M/s. Sri Krishna Alloys v. Tamil Nadu Electricity Board

Sri Vigneswara Steels (P) Ltd.rep by the Managing DirectorSF 110/1-A-1, Mavelipalayam Privu RoadAkkamapet Post, Sankari- 637 301Salem District ...Appellant/ Petitioner in W.A.3078/03 in W.P.25408/03Pavai Alloys and Steels (P) Ltd.,rep by the Managing DirectorS.F.No.433/A,B,C,DNallur KandamapalayamParamathi Velur Taluk- 637 203Namakkal District ...Petitioner in W.P.23574/03W.P.33821 to 33823N.G.A. Steels (P) Limitedrep by the Managing DirectorPappankadu Karukkampalayam VillageMorur- 637 304 Salem District. ... Petitioner in W.P.33821/07Sri Krishna Alloysrep by the Partner 262-1B-3 Manjakkalpatty VillageAkkamapet Post, Sankari- 637 301Salem District ... Petitioner in W.P.33822/07Sri Vigneswara Steels (P) LimitedRep by the Managing DirectorSF-110/1-A-1, Mavelipalayam Privu RoadAkkamapet Post, Sankari Taluk, Salem District- 637 301. ... Petitioner in W.P.33823/07 Vs1. THE UNION OF INDIA REP BY THE SECRETARY, DEPARTMENT OF ENERGY, NEW DELHI.2 THE STATE OF TAMILNADU REP BY THE SECRETARY, DEPARTMENT OF ENERGY, FORT ST.GEORGE, CHENNAI 9. https://hcservices.ecourts.gov.in/hcservices/ 3 THE TAMILNADU ELECTRICITY BOARD, REP BY THE CHAIRMAN, 800 ANNA SALAI, CHENNAI 2.4 THE SUPERINTENDING ENGINEERTNEB METTUR DISTRIBUTION CIRCLE, METTUR DAM.- 636 4015 THE TAMILNADU ELECTRICITY REGULATORY COMMISSION, REP BY THE SECRETARY, 17, THIRD MAIN ROAD, SEETHAMMAL COLONY, ALWARPET, CHENNAI 18. ...Respondents in W.Ps.33821 to 33823/07W.P.31842 to 31843/04Sri Vinayaga Alloys Private Ltd.,Rep by the Managing Director28/2,A-1 Salem Main road, Akkampet Post, Sankari Taluk, Salem District, Tamilnadu- 637 301 ... Petitioner Vs1.

THE STATE OF TAMILNADU REP.BY ITS SECRETARY,DEPARTMENT OF ENERGY,FORT ST.GEORGE CHENNAI 92 TAMILNADU ELECTRICITY BOARD REP.BY THE CHAIRMAN 800 ANNA SALAI CHENNAI-23 THE SUPERINTENDENT ENGINEERTNEB - METTUR DISTRIBUTION CIRCLE,METTUR4 THE TAMILNADU ELECTRICITY REGULATORY COMMISSION REP.BY THE SECRETARY,17,THIRD MAIN ROAD SEETNAMALLA COLONYALWARPET CHENNAI 18..RESPONDENTS Writ appeal under Clause 15 of the Letters Patent Appeal againstthe order dated 12.09.2003 passed by a learned single Judge of this Court in W.P. No: 25193 of 2003, 25194, 25407, 25408. https://hcservices.ecourts.gov.in/hcservices/ WP.No.25193 & 25194/03 :Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari calling for the records of the 2ndrespondent relating to his letter No.PR.A/CA/Br/AOR/HT/A2/BF110/2003 andPRA/CS,Br/AOR/HT/A2/BF.161/2003 respectively dated 25.08.2003 in respectof levy and collection of belated payment of surcharge and quash thesame.WP.No.25407 & 25408/03 :Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari to call for and quash the recordsof the second respondent relating to his letters No.

PR/ ACS.Br/ AOR/HT/ A2 /BF.119/ 2003 and No.PR /A/ CS.Br./ AOR/HT /A2/BF.135/ 2003 dated25.07.2003/8/03 in respect of the levy and collection of belated paymentof surcharge.WP.No.23574/03 :Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari calling for the records of thesecond respondent relating to his letters No. PR.233 /ACS.Br /AOR/ HT/A4/BF.167/ 03 dated 25.07.2003 in respect of levy of belated payment ofsurcharge and quash the same.WP.No.33821 to 33823/03 :Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of declaration declaring that Clauses 20.02 and20.03 of the terms and conditions of supply of electricity of TamilnaduElectricity Board levying belated payment of surcharge 1.5 per cent permonth (18% per annum/are excessive, arbitrary, unreasonable, discriminatory violative of Article 14 and 19(1)(g) of Constitution of India for the academic years 2001-2002 to 2004-2005 and consequentlydirect the respondents to rebond the BPSC collected illegally withinterest pursuant to demand by the Fourth Respondent in LR.No.

RR/A/CS.BR /AOR/ HT/ A2/ BF.161/ 2003 dated 25.08.2003, Lr.No. PR/A /CS.Br/AOR/ HT/ AZ/ BF.110/ 2003 dated 25.08.2003, Lr.No. PR-/A/ CS/ Br/ AOR/HT/ AZ/ BF.135/ 2003 dated 25.08.2003.WP.No.31842/04:Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Certiorari call for the records of the thirdrespondent in Lr.No. SEM/ A/ CS.Br/ AOR/ HT/ AZ/ BF.119/ PR.426/ 04dated 16.10.2004 and quash the same so far as the levy and collection of Belated Payment of Surcharge Rs.2,73,076/-. https://hcservices.ecourts.gov.in/hcservices/ WP.No.31843/04 :Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Declaration declaring that Clause 20.02 ofthe Terms and Conditions of supply of electricity of Tamil NaduElectricity Board levying surcharge 1.5 per month (18% per annum) isarbitrary, unreasonable, discriminatory, violative of Article 14 and 19(1)(g) of Constitution of India.

For appellants/ : Mr. S. Sivanandam petitioners For respondents : Mr. P.S. Raman, Additional Advocate General for Mr. S.N. KirupanandamJ U D G M E N TV. Periya Karuppiah, J. The appellants are unsuccessful petitioners in the writ petitions, who had approached this Court for a direction to the respondents forissuance of a writ of certiorari and to quash the order of the 2ndrespondent in his letter No: PR/A/CS.Br./AOR/HT/A2/BF.161/2003 dated25.08.2003 in respect of levy and collection of surcharge for thebelated payment. The appellants are having high tension power supplyconnection for their factories and were consuming electricity at thetariff of Rs.150/- per K.V.A. and Government of India issued G.O. Ms.No: 95 Energy (A2) Department dated 28.11.2001 revising the tariff forthe high tension industrial consumers from Rs.150/- per KVA to Rs.300/-per KVA and, therefore, many of the consumers including thepetitioners / appellants challenged the said demand of revised tariffand this Court has also granted stay of the operation of the order and, therefore, the appellants did not pay the increased tariffs.

Ultimately, those writ petitions were dismissed giving liberty to theappellants as also the other petitioners therein to seek suitable remedybefore the Tamil Nadu Electricity Regulatory Commission, Chennai. Thesaid revision petition filed by those petitioners including theseappellants before the said Commission came to be dismissed on 31.10.2002and the appeal preferred against the said order were also dismissed. Thereafter, the amount payable by the petitioners including theappellants were paid by them in instalments. Since the petitioners paidthe said amount belatedly, the impugned order came to be passed askingthe petitioners, including the appellants, to pay interest by way ofbelated payment surcharge as per the rules. The appellants hadquestioned the said order in the writ petitions and a learned singleJudge, after considering their case, had dismissed the writ petitionsfiled by them and, therefore, the appellants are before this Court inthese appeals. https://hcservices.ecourts.gov.in/hcservices/

The writ petitions in W.P. Nos: 33821 to 33823 of 2003,23574 of 2003, 31842 and 31843 of 2004 were filed by the petitioners forthe similar relief of quashing the levy of interest at 18% per annumthrough the letters of the 2nd respondent and since the point in issue isone and the same, those writ petitions are clubbed with these writappeals for disposal and is being disposed of by this common judgment.

For convenience sake, the appellants in the writ appealsand the petitioners in the writ petitions are commonly called aspetitioners in this judgment. Learned counsel for the petitionersMr.S.Sivanandam would submit in his argument that the Rules governingthe terms and conditions of payment of surcharge at 1.5% per month asper clauses 20.02 and 20.03 were enacted pursuant to the power conferredunder Section 49 of the Electricity (Supply) Act 1948 on the 3rdrespondent and it was framed by the said 3rd respondent arbitrarily, unreasonably and is violative of Article 14 of the Constitution of Indiaunder the then and present socio economical circumstances. He would alsobring it to the notice of this Court that interest rates in all tradeand commerce banking from 2000 onwards are half of the interestprevailing in 1990's and the rate of surcharge at 18% per annum isarbitrary in nature. He had also submitted in his argument that thelevy of such surcharge for belated payment from the year 2001-2002 to2004-2005 are unreasonable.

Learned counsel for the petitioners would submit an authorityreported in1993 (64) E.L.T. 161 (S.C.) equivalent to 1993 (3) S.C.C. 493[Kashyap Zip Industries vs. Union of India]. Placing reliance on thispronouncement, learned counsel would submit that the Hon’ble SupremeCourt of India has reduced the rate of interest from 17.5% to 12% perannum for the belated payments caused due to the directions of the Courtstaying the payment till such time the writ petitions were pending. Hehad also drawn the attention of this Court to the judgment reported in1999 (7) S.C.C. 89 [Style (Restland) vs. Union Territory, Chandigarh andanother] which is to the effect that the payment of interest for thepayments to be made belatedly due to the stay order of the Court can belevied but the levy of interest at 18% per annum was excessive and itwas reduced to 15% per annum. He had also submitted in his argumentthat since interest was not ordered by the Court while ordering paymentto be made by instalments, the levy of interest even as per the termsand conditions are not sustainable and the finding of the learned singleJudge that the levy of belated payment surcharge at 18% per annum (1.5%per month) need not be quashed is not sustainable and, therefore, theappeals may be allowed by passing suitable orders.

We have heard Mr. P.S. Raman, learned Additional AdvocateGeneral, appearing for the respondent Electricity Board. He would submitin his argument that the Superintending Engineer is empowered to extendthe time for the payment with a levy of surcharge at 3% per month andthe non payment of the consumption charges even beyond the said periodwould attract 3% surcharge on belated payment and however, the consumersthose who do not seek for extension of time but are paying the paymentsbelatedly would get attracted with class 20.02 of the Terms and Conditions which prescribes only 1.5% towards surcharge. The learnedAdditional Advocate General would further submit that the terms andconditions of supply of electricity to the High Tension customers havebeen enacted by the 3rd respondent as per the powers conferred on itunder Section 49 of the Electricity (Supply) Act 1948 and the payment ofsurcharge at 1.5% per month was also fixed for the purpose of avoidingthe payments to be made by consumers in time without any delay. Hewould also submit in his arguments that the validity of clauses 20.02, https://hcservices.ecourts.gov.in/hcservices/

20.03 and 20.05 were questioned before this Court in various writpetitions and a Division Bench of this Court had considered the validityof the terms and conditions, including the clauses therein, and hadupheld the clauses 20.02, 20.03 and 20.05 in a judgment reported in 2004W.L.R. 307 (M/s.Sri Krishna Smelters (P) Ltd. vs. The Chairman, TamilNadu Electricity Board and another) and therefore, the petitionerscannot question the validity of those clauses once again as the saidjudgment will bind the petitioners as well and the consumers who havemade belated payments are liable to pay the surcharge at 1.5%. Hewould further submit in his argument that the order of paying enhancedtariff by the Court did not prohibit any levy of interest as per theterms and conditions in force and the learned single Judge had correctlycome to the conclusion of applying the principle laid down in 1997 (7)S.C.C. 89, cited supra, and to disallow the claim of the petitioners. He had also drawn the attention of the Court to the judgment reported in1979 (4) S.C.C. 560 [Adoni Ginning Factory vs. Andhra PradeshElectricity Board, Hyderabad] and also the judgment reported in 1996 (1)S.C.C. 597 [Kerala State Electricity Board and another vs. M.R.F. Ltd.]and 1997 (5) S.C.C. 772 [Kanoria Chemicals and Industries Ltd. andothers vs. U.P. State Electricity Board and others]. He had also drawnthe attention of the Court to a judgment of the Andhra Pradesh HighCourt reported in A.I.R. 2002 A.P. 493 [M/s.Nava Bharath Ferro AlloysLtd. vs. A.P.S.E.B. and others] in support of his case that it is asettled law that when a party apply and obtains a stay from the Court oflaw, it is always at its own risk and responsibility and mere passing ofan order of stay cannot be presumed to be a conferment of any additionalright upon the litigant public. Therefore, the learned AdditionalAdvocate General would submit that the judgment of the learned singleJudge is perfectly in accordance with law and, therefore, there is nonecessity to interfere with the same. He would also add that the sameratio is applicable to the petitioners also and therefore the writpetitions are also liable to be dismissed along with the writ appeals.

We have given our anxious consideration to the argumentsadvanced on either side. The admitted facts are that the petitionerswere having High Tension Electricity Power Connection for theirrespective factories and were consuming the High Tension electricityprovided by the respondents. Petitioners have filed writ petitionsagainst the enhanced tariff for the High Tension Industrial Consumersissued through G.O. Ms. No: 95 Energy A2 Department dated 28.11.2001 andobtained stay of the said order, thereby they did not pay the enhancedtariff and continued to pay the old rate till the dismissal of the writpetitions filed by them. In the said writ petitions, the enhanced tariffwas upheld and the Court had permitted the petitioners to pay the saidamount in instalments and accordingly, they have paid the instalmentwithout any default. The point for consideration in these appeals aswell as in the writ petitions is as to whether clauses 20.02 and 20.03are unreasonable and whether the claim for surcharge at 1.5% per monthon the belated payment is unreasonable, arbitrary and violative of Article 14 of the Constitution of India and hence, it has to be struckdown or if so not whether it is sustainable ? https://hcservices.ecourts.gov.in/hcservices/

The questioned terms and conditions for the supply ofelectricity as per the rules framed by the 3rd respondent was derivedfrom the powers conferred on it under Section 49 of the Electricity(Supply) Act. It is also not in dispute that the Board is entitled totake into account both the economy and efficiency of the organisation ascontemplated under Section 49 (2) of the said Act since the Board hadkept all these statutory intendants in mind. It cannot be said that thesaid provision made by the Board under Section 49 of the Act foradditional charges on delayed payment or on the outstanding dues are notin consonance with the extent of power granted to the Board. Neithercan it be said that in making such provisions, the Board had outsteppedits power delegated under Section 49 of the Act, nor can it be said thatthey are arbitrary, unreasonable and illegal. No enactment can bestruck down by the Constitutional Courts just saying that in the opinionof the Court it is arbitrary and unreasonable, although non-arbitrariness, reasonableness and fairness are postulates of Article 14of the Constitution. There must be some other constitutional infirmitybefore validating any enactment and it cannot be struck down merelybecause it is unjustified and unwise. Already this Court had come to aconclusion, after considering all these aspects, in a judgment reportedin 2004 W.L.R. 307, cited supra, that the terms and conditions forsupply of electricity as framed by the 3rd respondent under the powersconferred under Section 49 of the Electricity (Supply) Act is reasonableand justifiable and the clauses in the said rule namely clause 19.05,20.02 and 20.05 are with reasons and are sustainable. Therefore, thepresent claim of the petitioners that the rules governing the terms andconditions for the supply of electricity especially in clauses 20.02 and20.03 are not liable to be struck down in view of the earlierpronouncement of this Court. It is mentioned in clause (b) of Section49.2 of the Act that to discourage delayed payments and to encourageprompt and timely payment of charges of electricity supplied by the Board, such charges are collected. Therefore, we are of the consideredview that clauses 20.02 and 20.03 of the terms and conditions for Electricity Supply are not liable to be struck down as they are valid inlaw.

The claim of the 2nd respondent was that the petitioners areliable to pay the amount demanded by him under the terms and conditionsentered into between the petitioners and the respondents andparticularly clause 20.02 entitles the respondents to claim 1.5%surcharge per month for the belated payment when admittedly they havenot paid within 8 days from the date of the bill which was included inthe monthly High Tension bills. There is no dispute that the belatedpayment on which the surcharge has been levied by the impugned lettersof the 2nd respondent was due to the permission granted by the Court topay it in monthly instalments along with the monthly current consumptioncharges. Similarly, it is also not in dispute that the High Tensionpower connection was given to the petitioners by the 2nd respondent asper the terms and conditions of the Tamil Nadu Electricity Board Rules. The relevant rule for the payment of surcharge is 20.02 of the terms and https://hcservices.ecourts.gov.in/hcservices/ conditions. The instalments were also ordered by the Court and thoseinstalments were promptly clubbed with the monthly High Tension billspayable by the petitioners and those payments were also made by thepetitioners without any default. In these circumstances, we have to seewhether the order of stay passed by the Court and the permission givenby the Court to pay those amounts in instalments along with currentconsumption charges would warrant the imposition of surcharge as perclause 20.02 of the terms and conditions.

In this context, we have to follow the dictum of our SupremeCourt, The judgment of the Apex Court reported in 1997 (7) S.C.C. 89Style (Dress Land) vs. Union Territoy, Chandigarh] would run as follows : “ 15. …….. It is a settled principle of law that as andwhen a party applies and obtains a stay from the Court oflaw, it is always at the risk and responsibility of the partyapplying. Mere passing of an order of stay cannot bepresumed to be the conferment of any additional right uponthe litigating party. This Court in Sri Chamundi Mopeds Ltd. Vs. Church of South India Trust Association [1992 (3) S.C.C.1] held that the said portion of order by the Court meansonly that such order would not be operative from the date ofits passing. The order would not mean that the order stayedhad been whipped out from existence. The order of staygranted pending disposal of a case comes to an end with thedismissal of a substantive proceeding and it is the duty ofthe Court in such cases to put the parties in the sameposition they would have been but for the interim orders ofthe Court.

Therefore, the petitioners are liable to pay the surcharge ascontemplated in the terms and conditions especially clause 20.02. Thepoint for consideration is as to whether the said rate of surcharge canbe reduced despite the terms and condition binds the petitioners to pay1.5% per month on the belated payments. However, the argumentsadvanced by the learned counsel for the appellants / petitioners inrespect of the liability to pay surcharge as per the terms andconditions of the supply of electricity mentioned in class 20.02 has tobe considered. For the said purpose, we have to extract the saidclause, which is as follows :- https://hcservices.ecourts.gov.in/hcservices/ " 20.02 All charges included in monthly High Tensionbills are to be paid within eight days from the date of thebill. Bills not paid by High Tension consumers within thetime stipulated will be subject to a levy of surcharge at1.5 per cent per mensem. "According to his arguments, there could not be any belated paymentsurcharge as long as the monthly payments of the bills along with theinstalments as ordered by the Court were paid within 8 days from thedate of bill claiming the monthly current consumption charges and ifthere was default in those payments only, the question of payment ofsurcharge would be attracted. The learned Additional Advocate Generalwould reply that in the judgment of the Apex Court it had alreadymentioned the outstanding sum of revised tariff becoming due to thedismissal of the writ petitions would become belated payment though thesaid payment have been made by the petitioners along with the monthlybills. According to him, Clause 20.02 of the Terms and Conditionsshould be read along with the rule of law made by the Hon’ble Apex Courtand accordingly, the petitioners are not entitled for any exemption frompayment of surcharge for the belated payments caused due to the filingof the writ petitions and obtaining orders of stay.

For the said purpose, we have to go through the judgmentspassed by the Hon'ble Supreme Court of India reported in 1993 (64)E.L.T. 161 [Kashyap Zip Industries vs. Union of India], which is adecision by a Full Bench of the Supreme Court. Similarly, the judgmentof the Supreme Court reported in 1999 (7) S.C.C. 89 [Style (DressLand) vs. Union Territory, Chandigarh] would also give a discretion ofreducing the interest for the outstanding payments caused due to thestay order passed by the Court. The relevant paragraph (para No: 16)runs as follows :

16. ........ We, however, feel that awarding of interestat the rate of 18% per annum from the aforesaid period was onthe excessive side. The respondent authority could not beequated with private commercial institutions and conferred withan amount of compensation in the form of interest which, in thejudicial parlance, may amount to penalty, despite the fact thatthe persons found to have jeopardised the process of law wererightly held liable to compensate the respondent authority byway of interest. In our opinion, 15% per annum interest forthe aforesaid period would have been just and proper.

On a careful perusal of the judgment of the Apex Court, weare of the considered view that the outstanding payments made by thepetitioners caused due to the stay order passed by this Court while theywere questioning the revised tariff became payable on the disposal ofthose writ petitions and the Court had also granted permission to paythose outstanding payments by instalment along with the monthlyelectricity consumption bills and they were also paid by the petitionerspromptly. But, however, those payments made by the petitioners are https://hcservices.ecourts.gov.in/hcservices/ considered and declared as belated payment by various pronouncement ofour Supreme Court as seen by us and, therefore, those payments warrant asurcharge for the belated payments. However, we find that Clause 20.02of the Terms and Conditions would show that belated payment would comeonly if there is default of any arrears of payment clubbed with monthlybills were failed to be paid within a period of 8 days.