clause (7) on demand in excess of CMD, there is no basis for levy of double the charges on the energy, since there is no agreement in that context. The petitioner states that the respondents themselves treated demand and energy as separate and independent components, in the context of levying penalties, particularly when power cuts were imposed, and there is no basis for treating them as inter-dependant, when there is no separate contract, in respect of energy. They challenge the validity of the said clause, insofar as it enables the respondents to levy penal charges on the energy consumption.

A counter affidavit is filed justifying the levy of penalty on excess energy also. The respondents contend that they are conferred with the statutory power to stipulate or alter the conditions of supply and that the amounts were charged in terms of clause (7) of B.P.Ms.No.671.

Sri D.Nagarjuna Babu, learned counsel for the petitioner submits that it is only in respect of demand, that limits are stipulated and in case of the petitioner, it is fixed at 15000 KVA and that there is no stipulation as to consumption of energy. He also submits that there may be instances, where the penalty contemplated under clause (7) may be imposed, on consumption of energy, in case the limits of energy consumption are also prescribed. Learned counsel submits that the clause brings about a semblance of double penalty for one and the same use of consumption of power. He points out that the respondents are not put to any loss, and are paid for every unit of supply, that is availed by the petitioner, through proper and legal means. Sri O.Manohar Reddy, learned counsel for the respondents, on the other hand, submits that the clause was incorporated in exercise of the statutory powers by the erstwhile Board and that the same does not suffer from any illegality or infirmity. He contends that the demand, on the one hand, and energy, on the other, are two different concepts. Learned counsel submits that the clause is legal and proper and no exception can be taken to the levy of amount against the petitioner.

This Court allowed the writ petition, though its judgment, dated 27.11.1998. Thereupon, the respondents filed W.A.No.2183 of 1998. It was allowed by a Division Bench of this Court on 14.10.2008, on the ground that the writ petition was allowed, even without expressing any view as regards the validity of clause (7), which was specifically challenged in the writ petition. Accordingly, the writ petition was directed to be heard afresh.

The petitioner reeled under restrictions in terms of consumption of power, due to the power cuts imposed by the respondents, up to August 1988. It was only in September 1988, that the power cut was lifted. Obviously in its anxiety to make up the loss, for the previous months, due to power cuts, the petitioner went into production in a large scale, after the cuts were withdrawn. This in turn resulted in crossing the limits of CMD of 15000 KVA. In the Bill issued for the month September of 1988, it was mentioned that the maximum demand for the month of September was recorded at 16320 KVA. Therefore, the petitioner was liable to pay the amount for the excess demand of 1320 KVA. In fact, the petitioner does not make any grievance out of it. Clause (7) of B.P.Ms.No.61, dated 10.06.1987 reads as under:

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