Important Points
The Terms and Conditions of supply framed by Board in exercise of statutory powers conferred by Section 49 of Electricity (Supply) Act, 1948 and made applicable to all consumers availing supply of electricity from Board are statutory in character and not purely contractual.
2. Clause 39 of Terms and Conditions of Supply providing adjudicatory procedure regarding disputes concerning pilferage or malpractices of energy and for final assessment of charges is neither violative of any provisions of Electricity Act, 1910 or Electricity (Supply) Act, 1948 and is also not arbitrary or unreasonable so as to be hit by the vice of arbitrariness under Art. 14 of the Constitution.

Headnote:(i) Electricity (Supply) Act, 1948 -Section 49-Supply of power-Agreement with Board-Nature of-Terms and conditions of supply framed by Board in exercise of statutory power u/s. 49 of Supply Act-Statutory in character and not purely contractual.
       Held : The Terms and Conditions of Supply were notified in B.P. Ms. No. 690 dated 17.9.1975 in exercise of the powers conferred by Section 49 of the Supply Act. They came into effect from 20.10.1975. They were made applicable to all consumers availing supply of Electricity from the Board. The section in the Act does not require the Board to enter into a contract with individual consumer. Even in the absence of an individual contract, the Terms and Conditions of Supply notified by the Board will be applicable to the consumer and he will be bound by them. Probably in order to avoid any possible plea by the consumer that he had no knowledge of the Terms and Conditions of Supply, agreements in writing are entered with each consumer. That will not make the terms purely contractual. The Board in performance of a statutory duty supplied energy on certain specific terms and conditions framed in exercise of a statutory power. Undoubtedly the terms and conditions are statutory in character and they cannot be said to be purely contractual. (Para 20)
       Consequently held : We are unable to uphold the view expressed by the Full Bench in the judgment under appeal that the terms and conditions of supply are purely contractual. In our opinion the Terms and Conditions of Supply are statutory in character. (Para 25)
       (ii) Electricity Act, 1910-Sections 21(4), 26(6), Clause VI(3) to Schedule-Electricity (Supply) Act, 1948-Section 49-Indian Electricity Rules, Rr. 4, 5 and 6-Constitution of India, Article 14-High Tension power-Supply of-Pilferage by consumer - Disconnection -Clause 39 of Terms and Conditions of supply providing for adjudicatory procedure regarding disputes concerning pilferage or malpractices of energy and for final assessment of charges-Electrical Inspectors have no jurisdiction in such matters-Clause VI to Schedule of Electricity Act also not applicable-Therefore, Clause 39 not contrary to provisions of Electricity Act-Also does not violate any provisions of Supply Act-Clause 39, therefore, not ultra vires Section 49 of Supply Act or Sections 21(4), 26(6) and Clause VI(3) of Schedule of Electricity Act-Clause 39, also not violative of Article 14 of the Constitution of India.
       Held : Learned counsel have not shown to us any provision in the Supply Act with which Clause 39 is in conflict. In so far as the Supply Act is concerned, argument hovers around Section 49 only. The only limitation in that Section is that the terms and conditions of supply should be subject to the provisions of the Act. Clause 39 does not violate any provision in the Supply Act. It is the statutory duty of the Board to arrange for the supply of electricity throughout the State and for transmission and distribution of the same in the most efficient and economical manner. For that purpose it has necessarily got to prevent unauthorised user, pilferage or malpractices by the consumers. Hence the necessary safeguards have to be provided as part of the conditions of supply so that the consumers will be bound by them. While on the one hand, the Board has to recoup the loss suffered by such pilferage or other malpractices, it has also on the other got to stop immediately the continuation thereof. Hence the terms and conditions of supply have to provide for compensation as well as immediate disconnection. For ascertaining the loss and fixing the compensation, uniform procedure has to be framed and a machinery constituted. Clause 39 is only doing that. (Para 27)
       According to learned counsel the terms and conditions of supply may tantamount to a subordinate legislation but it must yield to the plenary legislation and that the Supply Act never intended to confer powers on the Board to frame such terms and conditions of supply including the power to adjudicate a dispute between itself and the consumer and assess the damages. We have already adverted to the provisions of Section 49 of the Supply Act and pointed out that the power conferred on the Board is not circumscribed by any limitation other than that it should not contravene the provisions of the Act. We are of the opinion that Section 39 is not violative of any provisions of the enactment. Hence we reject the contention that Clause 39 is ultra vires the provisions of the Supply Act. (Paras 31 & 33)
       We have carefully perused the provisions of the Electricity Act and we find that those provisions provide for a different situation. Clause 39 will come into play whenever there is malpractice or pilferage on the part of the consumer or a fraud played by the consumer. The Electrical Inspector has no jurisdiction to deal with those matters. He can be approached only when there is a defective meter or any defect in wires, fittings, works or apparatus. As regards, Cl. (VI) of the Schedule to the Electricity Act, it is not applicable unless distribution mains have been laid down under the provisions of Clause (IV) or Clause (V) and the supply of energy through those mains or any of them has commenced. The second proviso to Section 26 clarifies the position that the provisions of Clause (VI) of the Schedule shall apply to the Board in respect of that area only where distribution mains have been laid by the Board and the supply of energy through any of them has commenced. The records before us do not disclose any pleading on the part of the consumers that the requirement of the second proviso to Section 26 have been satisfied. No question has been raised in that regard before the trial Court. No doubt, the Full Bench of the High Court has placed reliance on Clause (VI) of the Schedule and the grounds raised in the Special Leave Petition filed by the Board do not refer to the same. But in the absence of a specific pleading to that effect it cannot be presumed that Clause (VI) of the Schedule would apply. Even assuming that clause applies, it will not alter the situation. The difference or dispute referred to in sub-clause (3) of Clause (VI) will not cover fraudulent malpractice or pilferage.
       We have no hesitation to reject the contention of learned counsel for the consumers and hold that the provisions in clause 39 do not contravene the provisions of the Electricity Act. (Para 35)
       Further held : Clause 39 is not violative of Art. 14 of the Constitution of India.
       The principle ‘Nemo Judex in Causa Sua’ will not apply in this case as the officers have no personal lis with the consumers. As pointed out by learned senior counsel for the Board, they are similar to Income Tax or Sales Tax Officials. There is nothing wrong in their adjudicating the matter especially when the consumers may be represented by an advocate and the formula for making provisional assessment is fixed in the clause itself.
       That is sufficient safeguard for the consumer. (Para 43)

JUDGMENT:

SRINIVASAN, J.

I. Relevant facts,

The appellant in the earlier appeal of 1988 is a public limited company engaged in the manufacture of Vanaspathi. It entered into two agreements with Andhra Pradesh State Electricity Board hereinafter referred to as `Board on 1.9.1970 and 27.8.1973 for supply of High tension power. In January, 1976 the officers of the Board inspected the factory premises and noticed pilferage of energy. The power supply was immediately disconnected and a provisional assessment of the loss was made at Rs. 61,28,535/-. A prosecution was launched under Section 379 I.P.C. read with Section 39 of the Indian Electricity Act, 1910, hereinafter referred to as the Electricity Act in the court of the Chief Metropolitan Magistrate, Hyderabad. The Board also initiated proceedings calling upon the appellant to file its objections to the provisional assessment.

The appellant denied the allegations made by the Board. After enquiry, the final assessment was made fixing the lost at Rs. 55,511.81 Ps. The order was challenged by the appellant in appeal but in vain. The appellant filed a suit in the court of Additional Chief Judge, City Civil Court (Temp), Hyderabad for a declaration that it was not liable to pay any amount as penal damages and prayed for a direction for refund of the amount of Rs. 22.50 lakhs collected by the Board during the pendency of the assessment proceedings and for perpetual injunction restraining the defendants therein from disconnecting the power supply.

2. The suit was contested by the Board. Several issues were raised including one relating to the jurisdiction of the civil court. The trial court held that it had jurisdiction to try the suit but negatived all the contentions of the plaintiff and dismissed the suit. On appeal, a Division Bench of Andhra Pradesh High Court rejected the pleas of the appellant and dismissed the same. The High Court held that the terms and conditions of supply on the basis of which the agreements were entered between the appellant and the Board did not in any way contravene the provisions of either the " Electricity Act or the Electricity (Supply) Act. It was also found that ample opportunity was given to the appellant before the final order of assessment was made and that the enquiry held by the officers of the Board was in no way vitiated. Aggrieved by the said decision of the High Court the appellant preferred the said appeal on obtaining Special Leave of this court.

3. The questions which were decided by the High Court in the aforesaid proceedings were raised again in Writ Petitions under Article 226 of the Constitution of India by some industrial undertakings which had also entered into agreements with the Board for supply of electricity. When proceedings were initiated by the Board against those industrial undertakings on the ground of pilferage of electrical energy and supply was disconnected pending enquiry, those undertakings filed Writ Petitions challenging the validity of such proceedings. In one of the writ petitions, an appeal was filed against an Interlocutory Order refusing to grant interim relief to the petitioner therein. When that appeal was admitted by a Division Bench the matter was placed before a Full Bench for disposal as the Division Bench opined that the view taken by the Division Bench in the Civil Appeal referred to earlier was likely to be in conflict with the "possible view that the contractual obligation upon the consumer of electricity that in case of a dispute as to the consumption, the adjudication shall be by the officers of the Board shall be deviative of Article 14 of the Constitution of India". Thus all the writ petitions and the writ appeals against interlocutory orders were heard by a Full Bench of three Judges and disposed of by a common judgment dated 12.9.1997.

4. The Full Bench opined that the creation of the adjudicatory process by a contractual obligation in condition no. 39 of the `Terms and Conditions of Supply of electr

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1998 Supreme(SC) 433

Cases Referred (19)