A licensee under the Electricity Act, 1910, is not authorized to levy a standing charge on consumers of electricity unless such charge is authorized by the license or by the Electricity Act, 1910.

Headnote:
ELECTRICITY ACT - ELECTRICITY (SUPPLY) ACT - S.57(1), SCH.6, CL.1 - LICENSE - STANDING CHARGE - LEGALITY - The standing charge of Rs.2 for every 25 K.W. sought to be levied by the defendant-company from every consumer of electricity for domestic or general use was illegal and the defendant-company had no right to recover the standing charge.
Fact of the Case:

The defendant-company, a licensee under the Electricity Act, 1910, issued a notice to its consumers informing them of revised charges for the supply of electrical energy, including an additional monthly standing charge of Rs.2 for every 25 K.W. of connected load. Some consumers paid the standing charge for the months of May and June 1950, but later objected to its levy. The plaintiffs, representing the consumers, filed a suit for a declaration that the standing charge was illegal and for an injunction restraining the defendant-company from discontinuing the supply of electricity for non-payment of the charge.
Finding of the Court:

The trial court decreed the plaintiffs' suit, holding that the standing charge was illegal and the defendant-company had no right to recover it. The lower appellate court reversed the trial court's decree, holding that the Electricity (Supply) Act, 1948, authorized the defendant-company to levy the standing charge.
Issues: Whether the standing charge levied by the defendant-company was illegal.
Ratio Decidendi: The court held that the standing charge was illegal because it was not authorized by the defendant-company's license or by the Electricity Act, 1910. The court also held that the Electricity (Supply) Act, 1948, did not authorize the defendant-company to levy the standing charge. The court interpreted S.57(1) and Cl.1 of Sch.6 of the Electricity (Supply) Act, 1948, as imposing an obligation on licensees to comply with the provisions of Sch.6 and the Table appended to Sch.7, and not as creating new rights in favor of licensees. The court further held that the provisions of the Electricity Act, 1910, contained in S 3 (2), Cl. (d), or in S.21, Cl. (2), of that Act or the rates and methods of charging the same as fixed by the license were not affected by the Electricity (Supply) Act 54 of 1948.
Final Decision: The court allowed the appeal, set aside the decree passed by the lower appellate court, and restored the decree passed by the trial court with costs in this Court and in the District Court, payable by the defendant-company.

Judgement

JUDGMENT : - This second appeal arises out of a suit field by certain residents of the town of Chopda in the District of East Khandesh against the Chopda Electric Supply Company, Ltd., for a declaration that a standing charge of Rs.2 for every 25 K.W. sought to be levied by the Chopda Electric Supply Company, Ltd., which I will hereafter refer to as the defendant-company, from every consumer of electricity for domestic or general use was illegal and for an injunction restraining the defendant-company from discontinuing the supply of electricity for non-payment of the charge and for costs of the suit. The suit was filed under O.1, R.8, Civil P.C., as a representative suit on behalf of all consumers for domestic use in the town of Chopda.

2. The learned trial Judge decreed the plaintiffs suit. In appeal to the District Court at Jalgaon the appeal filed by the defendant-company was allowed and the plaintiffs suit was dismissed. Plaintiffs Nos.1 and 3 have come to this Court in second appeal.

3. A few facts which give rise to the appeal may be stated.

In 1936 a license for supplying electrical energy in the town of Chopda was issued to one Fakirchand Jankiram by order of the Government of Bombay. The license was transferred from time to time and finally on 21-8-1938, it was assigned to the defendant-company. Clause 9 of the license set out the limits of rates to be charged by the defendant-company for supply of electrical energy.

The material clause relating to levy of charges is Cl.9(A). In so far as it is relevant, it provides:

The rates to be charged by the licensee for energy supplied by him shall not exceed the maxima set out below: (A) Where energy is supplied by meter-(1) for general supply purpose, namely (a) for lights and fans not provided for in item (b) below,-a rate of Annas 6 per unit; .....(c) for heating and refrigerating purposes-a rate of Annas 2 per unit."

Under sub-cl. (4) of Cl.9 the defendant-company was authorised to charge meter rent not exceeding annas 8 per month for a Single Phase A.C. meter. This license was issued by the Government of Bombay in exercise of the power conferred by the Electricity Act of 1910. The Central Government passed the Electricity (Supply) Act (54 of 1948) with a view to provide for the rationalisation of the production and supply of electricity and generally for taking measures conducive to the electrical development to the State of India and for incidental matters.

By S.70(2) of the Act 54 of 1948 it was provided that save as otherwise provided in the Act the provisions of the Act shall be in addition to, and not in derogation of, the Electricity Act of 1910. The defendant-company assuming that by Act 54 of 1948, restrictions which were placed under the license and by the Electricity Act of 1910 upon the right of the licensee to levy rates and charges from consumers of electrical energy were abrogated, issued a notice dated 23-4-1950, generally to the consumers informing them of revised charges for the supply of electrical energy with effect from 1-5-1950.

By the notice the consumers were informed that for lights and fans there would be levied a charge of annas 8 per unit and for heating circuits and refrigeration a charge would be made at the rate of annas 5 per unit. An additional monthly standing charge of Rs.2 for every 25 K.W. of connected load was also intimated to be levied from every consumer of energy used for light and fans and for heating circuits and refrigeration.

Some of the consumers paid the additional standing charge of Rs.2 for the months of May and June 1950. An objection was, however, raised against the levy of the standing charge for subsequent months.

In the meanwhile correspondence ensued between the defendant-company and the Government of Bombay in connection with the right of the defendant-company to levy the additional standing charge. By their letter dated 26-9-1950, the Government of Bombay informed the defendant-company that their action in levying a

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1954 Supreme(Bom) 71

HIGH COURT OF BOMBAYSHAH, J.Babulal Chhaganlal GujerathiVersusChopda Electric Supply Co. Ltd.Second Appeal No.45 of 1954, from decision of Asst. J. Jalgaon, in Appeal No.67 of 1952.Decided On : 21-06-1954

A licensee under the Electricity Act, 1910, is not authorized to levy a standing charge on consumers of electricity unless such charge is authorized by the license or by the Electricity Act, 1910.

HIGH COURT OF BOMBAY
SHAH, J.
Babulal Chhaganlal Gujerathi
Versus
Chopda Electric Supply Co. Ltd.
Second Appeal No.45 of 1954, from decision of Asst. J. Jalgaon, in Appeal No.67 of 1952.
Decided On : 21-06-1954