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Goa High Court
GUSTAVO FILIPE COUTO, Ag. J.C.
Chowgule and Company, Goa and another - Appellant
Versus
Union of India - Respondents
Spl. Civil Appln. (W. P.) No.2 of 1980
Decided On : 28 May 1982
ELECTRICITY - DEMAND CHARGES - POWER CUT - PRO RATA REDUCTION - REASONABLENESS - TARIFF - INTERPRETATION - ARTICLE 14 - CLASSIFICATION - VALIDITY - ELECTRICITY ACT, 1910, SECTIONS 23(3), 51-A.
Fact of the Case:
Petitioners, a mining company, challenged the demand charges levied by the electricity supplier during a power cut, arguing that they were liable to pay only the reduced demand charges proportionate to the extent of the supplies made. The supplier contended that the minimum demand charges were payable even during the power cut as per the agreement and the Tariff.
Finding of the Court:
The court held that the minimum demand charges could not be levied when the supplier was unable to supply electricity as per the contract and to the extent desired by the consumer. The Tariff should be construed reasonably, and a pro rata reduction should be made in cases where, for no fault of the consumer, energy was not supplied as stipulated in the contract.
Issues: 1. Whether the minimum demand charges could be levied during a power cut when the supplier was unable to supply electricity as per the contract. 2. Whether the Tariff was ultra vires Article 14 of the Constitution as it discriminated between high tension consumers and ordinary low tension consumers.
Ratio Decidendi: 1. The court interpreted Section 23(3) of the Electricity Act, 1910, and held that a licensee could charge only for the energy supplied. Therefore, the minimum demand charges could be levied only when the licensee was ready to supply but the consumer did not consume. 2. The court held that the classification distinguishing high tension consumers from ordinary low tension consumers was based on intelligible differentia and had a clear nexus with the object of achieving industrial and economic development. Hence, the classification was not discriminatory and did not violate Article 14 of the Constitution.
Final Decision: The petition was allowed, and the court declared that the liability of the petitioners was to pay the demand charges reduced pro rata to the extent the respondents were able to make supplies. The respondents were directed to refund any amount collected in excess of the amount pro rata reduced.
ORDER :- Petitioners, herein M/s. Chowgule and Company Private Limited and Ashok Vishwasrao Chowgule seek in this writ petition a declaration that whilst the power cut was in operation, respondents were not entitled to claim from them the full demand charges, the liability of the petitioners No.1 being to pay only the said demand changes reduced pro rata to the extent to which the supplies were made, and also a direction to the respondents not to charge the full demand charges as per the contract and Tariff, whilst respondents were unable to supply the contracted quantities and further to refund to the 1st petitioners the sum of Rs. 1,39,800/- and any other demand charges collected illegally from them.
2. The case of the petitioners is as under :-
The 1st petitioners carryon business inter alia, as mine owners and operate certain mineral processing plants, palletisation plants and also have a ship building yard and a textile mill. For the aforesaid purpose, they require electricity which is supplied to them by the respondents under an agreement dated 8th Feb., 1978. This agreement is to be read and construed in conformity with the provisions of the Electricity Act, 1910 and provides that the supplier shall supply and the consumer shall take all the power requirements at the petitioners Pale plant with a demand of 8,000 KVA. It further provides that the charges for such supply would be made in accordance with the Scheduled rates specified in suppliers standard rate Schedule HTI in force and that in consideration of the special obligations assumed and investments made by the supplier for the benefit of the consumer, the consumer undertook and guaranteed that the total annual charges payable by him for a period of 7 years for the electric energy consumed shall not be less than Rs. 55,339/- and that if the amount chargeable was less than the said amount in a particular year, the consumer would make up the difference and pay the same. Under S.23 read with Sec.51-A of the Electricity Act, 1910, a licensee is empowered to prescribe Schedules from time to time laying down charges to be recovered by the licensee for the purposes of the electricity supplied. In the exercise of the said powers, different methods of calculating power charges are prescribed by the respondents. Ordinary domestic consumers are ordinarily required and receive low tension supply and they are charged only on the basis of the actual quantity of electrical units consumed by them. Consumers like the 1st petitioners are supplied high tension power and are charged on a double basis being required to pay what are called demand charges and what are called energy charges. Energy charges are collected at the prescribed rates depending upon the quantity of energy actually consumed by the consumer in question. Demand charges are however charged at the rate prescribed per KVA of billing demand per month and the Tariff provides that the amount of such minimum monthly charges will be payable by all the high tension consumers. The said monthly minimum demand charges are calculated on the basis of the actual demand during the relevant month or 75% of the contract demand or the actual maximum demand during the period of 11 months whichever is higher. Accordingly, petitioners were required to pay not only the charges of the actual energy consumed but also the demand charges calculated as aforesaid. The Union Territory of Goa obtains virtually the totality of its electricity requirement from Maharashtra or Karnataka. Maharashtra and Karnataka have reduced the supply of electricity available to the respondents for distribution in Goa and as a result thereof a power cut ranging from 40 to 60 per cent has been imposed throughout Goa and the 1st petitioners were permitted to consume reduced energy as laid down in Column 2 of the Order No.2-12-72-IPDB, dated 31-10-1979. Consequent upon this power cut, petitioners have suffered heavy losses as they were unable to produce the v
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