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Allahbad High Court
C.S.P.SINGH
Hindustan Aluminium Corporation. Ltd. - Appellant
Versus
The U.P. State Electricity Board - Respondent
Decided On : 09/27/1972
ELECTRICITY ACT, 1948 - SECTION 24 - ARBITRATION AGREEMENT - DISCONNECTION OF SUPPLY - NEGLECT TO PAY - WAIVER OF RIGHTS - WITHDRAWAL OF NOTICES - STATUTORY DUTY TO SUPPLY ELECTRICITY.
Fact of the Case:
The petitioner, an aluminium factory, entered into an agreement with the State Electricity Board for the supply of electricity. Disputes arose between the parties, and an arbitration agreement was entered into appointing a sole arbitrator. The arbitrator was unable to act, and the parties agreed to appoint another arbitrator. The Board sent a draft arbitration agreement to the petitioner, which the petitioner executed and returned. However, the Board refused to go ahead with the arbitration. The Board then issued a notice of disconnection of supply to the petitioner.
Finding of the Court:
The court held that the arbitration agreement was complete and binding on the parties. The court also held that the Board had waived its right to disconnect the supply under Section 24 of the Electricity Act, 1948, by entering into the arbitration agreement. The court further held that the Board was under a statutory duty to supply electricity to the petitioner and that the disconnection of supply would be a breach of that duty.
Issues: 1. Whether the arbitration agreement was complete and binding on the parties. 2. Whether the Board had waived its right to disconnect the supply under Section 24 of the Electricity Act, 1948. 3. Whether the Board was under a statutory duty to supply electricity to the petitioner.
Ratio Decidendi: 1. The court held that the arbitration agreement was complete and binding on the parties because: - The parties had agreed to appoint a sole arbitrator. - The arbitrator was unable to act, and the parties agreed to appoint another arbitrator. - The Board sent a draft arbitration agreement to the petitioner, which the petitioner executed and returned. 2. The court held that the Board had waived its right to disconnect the supply under Section 24 of the Electricity Act, 1948, by entering into the arbitration agreement because: - Section 24 of the Act is an enabling section, and the Board is under no obligation to resort to the mode of disconnection for the realisation of its dues. - The Board had agreed to treat the disconnection notices as withdrawn. 3. The court held that the Board was under a statutory duty to supply electricity to the petitioner because: - Section 18 of the Electricity (Supply) Act, 1948, imposes a duty on the Board to supply electricity to consumers.
Final Decision: The court allowed the petition and quashed the impugned notice of disconnection dated 8th December, 1971. The petitioner was awarded costs.
It appears that the Chief Engineer of the Electricity Board on the 1st November, 1966, sent a letter to the petitioner purporting to be under Cl. 12 (b) (i) of the first agreement imposing a 30% cut on consumption on account of low reservoir level of the Rihand Dam. This was followed by a notification under Section 22-B of the Electricity Act on the 5th November, 1966, directing that all energy supplied to consumers by licensees, which in the present case happened to be the Electricity Board would be subject to a 30% cut. This order was to remain effective till 30th June, 1967. Thereafter, the Board issued an order on the 20th February 1967 under Section 49 of the Electricity (Supply) Act, 1948 imposing a surcharge of 5.5 Paise per unit for energy consumed in excess of 70% of the normal monthly consumption. In the year 1967-68, 1968-69 and 1969-70, cuts were again imposed by the Board. A notification under Section 22B was also issued Imposing cuts. The cuts in these years were imposed on the basis that the reservoir level of Rihand was not of the optimum level so as to ensure a full supply of energy to consumers. The Board thereafter raised demands against the petitioner for excess energy consumption, and also certain other demands which were disputed by the petitioner company. On the 28th January, 1970, the Board and the petitioner entered into an arbitration agreement appointing Sri K. N. Wanchoo, retired Chief Justice of India as the sole arbitrator to decide the dispute which had arisen between the parties. This arbitration agreement which has been filed as Annexure 'III' to the petition sets out three heads of dispute and covers the period upto 1969-70. Clause 4 of this agreement is important for the purposes of the present case and may be quoted:-
"That all disconnection notices given by the Board for non-payment of the claims pertaining to the matters mentioned in clause I above, shall stand withdrawn on the execution of this agreement."
It appears that Sri K. N. Wanchoo was not available for arbitrating in the dispute. The parties then approached Sri A. K. Sarkar, another retired Chief Justice of India, but he too expressed his inability to take up the matter. Thereafter the Board sent a letter on the 19th March, 1971 (Annexure VI to the petition) suggesting the name of Sri Hidayatullah, retired Chief Justice of India t
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