- (1.) THIS is a petition under Art. 226 of the Constitution. The peti tioner is a private limited company carry ing on business in the name of Mirzapur Electrics Supply Co. Ltd.
(2.) SINCE 1929 the petitioner held a licence from the State Government under the Indian Electricity Act, 1910, for supply of electricity to the towns of Mirzapur and Vidhyachal. The petitioner had its own generating plant. The first respondent, the U. P. Electricity Board, Lucknow by an order dated January 15, 1962, directed the petitioner to close down its generating station and to take the supply of electricity from the Board. The generating station was closed on February 20, 1962 and the Board has been supplying electrical energy to the petitioner since then. The total load of electrical energy which was being sup plied from the Board from time to time has been increasing and went up about 3,000 KVA. In June 1961 the petitioner demanded an increase in the load by 1000KVA. The Board wrote back to the company saying that the increased demand will be met only when the peti tioner delivered to the Board a duly signed and executed agreement, a draft whereof had been sent to the petitioner several years back. The draft agreement contains a clause which requires the company to deposit a security and says that this demand of the Board is wholly unauthorised and illegal. The company has prayed for a writ of mandamus dir ecting the respondents to supply the enhanced demand without requiring the petitioner to deposit the security of rupees one lac. The short ground upon which the petitioner objects to the deposit of the security is that the relationship be tween the petitioner and the Board is governed wholly by Section 36 and Sche dule III of the Electricity (Supply) Act, 1948. There is no provision, according to the petitioner, in that Act authorising the Board to demand a security from the petitioner. The respondent's case is that the relationship between the petitioner and the Board is not governed exclu sively by Section 36 and Sch. Ill of the Act. The relationship should be gov erned by mutual agreement and the Board is within its right to demand a security to safeguard its own interest. It has been stated in the counter-affidavit filed on behalf of the respondents that the monthly bill for the supply of electri cal energy to the petitioner company comes to about Rs. 1,40,000/- and the Board shall be put to an additional ex penditure of about Rs. 40,000 per month when the increase in the load is sanction ed. It has been further alleged that the petitioner company is already in arrears to the tune of Rs. 7 lacs and the Board is not prepared to increase its commit ment without safeguarding its own fin ancial interest. It has further been stated on behalf of the respondent that under Section 26 of the Act Board has all the powers and obligations of a licensee under Act 9 of 1910 and the Board as a licensee has the power and the authority to demand a security from the petitioner company whose status is no better than that of a consumer.
(3.) NOW , turning to the rival con tentions to me it appears that the approach of both sides is wrong. It is true that the relationship between the Board and the petitioner company is governed in certain matters by Section 36 and Sch. III. Similarly the Board does enjoy the rights of a licensee according to the provisions contained in Section 26 .of the Act. But this position does not provide an answer to the question that falls for consideration in this case. The first thing to be determined is as to the nature of the transaction between the Board and the petitioner company. The Board holds a monopoly for the production and supply of electricity. It is engaged in what is essentially a commercial enter prise like so many State-owned enter prises. The petitioner company is also engaged in business; its sole purpose being to earn profits from the business of supply of electricity to its consumers. In other words, the relationship between the parties is that of seller and purchaser of goods. Such a relationship is essen tially governed by a contract between the parties. By virtue of statutory pro visions already noticed above, the ambit of contract is controlled in certain res pects. The control is two-fold. The first control is that the petitioner company cannot purchase its requirement of elec tricity from any other source than the Board. The second control is with re gard to the price. The Board cannot charge price higher than that is provid ed in Sch. III. But that is about all. The Act is not exhaustive and it does not purport to restrict the right of the parties to negotiate and agree upon other vital conditions governing such a contract. For instance there is nothing in the Act which precludes the parties from agreeing and] to the manner and time of the pay me of the price of electricity. Likewise there is no provision in the Act which prohibits the parties from agreeing upon a condition meant to safeguard the mutal interest under the contract If I one may say so, the Board is like the producer of goods and the petitioner company is its distributor or selling agent| Such a relationship between the parties is invariably governed by a mutual con-j tract. It is not uncommon in a transaction of this nature that the producer goods takes from its distributor a serenity with a view to safeguarding the payment of the price of the goods supply ed and for ensuring the fulfillment of other conditions of the contract. It is( therefore, not correct to say that the demand of the Board to require the petitioner company to sign an agreement to furnish a security in accordance one of the terms of the contract is authorised or illegal.;