Contract – State, a party to the contract must abide by Article
14 – Reasonable period to consider an application – Application made by the appellant for reduction to 10000 Kilovolt-Ampere (KVA) – No steps effectuating such request were taken despite repeated follow ups by the appellant – Action of the respondents in taking considerable time from when the said application was made, to when the revised agreement was entered into, if arbitrary and unreasonable – Held: Yes – State action irrespective of being in the contractual realm must abide by Article 14 – Appellant was unjustifiably asked to furnish costs for unutilized electricity which should not have extended beyond six months (considering ‘reasonable period’ to consider an application, to be so), for a period much larger thereto, rendering such action unreasonable and arbitrary – On facts, it is not open for the respondents to contend that the petitioner is not liable for the refund of the amount deposited under protest towards the bills so generated taking the maximum load to be 23000 KVA – Particularly, when at no point in time, the appellant neither sought for nor consumed the electricity more than the maximum demand of 10000 KVA – Acknowledging the financial health of the appellant, in the 1999 agreement, the respondent ought to have taken a decision on the appellant request with a reasonable dispatch and terms which ought to have been within a period latest by six months and not two and a half years as was eventually done – Judgment passed by High Court set aside – Respondent to return the amount paid by the appellant for 13000 KVA, in excess to its request of maximum sanctioned demand of 10000 KVA – Constitution of India – Article 14 – Doctrines/Principles – Sick Industrial Companies Act, 1985 – s.3(1)(O).
Doctrines/Principles – Principle of reasonable time – Discussed – Contract.
Allowing the appeals, the Court
HELD: 1.1 It is a matter of record that a fresh agreement with the reduced maximum demand of 10000 KVA was entered into between the parties in July, 2004. Undisputedly, such fresh agreement was inked more than two and a half years after the application was made on 24th December, 2001. The Appellant in pursuance of the reduction of maximum demand made its application and followed up repeatedly with the authorities. Save and except two letters on behalf of the Board one, acknowledging the said application and stating that same has been put up before the authorities for consideration: and two, rejecting the date of such reduction being effectuated and listing down certain conditions upon which the same would be granted, no other communication on part of the board forms the record. [Paras 23, 26][752-H; 753-A, E]
1.2 No reason whatsoever is forthcoming as to why this particular application required such a vast length of time to be acted upon. In the mean while the Appellant has been faced with the threat of disconnection, and has had to pay, due to such inaction, large amounts of money for electricity which it has not utilized. It is true that the agreement states that the consumer, (Appellant herein) is bound to pay such maximum demand amount irrespective of utilization and also that such an agreement will be in effect for a period of five years but in the considered view of this Court, the Board cannot be allowed to take refuge of these clauses while the company on the other side is saddled with heavy cost in the interregnum of such decision. More so in view of the communication dated 11th August 1994. [Paras 27 and 28][753F-H]
1.3 The Writ Court had observed that in the other instances cited by the Appellant herein, the reduction sought was a small amount of KVA as opposed to the 13000 KVA reduction sought vide the instant application. While that may be true, it does not supply reason to the act of keeping an application pending for such a long period of time. [Para 29][754-A-B]
1.4 State action irrespective of being in the contractual realm must abide by Article 14, and that a) after passage of a considerable period of time, in July, 2004 the reduction to 10000 KVA was agreed to and a new agreement to that effect was entered into; b) irrespective of the amount of reduction in KVA sought other applications were considered within a reasonable period of time; c) no reason has been put forth for keeping such application pending; d) that the Appellant duly and repeatedly followed up with the authorities to effectuate such reduction; and e) the Appellant has been unjustifiably asked to furnish costs for unutilized electricity which, in any case should not have extended beyond the period of six months (considering ‘reasonable period’ to consider an application, to be so), for a period much larger thereto, rendering such action unquestionably unreasonable and arbitrary. In view of the factual narrative, it would not be open for the Respondents to contend that the petitioner is not liable for the refund of the amount deposited under protest towards the bills so generated taking the maximum load to be 23000 KVA. Particularly, when at no point in time, the Appellant neither sought for nor consumed the electricity more than the maximum demand of 10000 KVA. Acknowledging the financial health of the Appellant, in the 1999 agreement, the Respondent ought to have taken a decision on the Appellant request with a reasonable dispatch and terms which ought to have been within a period latest by six months and not two and a half years as was so eventually done. Judgment passed by the High Court is set aside. [Paras 36-39][756-F-G; 757-A-D]
1.5 The Respondent, The Tamil Nadu Electricity Board is directed to return the amount as may be calculated and verified, paid by the Appellant to it for 13000 KVA, in excess to its request of maximum sanctioned demand of 10000 KVA (23000-10000 = 13000 KVA). Such amount shall be calculable six months post making of application, i.e. on 24th December, 2001, till the date of execution of the new agreement in July, 2004. Clarifying that the period is to commence from 23rd June, 2002 till 1st July, 2004 (both inclusive); interest applicable thereupon would be simple in nature @ 6 per cent per annum. All payments be made within two months from today. [Para 40][757-E-F] Natural Resources Allocation, IN Re, Special Reference No.1 of 2012 (2012) 10 SCC 1: [2012] 9 SCR 311 – followed.
Kumari Shrilekha Vidyarthi and Others v. State of U.P. and Others (1991) 1 SCC 212 : [1990] 1 Suppl. SCR 625; Mansaram v. S.P. Pathak and Ors. (1984) 1 SCC
125 : [1984] 1 SCR 139; Adjudicating Officer, Securities and Exchange Board of India v. Bhavesh Pabari (2019) 5 SCC 90 – relied on.
Ssangyong Engg. & Construction Co. Ltd. v. National Highways Authority of India (2019) 15 SCC 131 : [2019] 7 SCR 522; State of Gujarat v. Patel Raghav Natha (1969) 2 SCC 187 : [1970] 1 SCR 335 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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