Jharkhand State Electricity Board and Others vs M/s Ramkrishna Forging Limited

9.2 – On 14.04.2004, the respondent, small scale industry entered into an agreement with Board for High Tension connection of 325 KVA load – Thereafter, on 14.03.2006, respondent applied for enhancement of load from 325 KVA to 1325 KVA, which was sanctioned – On 26.12.2006, respondent again applied for enhancement of load from 1325 KVA to 3500 KVA which was also sanctioned by Board – On a further request of respondent, on 07.07.2007, the load was again enhanced to 4000 KVA – Due to continuous load shedding, which was affecting machineries, respondent decided to reduce load from 4000 KVA to 1325 KVA – However, the application to that effect was rejected treating it to be a case of determination of agreement, and quoting the Clause 9B of the agreement which provided that the agreement could not be permitted to be determined prior to the completion of initial period of three years from 07.07.2007 and that the respondent will have to pay the minimum guarantee charges and other charges, even if the respondent decides to terminate the agreement – Respondent successfuly filed writ petition before High Court – Board filed instant appeal – Held: Chapter 9 of the Regulations of 2005 deals with the enhancement and reduction of contract demand/sanctioned load – Regn.9.1 deals with enhancement of contract demand/sanctioned load, whereas Regn.9.2 deals with the reduction of contract demand/sanctioned load – Regn.9.2.6 of the Regulations of 2005 provides for execution of a supplementary agreement for reduction of contract demand/sanctioned load of the consumer – If the Regulations provide for contract load to be varied even through a written communication, then in all fairness, though fresh agreements may have been executed at the stage of enhancement of load of the same electricity connection, the same cannot be treated as anything but an extension/amendment or modification of the initial agreement granting the electricity connection, which in the present case would be the agreement dated 14.04.2004 – Thus, even though the consumer may have been required to sign fresh agreements for each enhancement of load, but the enhancement being for the same electricity connection which still continues, it would merely be amendment of the initial agreement – This would also be in consonance with the provisions of the Regulations of 2005, which have to be liberally interpreted in favour of the consumer – The Board was wrong in treating the application of the respondent for reduction of load to be that for determination of the agreement under Clause 9B of the agreement, which application, in fact, ought to have been considered under Regn. 9.2 of the Regulations of 2005 – The agreement to be considered in the present case is the initial agreement dated 14.04.2004 and not the subsequent agreement dated 07.07.2007.

Dismissing the appeal, the Court

HELD : 1. After the initial agreement dated 14.04.2004, which came into effect from 16.04.2004 whereby the contract demand of 325 KVA was allowed in favour of the respondent, the Jharkhand State Electricity Regulatory Commission in exercise of power conferred by Section 181(2)(x) read with Section 50 of the Electricity Act, 2003, framed the Jharkhand State Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2005, which came into effect from 28.07.2005. [Para 5][459-F-H]

2.1 The communication dated 08.11.2007 of the Electrical Superintending Engineer of the Board, refusing the prayer of the respondent for reduction of load showed that the application of the respondent for reduction of load was rejected in terms of Clause 9(B) of the agreement, treating the date of commencement of the agreement to be 7/12.07.2007 and only by considering the provision of determination of the agreement, which could not have been without giving notice of less than 12 calendar months. It is clear that the said communication/order does not consider the provisions of the Regulations of 2005 with regard to reduction of load, but only treats the application for reduction of load to be an application for determination of the agreement. [Paras 9, 11] [463-B; 464-A-C]

2.2 Chapter 9 of the Regulations of 2005 deals with the enhancement and reduction of contract demand/sanctioned load. Regulation 9.1 deals with enhancement of contract demand/sanctioned load, whereas Regulation 9.2 deals with the reduction of contract demand/sanctioned load. Just as the consumer has the liberty of getting its load enhanced under Regulation 9.1, the reduction of contract demand/sanctioned load can also be prayed for and decided in terms of Regulation 9.2. The proviso to Regulation 9.2.1, no doubt, provides that no reduction of load shall be allowed before expiry of the initial period of agreement, which is three years in the present case. The question would be whether the initial agreement is to be considered for such purpose, or the subsequent agreements. [Paras 12, 13] [464-C-F]

3. Regulation 9.2.6 of the Regulations of 2005 provides for execution of a supplementary agreement for reduction of contract demand/sanctioned load of the consumer. Similarly, for enhancement of load also, even if a fresh agreement may have been executed between the parties, the same could be treated as nothing but a supplementary agreement of the initial agreement by which the electricity connection was granted for a particular load. Clause 2(l) of the Regulations also defines “contract demand” to be demand mutually agreed in the agreement or agreed through other written communication, meaning thereby that for variation of the contract demand execution of a fresh agreement is not essential and the same can be done otherwise also by mere written communication. [Para 14][464-F-H]

4. The Jharkhand State Electricity Board (‘the Board’) is a monopoly supplier of electricity which has laid down its own terms and conditions, regarding which the consumer has no say or choice but to sign on the dotted lines, if it wants of get electricity load varied for running its industry. The Board is an instrumentality of the State. It has to be fair and reasonable. If the Regulations provide for contract load to be varied even through a written communication, then in all fairness, though fresh agreements may have been executed at the stage of enhancement of load of the same electricity connection, the same cannot be treated as anything but an extension/amendment or modification of the initial agreement granting the electricity connection, which in the present case would be the agreement dated 14.04.2004. On the dictates of the Board, the consumer may have been required to sign fresh agreements for each enhancement of load, but the enhancement being for the same electricity connection which still continues, it would merely be amendment of the initial agreement. This would also be in consonance with the provisions of the Regulations of 2005, which have to be liberally interpreted in favour of the consumer. [Para 15][465-A-D]

5. The Board has gone wrong in treating the application dated 20.09.2007 of the respondent for reduction of load to be that for determination of the agreement under Clause 9B of the agreement, which application, in fact, ought to have been considered under Regulation 9.2 of the Regulations of 2005. The agreement to be considered in the present case is the initial agreement dated 14.04.2004 and not the subsequent agreement dated 07.07.2007. [Para 16][465-D-F]

Bihar State Electricity Board, Patna and Others v. M/s. Green Rubber Industries and Others (1990) 1 SCC 731 : [1989] 2 Suppl. SCR 275; Orissa State Electricity Board v. Orissa Tiles Limited (1993) Supp. 3 SCC 481 : [1993] 2 SCR 860; Andhra Steel Corporation Ltd. And Others v. Andhra Pradesh State Electricity Board and Others (1991) 3 SCC 263 : [1991] 2 SCR 624; Jharkhand State Electricity Board & Others v. Laxmi Business and Cement Company Private Limited and Another (2014) 5 SCC 236 : [2014] 3 SCR 453

– distinguished.