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MADHYA PRADESH HIGH COURT AT JABALBUR BENCH
Sanjay Yadav, J.
M.P.State Electricity Board - Appellant
Versus
Shiv Shakti Paper - Respondent
Misc. Appeal Nos. 506 of 2002, 2245, 2446, 2471 of 2003 and 164 of 2004
Decided On : 23-03-2010
Electricity Regulatory Commission Act - Reduction in Contract Demand - Section 27 of Electricity Regulatory Commission Act, 1998 and Clause 41 of M. P. Vidyut Sudhar Adhiniyam, 2000 - 13(a), 13(b), 13(c), 13(d) - The court discussed the issue of reduction in contract demand owing to reduction in production affected by market conditions and advancement of technology leading to reduced consumption of electricity. The court analyzed the relevant clauses of the agreement and the jurisdiction of the Commission in allowing the reduction. The court also considered the provisions of the Madhya Pradesh Vidyut Sudhar Adhiniyam, 2000 and the functions of the State Electricity Regulatory Commission under the Electricity Act, 2003.
Fact of the Case:
The case involved appeals preferred under section 27 of the Electricity Regulatory Commission Act, 1998 and Clause 41 of M. P. Vidyut Sudhar Adhiniyam, 2000, against the order passed by Madhya Pradesh Electricity Regulatory Commission, Bhopal. The issue revolved around the reduction in contract demand by invoking clause 13(d) in the Agreement for High Tension Supply between the Board and the consumers. The consumers' request for reduction was based on reduced production due to market conditions and technological advancements.
Finding of the Court:
The court found that the Commission had the jurisdiction to adjudicate the consumers' claim against the denial by the Board for reduction in contract demand. The court held that the reasons put forth by the consumers for reduction constituted compelling reasons under clause 13(d) of the agreement. The court also noted that the Board's refusal to allow reduction based on market conditions was not justified, considering the provisions of the Madhya Pradesh Vidyut Sudhar Adhiniyam, 2000 and the functions of the State Electricity Regulatory Commission under the Electricity Act, 2003.
Issues: The issues involved in the case were whether the Commission exceeded its jurisdiction in allowing the reduction of contract demand and whether the reasons put forth by the consumers constituted compelling reasons under clause 13(d) of the agreement.
Ratio Decidendi: The court held that the Commission had the jurisdiction to entertain the application against the refusal for reduction in contract demand. The court also found that the reasons put forth by the consumers for reduction constituted compelling reasons under clause 13(d) of the agreement. The court further noted that the Board's refusal to allow reduction based on market conditions was not justified, considering the provisions of the Madhya Pradesh Vidyut Sudhar Adhiniyam, 2000 and the functions of the State Electricity Regulatory Commission under the Electricity Act, 2003.
Final Decision: The court dismissed the appeals, holding that the Commission was justified in allowing the reduction in contract demand and that the Board's refusal to allow reduction based on market conditions was not justified.
JUDGMENT :
This order shall govern the final disposal of M.A. No. 506/2002, M.A. 2245/2003, M.A. No. 2446/2003, M.A. No. 2471/2003 and M.A. No. 164/2004 as the issue involved is similar in these appeals preferred under section 27 of the Electricity Regulatory Commission Act, 1998 and Clause 41 of M. P. Vidyut Sudhar Adhiniyam, 2000, against the order passed by Madhya Pradesh Electricity Regulatory Commission, Bhopal; whereby the Commission while entertaining the application by respondent consumer, for setting aside the decision of M. P. State Electricity Board refusing to reduce the contract demand, directed the Board to reduce the contract demand. The respective details regarding the contract demand and reduction thereof by the impugned order are as under:Misc. Appeal
Parties
Contract Reduced Order Demand Demand impugned
MA 506/02 MPSEB vs. M/s Shivshakti 790 KVA 600 KVA 5-1-2002
Paper MA 2245/03 MPSEB vs. M/s Rewa Gases 220 KVA 180 KVA 28-8-2003
Pvt. Ltd. MA 2446/03 MPSEB vs. M/s Universal 1000 KVA 600 KVA 16-9-2003
Cables Ltd. MA 2471/03 MPSEB vs. M/s Khadi and 250 KVA 180 KVA 28-8-2003
Village Industries Commission MA 164/04 MPSEB vs. M/s Gwalior Sugar 500 KVA 250 KVA 28-8-2003 Co. Ltd.
2. The claim for reduction in contract demand in respective cases is owing to reduction in production affected by the market condition and the advancement of technology leading to reduced consumption of electricity and the claim for reduction in contract demand is by invoking the discretion clause 13(d) in Agreement entered into between the Board and respective consumers.
3. The issue which is being raised in these appeals are that the Commission exceeded its jurisdiction and while usurping the powers of the Board regarding the supply of electricity to its consumers has directed the reduction of contract demand.
4. The relevant facts for proper appreciation of the issue, briefly are that in respective cases an agreement was entered into for supply of electricity between the Board and the respondents (hereinafter shall be referred to as Consumers), commonly known as 'Agreement for High Tension Supply'. In some of the cases after original agreement there were supplementary agreements, covering the increase in contract demands.
5. The clause which we are concerned with for the present remained same, i.e. clause 13 whereunder:
"13. (a) The Consumer will be permitted such additional supply in excess of the contract demand as may be agreed upon by the Board and the Consumer after the latter has given due notice in writing of his desire to have the contract demand altered.
(b) In the event of the Board agreeing to make such additional supply available, the Consumer shall pay such contribution towards the cost of making such additional supply available as may be determined by the Board.
(c) If such additional supply is made available by the Board the contract demand specified in clause (a) hereof shall be increased to the same extent.
(d) On being satisfied that for certain compelling reasons the Consumer is not or will not be in a position to consume electricity sufficient to have maximum demand equal to his contract demand, the Board may in its discretion allow the Consumer when request in writing is received in this regard, to reduce his contract demand to such extent and from such date as the Board may decide. Such reduction in the contract demand will be allowed not more than once during the period of the Agreement remains in force but it shall not affect the consumer's liability to pay the amount of the minimum guarantee, mentioned in clause 21 (a) hereof."
6. The controversy in these bunch of cases revolves round clause 13(d).
7. During the subsistence of agreement, the consumption of electrical energy by the respective consumers reduced to less than the contract demand of the respective consumer, either because of the recession in the industry resulting in less production, or the advancement of technology improving the efficiency of the plant as a result w
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