1997 Supreme(MP) 668

High Court Of Madhya Pradesh
A. K. MATHUR, DEEPAK MISRA
JINDAL STRIPS LIMITED - Appellant
Versus
MADHYA PRADESH ELECTRICITY BOARD - Respondents
L. P. A. 54 Of 1997
Decided On : 09/25/1997

Headnote:

ELECTRICITY - POWER PURCHASE AGREEMENT - VALIDITY - COMPETENCY OF EXECUTIVE DIRECTOR (COMMERCIAL) TO ENTER INTO AGREEMENT ON BEHALF OF BOARD - BOARD'S APPROVAL - INDOOR MANAGEMENT - ESTOPPEL - COMPENSATION FOR SUPPLY OF POWER - JURISDICTION OF CIVIL COURT - EXTRAORDINARY JURISDICTION.

Fact of the Case:

The appellant company, M/s. Jindal Straips Limited, had a plant in which sponge iron, steel slabs, and blooms were manufactured. The appellant company made a request to the respondent Madhya Pradesh Electricity Board (the Board) for permission for installation and running of a generating set in parallel with the Board's grid and supply of excess energy to the Board. In response, the Board wrote on 26th May, 1993, that permission under Section 44 of the Electricity (Supply) Act, 1948 (the Act of 1948) is accorded to establish and run 15 M.W. turbogenerator set in parallel with the Board's system. The appellant company further made a request for extension of said permission and by letter dated 23rd April, 1994, the Executive Director (Commercial) of the Board wrote to the company that it has been decided to permit the company to run 2 numbers D.G. sets of 4375 KVA each in parallel with Board's system for which permission for standby use was earlier accorded. The said letter further stated that the request of the company to accord permission to feed energy generated by it in excess of its requirement into Board's system has been accepted subject to certain terms and conditions enumerated in the letter. The appellant company accepted the terms and conditions but made certain suggestions and modifications by a communication dated 23rd May, 1994. This was examined by the Board and the Board by its communication dated 5th August, 1994, wrote back dealing with the points raised by the company and mentioning the views of the Boards. The appellant company agreed in principle the terms and conditions contained in communication dated 23rd April, 1994, and subsequent communication dated 5th August, 1994, by letter dated 26th December, 1994. On 21st July 1995, the permission granted by the Board vide letters dated 23rd April 1994 and dated 5-8-1994 was substantially modified altering the terms and conditions, which gave rise to this litigation.

Finding of the Court:

1. The Executive Director (Commercial) of the Board was not competent to enter into any such agreement on behalf of the Board and the whole action of the Executive Director (Commercial) was unauthorized. Thus, no agreement had come into existence with the appellant on behalf of the Board. 2. The principle of estoppel will not be applicable in this case as no valid agreement had come into existence on behalf of the Board. 3. The Board is not bound by the unauthorized act of its limb. 4. The appellant company is entitled to be compensated either by supply of the same energy as supplied by the company to the Board or it can be compensated in terms of money. 5. The exercise of determining the quantum of compensation cannot be undertaken in the extraordinary jurisdiction of the Court.

Issues: 1. Whether the Executive Director (Commercial) of the Board was competent to enter into an agreement on behalf of the Board? 2. Whether a concluded contract had come into existence between the parties? 3. Whether the Board is estopped from going back on the principle of estoppel? 4. Whether the appellant company is entitled to be compensated for the supply of power to the Board? 5. Whether the Court can exercise jurisdiction to determine the quantum of compensation?

Ratio Decidendi: 1. The Executive Director (Commercial) of the Board was not competent to enter into any such agreement on behalf of the Board and the whole action of the Executive Director (Commercial) was unauthorized. Thus, no agreement had come into existence with the appellant on behalf of the Board. 2. The principle of estoppel will not be applicable in this case as no valid agreement had come into existence on behalf of the Board. 3. The Board is not bound by the unauthorized act of its limb. 4. The appellant company is entitled to be compensated either by supply of the same energy as supplied by the company to the Board or it can be compensated in terms of money. 5. The exercise of determining the quantum of compensation cannot be undertaken in the extraordinary jurisdiction of the Court.

Final Decision: The appeal is dismissed. There shall be no order as to cost.