MODI INDUSTRIES Vs. U P S E BOARD

JUDGEMENT

(1.) IN these petitions filed by the consumers of electrical energy supplied by the U.P. State Electricity Board the main question involved is whether the U.P. State Electricity Board (hereinafter referred to as the Board) has power or authority to demand from the petitioners any additional amount of security deposit on the basis of its letter dated 9th Dec., 1975.

(2.) THE petitioners entered into separate but identical agreements with the Board for supply of electrical energy for industrial purposes. For sake of convenient reference to facts necessary for the decision of the question involved, Civil Misc. Writ Petition No. 515 of 1976 filed by Modi Industries Ltd., (Steel Section) is made the leading case.

(3.) UNDER the 1948 Act the Board is not a licensee as defined in that Act but by virtue of Section 26 the Board is deemed a licensee and has all the powers and obligations of a licensee under Act IX of 1910. The second proviso appended to S.26 provides that the provisions of Cl.VI of the Schedule to the 1910 Act are made applicable to the Board in respect of that area only where distribution mains have been laid by the Board and the supply of energy through any of them has commenced. Clause '2' of the Agreement entered into between the parties, which provides that the agreement shall be read and construed in all respects in conformity with all provisions of the 1910 Act and the 1948 Act or any subsequent amendments thereof and the Rules and Regulations made thereunder from time to time, has the effect of making Cl.VI of the Schedule applicable to the agreement between the parties. Learned counsel for the Board contended that Cl.VI of the Schedule empowered the Board to demand sufficient security from the consumer in order to safeguard its financial interest. The relevant part of Cl.VI reads as follows : "VI. Requisition for supply to owner or occupiers in vicinity - (1) where, after distributing mains have been laid down under the provisions of Cl.IV or Cl.V and the supply of energy through those mains or any of them has commenced a requisition is made by the owner or occupier of any premises situate within the area of supply requiring the licensee to supply energy for such premises, the licensee shall, within one month from the making of the requisition or within such longer period as the Electrical Inspector may allow supply, and, save in so far as he is prevented from doing so by cyclones, floods, storms or other occurrences beyond his control, continue to supply, energy in accordance with the requisition : Provided first, that the licensee shall not be bound to comply with any such requisition unless and until the person making it - (a) within fourteen days after the service on him by the licensee of a notice in writing in this behalf, tenders to the licensee a written contract, in a form approved by the State Government, duly executed and with sufficient security, binding himself to take a supply of energy for not less than two years to such amount as will assure to the licensee at the current rates charged by him an annual revenue not exceeding fifteen per centum of the cost of the service-line required to comply with the requisition, and (b) ............ Provided secondly, that the licensee shall be entitled to discontinue such supply - (a) if the owner or occupier of the property to which the supply is made has not already given security, or if any security given by him has become invalid or insufficient, and such owner or occupier fails to furnish security or to make up the original security to a sufficient amount, as the case may be, within seven days, after the service upon him of notice from the licensee requiring him so to do, or (b) to (d) .................." This rule is concerned with the stage when a requisition is made by the owner or occupier of any premises for supply of energy for such premises. It provides that within a month from the making of the requisition or within such extended period as the Electrical Inspector may allow, the Board shall supply energy in accordance with the requisition. The obligation to supply energy requisitioned is subject to the condition that the consumer, within fourteen days after the service on him by the licensee of a notice in writing, tenders to the licensee a written contract in the approved form duly executed and furnishes sufficient security binding himself to take a supply of energy for not less than two years. The amount of security will be such as will assure to the licensee at the current rates charged by him an annual revenue not exceeding fifteen per centum of the cost of the service-line required to comply with the requisition. The security that the consumer is required to furnish at this stage has nothing to do with the security for safeguarding any financial interest of the licensee for the energy consumed by the owner or occupier of any premises. We are unable to accept the contention of the Board that by virtue of this clause the Board is empowered to demand any or every type of security that the Board may consider necessary in order to safeguard its financial interest. The security contemplated under the proviso to Clause VI of the Schedule is for the purpose of binding the consumer to take supply of energy for not less than two years. The extent of security shall be such which will assure to the licensee an annual revenue not exceeding 15 per cent of the cost incurred in laying the service-line in order to comply with the requisition. It has nothing to do with the security that may be taken by the licensee under the agreement entered into with the consumer for payment of the bills for consumption of energy.