SIHOR ELECTRICITY WORKS LIMITED Vs. GUJARAT ELECTRICITY BOARD

JUDGEMENT

(1.) The appellant, the Sihor Electricity Works Ltd., is a public limited company carrying on the business of generating and distributing electrical energy under the licence granted to it under the Indian Electricity Act, 1910, having its supply area within the limits of Sihor Town situated in the district of Bhavnagar in Saurashtra. The first respondent is the Gujarat Electricity Board which is a Corporation constituted under the Electricity (Supply) Act, 1948 for the purposes of generation, supply and distribution of electricity in the State of Gujarat. The second respondent is the Saurashtra Electrical and Metal Industries (Private) Ltd., a private limited company carrying on the business of manufacturing electrical accessories etc., and having its factory at Sihor within the area of supply the appellant company. The appellant company was originally generating and distributing electricity but at the relevant time it was a distributing licensee distributing the energy purchased in bulk from the first respondent within its area of supply.

(2.) The appellant brought a suit against the respondents in the Court of Civil Judge Junior Division) of Sihor being Civil Suit No. 45 of 1960 to obtain a declaration that the decision of the first respondent as contained in its letters dated 3rd June, 1960 and 24h October, 1960 to give direct supply to the factory of the second respondent within the area of supply of the appellant and without its consent was illegal and ultra vires its powers under the Electricity (Supply) Act, 1948 (Act No. 54 of 1948) (hereinafter called the Act), and for a permanent injunction restraining the first respondent from implementing the said decision. The case of the appellant was that the first respondent was not entitled to give direct supply to the second respondent as the 'maximum demand' of the appellant at the time of request of the second respondent was more than twice the 'maximum demand' asked for by the second respondent. The appellant company alleged at the maximum demand of the appellant company in the relevant period, namely, September 1959 to December 1959, was between 262 to 349 KVA while the maximum demand of the second respondent had never exceeded 40 to 45 KVA. The first respondent contested the suit on the ground that the decision was legal and proper because the maximum demand of the appellant company at the time of request was less than twice the maximum demand 'asked for' by the second respondent from the first respondent. It was contended that the demand 'asked for' by the second respondent was 398 KVA, and, therefore, the first respondent was entitled in law to give direct supply to the second respondent. The trial Judge held that the decision of the first respondent to give direct supply of electricity to the second respondent was ultra vires the power of the first respondent under Section 19 (1) (b) (ii) of the Act and was, therefore, null and void and gave a declaration to that effect in favour of the appellant. The trial Judge, however, refused to grant the consequential relief of injunction on the ground that the Board being a public authority could be expected to respect the law laid down by the Court and it was therefore, not necessary to issue any injunction against the respondents. Aggrieved by the decree passed by the trial Judge the two respondents filed separate appeals in the District Court. The appellant preferred a cross-objection contending that the trial Judge was in error in refusing to grant injunction. The appeals and the cross-objection were heard by the District Judge of Bhavnagar and by a common judgment delivered on 12th October, 1963, the District Judge accepted the contentions urged on behalf of the respondents and allowed the appeals. The District Judge held that the jurisdiction of the Civil Court to entertain the suit was excluded by reason of Section 76 (1) of the Act and the dispute between the parties being a dispute covered by that Section could be determined only in the manner provided by that Section, viz., by arbitration. The District Judge also decided that the maximum demand asked for by the second respondent was in excess of 50 per cent of the maximum demand of the appellant at the time of request for direct supply and the first respondent was entitled to give direct supply of electrical energy to the second respondent under Section 19 (1) (b) (ii) of the Act. The District Judge accordingly found that the suit was liable to fail not only for want of jurisdiction but also on merits and accordingly allowed the appeals and dismissed the suit. Thereafter, the appellant preferred appeals to the High Court of Gujarat being Civil Second Appeals Nos. 33 and 34 of 1964. The said appeals came for hearing before Mr. Justice P. N. Bhagwati, who dismissed the same by a common judgment dated 4th July, 1964. The learned Judge took the view that the Court had jurisdiction to hear the suit as the provision for arbitration under S. 76 of the Act was inserted in the statute not in the interest of public food but for the benefit of individuals and therefore either party can waive the right to insist on arbitration. The learned Judge, however, held that the true effect of Section 19 (1) (b) (ii) was that "the comparison required to be made was between the maximum demand of the licensee on the Board at the time of request for direct supply which would of course be maximum demand based on electricity actually supplied and taken during some reasonable period immediately preceding the time of request for direct supply and the maximum demand which the applicant wants to keep the Board ready on tap when supplying electricity to the applicant". These appeals are brought by special leave from the judgment of the Gujarat High Court dated 4th July, 1964 in Second Appeals Nos. 33 and 34 of 1964.

(3.) The question of law presented for determination in this case is whether the High Court was right in holding that Section 19 (1) (b) (ii) of the Act prescribed that a comparison must be made between the actual maximum demand of the licensee company and the anticipated maximum demand of the consumer before the Electricity Board can decide to give direct supply to the consumer within the area of the supply of the licensee company.