- (1.) In these appeals by special leave the common question for determination is whether the Haryana State Electricity Board (briefly, the Board), respondent No. 2, is entitled to claim any demand charge from the appellants in respect of the supply of electric energy to them and whether the State of Haryana, respondent No. 1 is entitled to charge any duty under the Punjab Electricity (Duty) Act, 1958 on the demand charge. Several connected Writ Petitions were disposed of by the High Court of Punjab and Haryana by a common Judgment and this judgment will govern all the cases which had been heard together by us.
(2.) Civil Appeal No. 1306/1975 is by M/s. Northern India Iron and Steel Co. Ltd. and arises out of Writ Petition No. 733/1975. We may state a few necessary facts of this case; those of the other cases being more or less similar. The appellant owns a factory and manufactures alloy steel and steel castings. It is a large consumer of electricity supplied by the Board. As per the contract between the appellant and the board the total connected load of the installation in question is 8687, 649 Kilowatts and its contract demand is the same. At the ratio of one K. V. to 0.85 KW, the corresponding K. V. of the contract demand works to 10,221 K. V. The appellant was allotted 1,06,590 units on daily basis as its power quota by the Board. There was shortage of electric energy in the State of Haryana. The State Government, therefore, issued orders and directions for maintaining the supply and securing the equitable distribution of the energy. Orders were issued by the State Government under Section 228 of the Indian Electricity Act, 1910 - hereinafter called the 1910 Act, restricting considerably the supply of electric energy by the Board to the large industrial consumers as a result of which power cut was introduced. It is not necessary to give the facts and figures of the amount of power cut, suffice it to say that at the relevant time there were substantial power cuts and the appellant was not able to get supply of energy according to its demand as per the quantity mentioned in the contract. In these circumstances a dispute arose between the parties as to whether the Board was entitled to get any demand charge, if so to what extent, and whether the State could demand any duty on such charge. Under Sec. 49 of the Electricity (Supply) Act, 1948 hereinafter called the 1948 Act, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs; of course, the power of the Board is subject to the other provisions of the Act and regulations, if any, made in this behalf.
(3.) There are two well-known systems of tariffs - one is the flat rate system and the other is known as the two-part tariff system. Under the former a flat rate is charged on unit of energy consumed. The latter system is meant for big consumers of electricity and it comprised of (1) demand charges to cover investment, installation and the standing charges to some extent. and (2) energy charges for the actual amount of energy consumed. The Board has framed in exercise of its power under Sec. 49 of the 1948 Act certain terms and conditions and procedure in regard to supply of electricity to its consumers. They are applicable in the cases of the appellants also. Demand charge has been defined in clause 1 (h) thus : "'Demand charge' shall mean the amount chargeable per month in respect of Board's readiness to serve the consumers irrespective of whether he consumes any energy or not, and is based upon the connected load, the maximum demand or the contract demand, as the case may be and as prescribed in the relevant schedule of tariff." And in sub-clause (i) "Emergy charge" has been defined thus : " 'Energy charge' shall mean the charge for energy actually taken by the consumer and is applicable to the units consumed by him in any month. This is in addition to any demand charge, if applicable." A schedule of tariff for supply of energy which is amended from time to time has been framed by the Board. Such schedule of tariff for steel furnace power supply mentions in item 2 the character of service. Clause 3 provides for tariff and clause 4 deals with the demand assessment. The two-part tariff mentioned in clause 3 in case of the appellant was "Demand Charges Rupees 12/- per KVA per month PLUS Energy charges Rs. 7.00 paise per Kwh." There was some surcharge on the above rates. The relevant subclauses of clause 4 i.e., Demand Assessment may now be quoted here : "(a) The demand for any month shall be defined as the highest average load measured in Kilovolt amperes during any consecutive minutes period of the month. (b) The monthly demand charges shall be based on (i) the actual maximum demand during, the month or (ii) 65% of the contract demand or (iii) 75% of the highest maximum demand during the preceding eleven months or (iv) 100 KVA whichever is the highest. For the first 11 months from the commencement of supply alternative (iii) shall not be applicable. (c) The contract demand means the maximum K.W/KVA for the supply of which the Board undertakes to provide facilities from time to time. Note :- In case the consumer exceeds his contract demand in any month by more than 7.1/2% a surcharge of 25% will be levied on the 50 P/Monthly minimum charges (industrial, Factory lighting and colony supply). (d) If in any case the maximum demand is being measured in KW the same shall be converted into KVA by the use of actual power factor and KVA tariff applied for working out the demand charges. (e) In case the supply has been given on restricted hours basis then a reduction of 30 per cent in demand charges will be given if supply is for 12 hours or less, occassional break downs or shut downs if any, on the part of the supplier, shall, however, not entitle a consumer to any reductions. (f) Force Majeure : In the event of lock out, fire or any other circumstances considered by the supplier to be beyond the control of the consumer, the consumer shall be entitled to a proportionate reduction of demand charges/minimum charges provided he serves at least 3 days notice on the supplier for shut down of not less than 15 days duration.";