KESHARI STEELS Vs. M P ELECTRICITY BOARD

JUDGEMENT

(1.) The million - dollar question that falls for determination is whether the Bank guarantees executed at the behest of appellants in favour of M.P. Electricity Board fall under the protective umbrella of section 22 of Sick Industrial Companies (Special Provisions) Act, 1985 (for short the Act).

(2.) Appellants set up a mini steel plant and Rolling mill and applied for supply of high tension electricity. Respondent Board agreed to supply them 15,000/- KVA power for two years from 1-2-95. An agreement was executed between the parties clause 27 (a) whereof required a consumer to furnish security by cash deposit or in some other form. Appellants were asked to give five bank guarantees through State Bank of India, Dewas. The terms and conditions also envisaged that the Board shall be competent to enhance the security amount and to apply it towards payments or arrears of any money which may become due by the consumer.

(3.) It appears that appellants fell in red and could not clear their electricity bills in time. Meanwhile they moved the Board for industrial and financial re-construction (BFIR) u/s 15 of the Act which recommended winding up of their company. They took appeal against this before the appellate Authority which is pending. They thereafter embarked on a litigation spree and filed series of writ petitions. The first filed M.P. No. 93/94 to assail the recovery of arrears of electricity charges and obtained interim stay dated 8-5-96 and then filed W.P. No. 1331/96 to resist the disconnection of electricity supply. They lastly filed W.P. No. 348/97 to assail respondent Board's letter of invocation of five Bank guarantees addressed to S.B.I., Dewas (respondent No. 5) on the plea that the action amounted to recovery of arrears of electricity charges which was barred u/s 22 of the Act. The writ Court rejected their plea holding that payment of dues for consumed electricity was neither a loan nor advance to attract the bar under section 22. Hence this appeal.