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IN THE HIGH COURT OF ALLAHABAD
N. N. Mithal, J.
RAJ NARAIN PRATAP NARAIN - Appellant
Versus
U.P.STATE ELECTRICITY BOARD - Respondents
Civil Revision 294 Of 1980
Decided On : 09/11/1981
ARBITRATION - TEMPORARY INJUNCTION - U. P. GOVERNMENT ELECTRICAL UNDERTAKINGS (DUES RECOVERY) ACT, 1958 - APPLICABILITY - NOTICE OF DEMAND - VALIDITY - PRINCIPLES OF NATURAL JUSTICE - DUE OR PAYABLE - IRREPARABLE INJURY - BALANCE OF CONVENIENCE - SECURITY.
Fact of the Case:
The plaintiff, a flour mill owner, entered into a special agreement with the U. P. State Electricity Board (Board) for the supply of electricity to its mill. A security deposit of Rs. 55,100/- was paid, and the Board installed a meter for indicating units of electric power consumed. The agreement contained an arbitration clause for the settlement of certain disputes. The plaintiff paid all charges up to April 1979, but received a bill for Rs. 7429-13p for the period January 76 to August 77, which was paid under protest. The plaintiff shifted its mill from Dehradun to Agra in April 1979 and requested the Board to disconnect the electricity supply, which was done on 24-6-79. Another bill for Rs. 4684/- for the period September 77 to December 78 was also paid under protest. The plaintiff requested a refund of the security deposit, but the Board served two bills, one for Rs. 92891/- for the period 1-1-76 to April 78 and the other for Rs. 28243-20 P for the period 31st May 79 to 12-7-79, on 1-9-79. The plaintiff alleged that the second bill was wrong as the mill had been closed down and the electricity supply disconnected. A notice of demand under Section 3 of the U. P. Government Electrical Undertakings (Dues Recovery) Act 1958 (Dues Recovery Act) was served, demanding payment of Rs. 73,004. 33 P. after adjusting the security amount. The plaintiff filed an application under Section 20 of the Arbitration Act, alleging that a dispute had arisen and praying for reference to arbitration. An application for a temporary injunction was also filed under Section 41 of the Arbitration Act to restrain the Board from realizing the amount as arrears of land revenue. The lower court rejected the application, holding that the plaintiff was required to deposit the claimed amount as a precondition to any proceedings challenging its liability in view of Section 4 of the Dues Recovery Act. The plaintiff filed a revision petition in the High Court.
Finding of the Court:
The High Court held that the plaintiff had established a prima facie case for the grant of a temporary injunction. The court found that the provisions of the Dues Recovery Act were not applicable in the present case, as the U. P. State Electricity Board was not designated as a government electrical undertaking within the meaning of Section 2 (c) of the Act. The court also held that the amount demanded by the Board was not "due or payable" as it had not been properly determined and the plaintiff had not been given an opportunity to be heard. The court further held that the balance of convenience lay in favor of the plaintiff, as the Board could be secured by requiring the plaintiff to provide adequate security for the amount in question.
Issues: 1. Whether the provisions of the U. P. Government Electrical Undertakings (Dues Recovery) Act, 1958 are applicable to the present case? 2. Whether the amount demanded by the Board is "due or payable"? 3. Whether the principles of natural justice were violated by the Board in determining the amount due? 4. Whether the plaintiff has established a prima facie case for the grant of a temporary injunction? 5. Whether the balance of convenience lies in favor of the plaintiff or the Board?
Ratio Decidendi: 1. The provisions of the U. P. Government Electrical Undertakings (Dues Recovery) Act, 1958 are not applicable to the present case, as the U. P. State Electricity Board was not designated as a government electrical undertaking within the meaning of Section 2 (c) of the Act. 2. The amount demanded by the Board is not "due or payable" as it had not been properly determined and the plaintiff had not been given an opportunity to be heard. 3. The principles of natural justice were violated by the Board in determining the amount due, as the plaintiff was not given an opportunity to be heard. 4. The plaintiff has established a prima facie case for the grant of a temporary injunction, as it has shown that the amount demanded by the Board is not due or payable, that the principles of natural justice were violated, and that the balance of convenience lies in its favor. 5. The balance of convenience lies in favor of the plaintiff, as the Board can be secured by requiring the plaintiff to provide adequate security for the amount in question.
Final Decision: The revision petition was allowed, the order of the lower court was set aside, and the application for issuance of an injunction restraining the Board from realizing the amount in question as arrears of land revenue was allowed. The Board was restrained from realizing the disputed amount from the plaintiff during the pendency of the petition under Section 20 of the Arbitration Act, provided the plaintiff gave adequate security for the amount in question to the satisfaction of the court below within three months of the date of the order.
N. N. MITHAL, J.
( 1 ) THE present revision is directed against the order passed by the court below rejecting the plaintiffs application for issue of temporary injunction in the proceedings under Section 20 of the arbitration Act.
( 2 ) THE relevant facts of the case are that the plaintiff entered into a special agreement with the U. P. State Electricity Board (hereinafter referred to as the Board) on 26-9-1979 for supply of electricity to its Roller Flour Mill. A sum of Rs. 55,100/- was deposited as security and the board in pursuance of the agreement installed a meter for indicating units of electric power consumed, No other meter for indicating the maximum demand was, however, installed in the premises at that time. In the agreement one of the terms thereof related to settlement of disputes of certain nature through arbitration. The revisionist continued to pay all the charges in respect of the units consumed by it up to Apr. 1979 in accordance with the readings recorded by the meter. However, on 17-4-1979 the applicant received a bill for Rs. 7429-13p pertaining to the period from January, 76 to August, 77. Although the correctness and legality of this demand was disputed by the revisionist the money claimed in the bill was paid under protest on 1-5-79. In the month of April, with the permission of the authorities concerned, the flour mill in question was shifted from Dehradun to Agra. On 30th May, 1979 therefore a written request was made to the board to disconnect the supply. It was so actually disconnected on 24-6-79. In the mean time, another bill for Rs. 4684/-for the period from September, 77 to December, 78 was received and this too was paid by the revisionist under protest, Since the rolling flour mill units had been discontinued at Dehradun and all the bills sent to the revisionist already stood paid up, a request was made to get refund of Rs. 55,100/- deposited with the Board by way of security.
( 3 ) IT appears that simultaneously the revisionist had also approached the higher authorities seeking direction for getting refund of its security deposit (See Annexure 16, letter of Chief secretary of the Electricity Board) due to which the local staff got annoyed This immediately resulted in two bills one for Rs. 92891/-for the period from 1-1-76 to April, 78 and the other for rs. 28243-20 P for the period from 31st May, 79 to 12-7-79 being served on the revisionist on 1-9-79. It is alleged that this action of the Board was mala fide as the second bill was obviously wrong in as much as the roller flour mill unit of the revisionist itself had been closed down and shifted in April, 79 and the electricity supply had also been actually disconnected on 24-6-79 (Annexure 15 dated 2-7-79) yet the second bill covered a period even subsequent to the date of such disconnection. These bills were followed by a notice of demand under Section 3 of U. P. Government Electrical Undertakings (Dues Recovery) Act 1958 (herein-after referred to as Dues recovery Act) demanding payment of Rs. 73,004. 33 P. after making an adjustment of the security amount of Rs. 55,100/ -.
( 4 ) SINCE correctness of this demand was disputed the revisionist moved. an application under section 20 of the Arbitration Act alleging that dispute had arisen between the parties to the agreement which are covered by the arbitration clause and prayed that the matter may be referred to arbitration. Simultaneously, he moved an application for issue of a temporary injunction also under Section 41 of the Arbitration Act against the board restraining it from realising the amount in question as arrears of land revenue. This application was contested on behalf of the Board mainly on the ground that after a notice under Section 3 of the Dues Recovery Act had been served, the only way for revisionist to get any relief was to deposit the claimed amount first and then to file a suit for its refund from the Board. Since in this case, the money mentioned in the notice had not been
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