IPI STEEL LIMITED Vs. ORISSA STATE ELECTRICITY

JUDGEMENT

(1.) The petitioner, a company registered under the Companies Act and was engaged in manufacture of Steel, assails the validity of proviso to Regulation 46 of the Orissa State Electricity Board (General Condition of Supply) Regulations, which was brought in by way of amendmant by notification dated 25 -6 -1987, inter alia. on the ground that the said provision is ultra vires of Art. 14 of the Constitution. The petitioner has also prayed for quashing the bills raised by the Orissa State Electricity Board for the period January 1989; to August 1990 in accordance with the aforesaid amended Rugulations

(2.) THE petitioner entered into an agreement with the Board, opp. party No 1 on 16 -8 -1981 and under the agreement the said opp. party No. 1 undertook to supply power up to a maximum demand of 777 8 KVA/7000 -KW called 'the contract demand' and the said agreement continues to be still in force. It is alleged in the write application that notwithstanding the aforesaid agreement between the parties, opp. party No. 1 was not in a position to suoply the maximum demand to the petitioner during 1985, 1986 and 987 on account of shonage of generation of power. During July, 1988 the Government of Orissa in the Irrigation and Power Department in exercise of its power under Section 22(b) of the Indian Electricity Act. 1910 hereinafter referred to as 'the Electricity Act') read with Sac. 73A of the Electricity (Supply) Act, 1945 (hereinafter referred to as 'the Supply Act') issued an order dated 13 -7 -1988 directing th3 Board to reduce the supply of energy so as to allow the consumers to avail to the extent as specified in the Annexure, notwithstanding anything contained in contract, agreement or requisition. So far as the petitioner is concerned the allowable drawal for the water year 1988 -89 was 16 -863 million K. V. M. The aforesaid order of the State Government has been annexed as Annexure -2 to the writ application. In accordance with the aforesaid order of the State Government, the Board in its return intimated the petitioner by letter dated 16 -7 -1988, annexed as Annexure -3, stating therein that in case the petitioner's consumption exceeded the quantum of energy specified by the Government then the service connection was liable for disconnection without any notice and the excess energy drawn should be payable at double the highest rate of energy charge for any category as per the Tariff Schsdule of the Orissa State Electricity Board in force at the time plus demand charges and power factor penalty and other charges, if any, at normal rates of the Tariff applicable to the industry. From time to time the Board issued such power restrictions on the petitioner as per Annexure -4 series. The petitioner asserts that failure on the part of the Board to supply the agreed quantity of power to the petitioner almost made the petitioner's industry cripple and at the same time by virtue of the amended provisions of the Regulations continued to levy the demand charge on the basis of 'maximum demand' as provided in the agreement apart from the levy of energy charge on the basis of actual energy consumption which is arbitrary, irrational and puts an unreasonable burden on the petitioner and is confiscatory in nature and the petitioner accordingly prays for striking down of the aforesaid proviso in respect of the 'demand charge' in question. The petitioner being aggrieved by the excessiveness of the demand charge levied on the basis of maximum demand notwithstanding the power restrictions imposed by the State Government and by the Board, made a representation to the Chief Engineer (Commerce) of opp. party No. 1 requesting him to direct the concerned authority not to charge 'demand charges' on the basis of miximum damand but charge demand, charges propor - tionate to the number of hours power is made available to the petitioner. But that prayer of the petitioner was not accepted and, on the other hand, the petitioner was intimated that the demand charges are not for round the clock supply during the month and an industry may not be supplied power due to to break -down or other exigencies but yet is supposed to pay the said demand charge. The said letter of opp. party No. 2 has been annexed as Annexure -7 to the writ application. The petitioner then Iearnt that it is because of the proviso to Regulation 46 which was brought about by notification dated 25 -6 -1987, the opp. parties are not in a position to levy the demand charge proportionate to the power made available to the petitioner and therefore, the petitioner filed the present writ application challenging the validity of the aforesaid proviso to Regulation 46. The petitioner has given a statement of the hourly power -cut as well as the power that was made available to the petitioner under Annexure -9 and it is stated that between January, 1939 to August, 1990 by raising the demand charge on the basis of maximum demand and not on the basis of proportionate reduction on account of reduction of power, an excess sum of Rs. 20,39,874/ - has been sougt to be recovered by the Board from the petitioner. The bills for the period January, 1989 to August. 1990 have been annexed as Annexure -10 series.

(3.) MR . Panigrahi,the learned counsel for the petitioner, contends that the proviso to Regulation 46 as brought out by amendment by notification dated 23 -6 -1987 providing levy of demand charge on the basis of maximum demand as provided in the agreement is grossly arbitrary and unreal and has got absolutely no connection with the readiness of the Board to supply power at any given point of time and such a provision must be struck down on the ground of arbitrariness and unreasonableness. He further contends that the right of the Board to levy demand charge being sustained on the ground of Board's readiness to supply power to the consumer irrespective of the fact whether the consumer consumes the same or not, when the Board itslf is not in a position to supply power as per the contract demand it is wholly unreasonable on the part of the Board to levy the demand charge on the basis of maximum demand.