Decided on November 03,1973


Referred Judgements :-


Cited Judgements :-



B.J.DIVAN, T.U.MEHTA - (1.)This appeal under sec. 483 of the Companies Act 1956 has been filed against the order of our learned brother D. A. Desai J. in Company Application No. 76 of 1972 in Company Petition No. 21 of 1966. The Company under liquidation in Rajratna Naranbhai Mills and it is common ground between the parties before us that this Company is in insolvent circumstances. The Company had entered into an agreement on January 8 1962 with the Gujarat Electricity Board for the purpose of getting bulk supply of electricity for the purpose of its Mills at Petlad in Kaira District. It appears that sometime prior to 1966 the Company fell in arrears of payment of its dues to the Gujarat Electricity Board (hereinafter referred to as the Board) and the Board wrote a letter dated September 27/28 1966 pointing out to the Company that the arrears of bills had accumulated and the Board informed the Company that the supply of electricity to the Company would be disconnected. On September 28 or 29 1966 the supply of electricity was disconnected and thus discontinued. On November 1 1966 a winding up petition was presented in this Court and that is Company Petition No. 21 of 1966. Actual order for winding up was passed by the Court on June 26 1967 Between the date when the winding up petition was presented and the date when the order for winding up was passe on December 31 1966 the Company wrote a letter treating the disconnection of the supply as summary termination by the Board of the agreement dated January 8 1962 By this letter the Company purported to treat this discontinuance of the supply as summary termination under Clause 12 of the agreement and the Company was contending that the Board was not entitled to claim any minimum charges after such discontinuance of supply. After the Company was ordered to be wound up the Official Liquidator of this Company wrote a letter on August 24 1967 and by this letter the Official Liquidator maintained that by the letter dated December 31 1966 the Company had terminated the agreement with the Board for the supply of electric power and he also disclaimed the liability to pay the bills thereafter. The Official Liquidator contended in this letter that the bills after June 30 1967 were not payable as in the ordinary course the agreement came to an end on March 31 1967 The Board however insisted that the Company was liable to pay and after the winding up order the Official Liquidator was liable to pay minimum charges for the period from September 29 1966 to March 31 1968 The Official Liquidator disallowed the claim of the Board for the minimum charges and other amount which the Board was claiming for the period between July 1 1967 to March 31 1968 This amount which was disallowed consisted of two items:- (1) Rs. 38 295 for minimum charges and (2) Rs. 1 999 by way of delayed payment charges. The Boards claim for Rs. 1 33 308 was allowed except for a small amount of Rs. 200/and odd and there is no dispute between the Board and the Official Liquidator regarding that item of Rs. 1 33 308 which was for arrears of bills and minimum charges for the period from September 1 1964 to June 30 1967 The Official Liquidator having disallowed the claim of the Board for the amount of Rs. 40 294 for the period July 1 1967 to March 31 1968 the matter was taken by way of a Company Application to the learned Judge under Rule 164 of the Companies (Court) Rules 1959 by taking out a Judges Summons challenging the order of the Official Liquidator. The Judges Summons that is Company Application No. (i) of 1972 came up for hearing before our learned brother D. A. Desai J. and our learned brother rejected the summons with costs and this present appeal has been filed against the judgment of our learned brother.
(2.)The main bone of contention between the Board on the one hand and the Company as represented by the Official Liquidator on the other is as to whether the Board Was entitled to get minimum charges for keeping the power connections at the Companys premises even though the supply of electrical energy was discontinued after September 29 1966 Our learned brother held that it was incomprehensible that even after the supply was disconnected the Board continued to demand minimum charges and charges for the delayed payment of minimum charges. Our learned brother further held that once the supply was disconnected there might be a right to get reconnection either under the agreement or under the law but unless reconnection was granted by a unilateral act of the Board to disconnect supply the agreement between the parties came to an end and he further observed that too much sanctity should not be attached to such an agreement between unequally placed parties namely the Gujarat Electricity Board and a consumer like the Company. Our learned brother held that if the Board exercised this power to disconnect supply when the consumer was ill arrears it was inconceivable that the consumer should go on paying minimum charges even though the Board was unable to show that it had to maintain some installations and had to incur expenditure in the maintenance of the installation which would justify the claim of minimum charges. It was on this reasoning that our learned brother dismissed the Judges Summons with costs.
(3.)In order to appreciate the rival contentions between the parties it is necessary to refer to some of the provisions of the Indian Electricity Act 1910 and the Electricity (Supply) Act 1948 Secs. 18A to 27 of the Indian Electricity Act 1910 (hereinafter referred to as the 1910 Act) provide for supply of energy. Under sec. 22 the licensee to whom license has been granted under the Act of 1910 is under an obligation to supply energy to every person within the area of supply but the proviso to sec. 22 is material. It is in these terms :-
Provided that no person shall be entitled to demand or to continue to receive from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises the sum payable to be determined in case of difference or dispute by arbitration.
Under sec. 23 provision is made for charges for energy to be made without undue preference to any person Under sub-sec. (3) in the absence of an agreement to the contrary a licensee may charge for energy supplied by him to any consumer by the actual amount of energy so supplied or by the electrical quantity contained in the supply or by such other method as may be approved by the State Government. Under sub-sec. (4) it has been provided that any charges made by a licensee under clause (c) of sub-sec. (3) may he based upon and vary in accordance with any one or more of the following considerations namely the consumers load factor or the power factor of his load or his total consumption of energy during any stated period or the hours at which the supply of energy is required. Under sec. 24 of the Act the licensee is empowered to discontinue supply to consumer neglecting to pay charges and under sub-sec (1) of sec. 24 where any person neglects to pay ally charge for energy or any sum other than a charge for energy due from him to a licensee in respect of the supply of energy to him. the licensee may after giving not less than seven clear days notice writing to such person and without prejudice to his right to recover such charge or other sum by suit cut off the supply and for that purpose cut or disconnect any electric supplyline or other works being the property of the licensee through which energy may be supplied and may discontinue the supply until such charge or other sum together with any expenses incurred by him in cutting off and reconnecting the supply are paid but not longer. Thus it is clear that the right of the licensee to discontinue electric supply comes into existence when the consumer neglects to pay the charges to the licensee and as soon as the arrears and the expenses incurred by the licensee in cutting off and re-connecting the supply are paid. the licensee is bound to resume the supply and start supplying the electrical energy to the consumer once again That obligation of the licensee has to be bound in mind in the context of the dispute before us. The Schedule to the 1910 Act sets out provisions which are deemed to be incorporated with and to form part of every licensee granted under part 11 of the 1910 Act. Under Clause VI it is open to the one. or occupier of any premises to make a requisition requiring the licensee to supply energy for such premises and the licensee shall within one month from the making of the requisition supply and save in so far as he is prevented from doing so by cyclones floods storm or other occurrences beyond his control continue to supply energy in accordance with the requisition. Under subclauses (1) and (28 of Clause X provision is made for the methods of charging by the licensee for the electricity supplied by him to the consumer. Under sub-clause (2) before commencing to supply energy through any distributing main the licensee shall give notice by public advertisement of the method by which he proposes to charge for energy so supplied and where tive licensee has given such notice he shall not be entitled to change that method of charging without giving not less than one months notice in writhing of change to the State Government and to every consumer of energy who is supplied by him from such distributing main. Once the method has been so notified any consumer who objects to that method may by not less than one months notice in Writing require the licensee to charge him at the licensees option either by the actual amount of energy supplied to him or by the electrical quantity contained in the supply and thereafter the licensee shall not except with the consent of the consumer charge him by another method.

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