# M/s Rathi Steel & Power Ltd. (Furnace Division) v. U.P. Electricity Regulatory Commission & Ors

- **Citation:** J. Misc. Bench No. 6950 of 2020
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-03-06
- **Case number:** J. Misc. Bench No. 6950 of 2020
- **Bench:** Pankaj Kumar Jaiswal, Karunesh Singh Pawar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-rathi-steel-power-ltd-furnace-division-v-u-p-electricity-regulatory-46304
- **Pages:** 13

## Headnote

law-U.P.Electricity
Supply
Code,2005-
Cl.4.49Petitioner
prayed
for
enhancement
of
load-bank
guarantee
was
demanded
by
Respondent-payment
of
additional
security is a condition for release of
additional
load-non
paymentadditional load not to be releasedsupply can be disconnected-event of
deposit of additional security-cannot
be said to be any dues recovered from
Petitioner-demand of bank guarrantee
or cash for grant of additional load is
perfectly justified.W.P. dismissed.

Held, the scheme of the Act and the Code
does not indicate that any process for
recovery
of
additional
security
is
contemplated or provided for because of
the reason that the consequences for non
deposit of additional security has been
clearly provided in the Act itself. The
payment
of
additional
security
being
condition for release of additional load, in
the event it is not paid the additional load
is not to be released and further supply can
be discontinued. No more is contemplated
with regard to non payment of additional
security. Thus, we are of the view that in
the event of deposit of additional security
by the petitioner for grant of additional load
cannot be said to be any dues, which is to
be recovered from the petitioner and
therefore, the demand by the respondents
of giving bank guarantee or cash for grant
of additional load is perfectly justified.
(para 22) (E-9)

Cases Cited:

## Text

_Characters 0–39,984 of 43,041. This is a partial read: ask again with offset=39984 for what follows._

3-5 All. M/s Rathi Steel & Power Ltd. (Furnace Division) Vs. U.P. Electricity Regulatory Commission & Ors.
1137

23. Having perused the Awards
impugned passed by the Labour Courts in
these two writ petitions, the Court finds no
mention at all or consideration of the
preliminary objection raised with regard to
the maintainability of the Adjudication case
under the U.P. Industrial Disputes Act by
the Labour Court concerned.

24. The Awards dated 29.1.2009 and
10.11.2009 are set aside. However, since
the respondents have been engaged in the
absence of any interim order as daily wage
Beldars, the benefit granted to them by the
authorities during the pendency of these
writ petitions shall not be taken away from
them. The amount of back wages deposited
by the petitioners in Writ Petition No.4074
(MS) of 2010 before the Labour Court,
shall be refunded to them on an appropriate
application being moved by them.

25. The writ petitions stand allowed
to this extent.
----------
(2020)03-05ILR A1137
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 06.03.2020

BEFORE

THE HON'BLE PANKAJ KUMAR JAISWAL, J.
THE HON'BLE KARUNESH SINGH PAWAR,
J.

Misc. Bench No. 6950 of 2020

M/s Rathi Steel & Power Ltd. (Furnace
Division) ...Petitioner
Versus
U.P. Electricity Regulatory Commission &
Ors. ...Respondents

Counsel for the Petitioner:
Vishal Dixit, Ankit Tripathi, Ashok Tripathi,
Ashok Kumar Prajapati, Devendra Kumar,
Kamlesh Kumar
Counsel for the Respondents:
Sanjay Singh, Shree Prakash Singh

Civil
law-U.P.Electricity
Supply
Code,2005-
Cl.4.49Petitioner
prayed
for
enhancement
of
load-bank
guarantee
was
demanded
by
Respondent-payment
of
additional
security is a condition for release of
additional
load-non
paymentadditional load not to be releasedsupply can be disconnected-event of
deposit of additional security-cannot
be said to be any dues recovered from
Petitioner-demand of bank guarrantee
or cash for grant of additional load is
perfectly justified.W.P. dismissed.

Held, the scheme of the Act and the Code
does not indicate that any process for
recovery
of
additional
security
is
contemplated or provided for because of
the reason that the consequences for non
deposit of additional security has been
clearly provided in the Act itself. The
payment
of
additional
security
being
condition for release of additional load, in
the event it is not paid the additional load
is not to be released and further supply can
be discontinued. No more is contemplated
with regard to non payment of additional
security. Thus, we are of the view that in
the event of deposit of additional security
by the petitioner for grant of additional load
cannot be said to be any dues, which is to
be recovered from the petitioner and
therefore, the demand by the respondents
of giving bank guarantee or cash for grant
of additional load is perfectly justified.
(para 22) (E-9)

Cases Cited:

1. Ferro Alloys Corporation Ltd. Vs. A.P. State
Electricity Board and another reported in 1993
Supp (4) S.C.C. 136

2. Gainda Ram Vs.Vs. Municipal Corporation of
Delhi Vs. [(2010) 10 SCC 715]

3. Krishnan Kakkanth Vs. Govt. of Kerala
[(1997) 9 SCC 495]
1138 INDIAN LAW REPORTS ALLAHABAD SERIES
4.Indian Drugs & Pharmaceuticals Ltd& ors. Vs.
Punjab Drugs Manufacturers Association & ors.
[(1999) 6 SCC 247],

5.
Cooverjee
B.
Bharucha
Vs.
Excise
Commissioner and the Chief Commissioner,
Ajmer & ors. [AIR 1954 SC 220)

6.State of Gujarat Vs. Mirzapur Moti Kureshi
Kassab Jamat & ors. [(2005) 8 SCC 534

7. PGF Limited & ors. Vs. U.O.I. & anr. : 2015
(13) SCC 50.

(Delivered by Hon'ble Karunesh Singh
Pawar, J.)

(1) Heard Sri Vishal Dixit, learned
counsel for the petitioner, Sri Sanjay Singh,
learned counsel for the respondent no.1 and
Sri Shree Prakash Singh, learned counsel
for the respondents nos. 2 to 4.

(2) By this writ petition under Article
226 of the Constitution of India, the
petitioner is praying for following reliefs :

(i) issue writ order or direction in
the nature of certiorari quashing the
provision of clause 4.49 of U.P. Electricity
Supply
Code
2005
by
declaring
it
unconstitutional or ultra vires.

(ii) issue writ order or direction
in the nature of mandamus commanding
the opp. party No.1 for modifying clause
4.49 of U.P. Electricity Supply Code 2005
upto the extent of placing the clause of
accepting simple security undertaking from
the petitioner instead of bank guarantee or
cash.

(iii) issue writ order or direction
in the nature of mandamus commanding
the opp. party licensee to sanction/release
the additional load of 3100 KVA after
accepting simple security undertaking for
the
court
stayed
amount
from
the
petitioner.

(iv) Issue any other order or
direction which this Hon'ble court may
deem fit and proper.

(v) Allow the petition with cost."

(3) According to the petitioner, a
dispute arose between the petitioner and the
licensee for application of tariff order in
respect of allowing the TOD (time of day)
rebate which has not been allowed to the
petitioner
properly
by
the
licensee.
Therefore, the petitioner approached the
Electricity Ombudsman by filing Reference
No. 111 of 2019 : Rathi Steel & Power Ltd.
(Furnance Division) and Reference No.
112 of 2019 : Rathi Steel & Power Ltd. (
Rolling Mill Division ). In the aforesaid
reference,
earlier
the
Electricity
Ombudsman stayed the entire money, due
to which, there was loss to the petitioner,
therefore, the petitioner had approached
this Court by filing writ petition Misc.
Single No. 11068 of 2019 : M/s Rathi Steel
& Power Ltd. (Furnace Division) Vs.
Electricity Ombudsman, U.P., Lucknow,
which was disposed of vide judgment and
order dated 18.04.2019 with the directions
that if the petitioner tenders an amount of
Rupees Seventy Lakhs to respondent no.3,
then, respondent no.3 shall accept the same
and give a receipt of the same to the
petitioner.

(4) Order dated 18.04.2019 reads as
under :

"Heard learned counsel for the
petitioner and learned counsel for the
respondents.

The grievance of the petitioner is
that the opposite parties is not allowing
TOD (time of day) rebate to the petitioner,
which is permissible to him as per order
dated 09.12.2017, and the petitioner is
being a HV-2 category industry, was
3-5 All. M/s Rathi Steel & Power Ltd. (Furnace Division) Vs. U.P. Electricity Regulatory Commission & Ors.
1139
entitled to the said rebate. The petitioner in
this
regard
has
made
several
representations to the respondents, but on
receiving no response, had approached the
Electricity Ombudsman U.P. under Section
43 (6) of the Electricity Act, 2003 read with
Provisions of Regulations, 2007. Along
with the said reference, the petitioner has
preferred the application for interim relief,
which is quoted below:-

"Hence
for
the
facts
&
circumstances stated in the memo of
statutory reference duly supported by an
affidavit, it is most respectfully prayed that
this Hon'ble Authority may kindly be
pleased to direct the opp. party, UPPCL
that after reduction of claimed amount of
Rs.59,52,721/- against the TOD limit,
rebate of 20% remaining money be
accepted from the petitioner and his
electricity
connection
should
not
be
disconnected during the pendency of the
matter."

After
due
consideration,
the
Electricity Ombudsman passed an order,
directing the Executive Engineer, not to
take any coercive steps against the
petitioner. The petitioner is interpreting the
said order as, if the entire recovery
proceedings to the tune of Rs.1,11,97,943/-
have been stayed and subsequent to the
said interim order, the respondents are not
even accepting the admitted liability while
the petitioner is ready and willing to
deposit
Rs.70
lakhs,
which
is
the
undisputed amount, which the petitioner is
ready and willing to deposit with the
respondent no.3.

Sri S.P. Singh, learned counsel
for
the
respondents
disputes
the
interpretation as given by the petitioner in
the writ petition and submits that at no
stage, have the respondents refused to
accept the admitted amount, which the
petitioner is at liberty to deposit with them.
He further submits that the assessment of
electricity has been correctly made and the
matter is under consideration before the
Ombudsman and it is only the interim
order, against which the petitioner has
approached this Court.

After hearing counsel for the
parties and perusing the record.

The innocuous prayer made by
learned counsel for the petitioner is that he
is ready and willing to deposit the
undisputed amount of Rs.70 lakhs, which
the respondents should be directed to
accept.

Sri S.P. Singh, learned counsel
for the respondents submits that they have
no objection, if a direction is passed that
the petitioner may deposit Rs.70 lakhs to
respondent no.3, before the scheduled
period i.e. 23.04.2019.

It is therefore provided that, if the
petitioner tenders an amount of Rs.70 lakhs
to respondent no.3, then respondent no.3
shall accept the same and give a receipt of
the same to the petitioner.

With the above observations, writ
petition stands disposed of."

(5) It has been stated by the petitioner
that the petitioner has applied for additional
load of 3100 KVA but the licensee has
informed the petitioner vide letter dated
17.1.2020 that until and unless the cash or
bank guarantee would not be furnished
upto the extent of Court stayed amount as
per the provisions of Clause 4.49 of the
U.P. Electricity Supply Code, 2005, the
additional load of 3100 KVA would not be
released to him. Thereafter, the petitioner
approached the Electricity Ombudsman by
filing application in pending Reference No.
111 of 2019, wherein during the course of
hearing,
Electricity
Ombudsman
has
discussed that we are bound with the
provision of Clause 4.49 of the U.P.
1140 INDIAN LAW REPORTS ALLAHABAD SERIES
Electricity Supply Code, 2005. Thereafter,
the petitioner has filed the present writ
petition for declaring the provision of
Clause 4.49 of the U.P. Electricity Supply
Code, 2005 as ultra vires.

(6) Learned counsel for the petitioner
has submitted that Clause 4.49 of U.P.
Electricity Supply Code 2005 (hereinafter
referred
to
as
"Code
2005")
is
unconstitutional and ultra vires. The
assessment amount having been stayed,
which is still continuing, therefore, asking
for submission of bank guarantee to
recover the said amount is interference with
the order of stay. He submits that
provisions of Clause 4.49 of the Code 2005
is against Article 19 (1) (g) and Article 14
of the Constitution of India as by asking
bank guarantee, the licensee is trying to
snatch
the
petitioner's
right
for
enhancement
of
plant
capacity
for
surviving in the market. Therefore, Clause
4.49 of the Code, 2005 is unfair,
unreasonable and arbitrary.

(7) The main thrust of submission of
learned Counsel for the petitioner is that
Clause 4.49 of 2005 Code to the extent of
furnishing bank guarantee or cash for the
purpose of release of additional load or
reduction of load for the court stayed
amount is ultra vires to Article 19 (1) (g)
and Article 14 of the Constitution of India,
hence no bank guarantee can be demanded
from the petitioner.

(8) Before we proceed to consider the
respective submission, it is necessary to
look into the relevant provisions of the
Electricity Act, 2003 and U.P. Electricity
Supply Code 2005.

(9) Part-VI of the Electricity Act,
2003 deals with distribution of electricity.
Section 45 provides for power to recover
charges, Section 46 relates to power to
recover expenditure and Section 47 deals
with power to require security. Sections 45,
46 and 47 of the Electricity Act, 2003 are
quoted below:-

45. Power to recover charges.- (1)
Subject to the provisions of this section, the
prices to be charged by a distribution
licensee for the supply of electricity by him
in pursuance of section 43 shall be in
accordance with such tariffs fixed from
time to time and conditions of his licence.

(2) The charges for electricity
supplied by a distribution licensee shall be -

(a) fixed in accordance with the
methods and the principles as may be
specified
by
the
concerned
State
Commission ;

(b) published in such manner so
as to give adequate publicity for such
charges and prices.

(3) The charges for electricity
supplied by a distribution licensee may
include -

(a) a fixed charge in addition to
the charge for the actual electricity
supplied;

(b) a rent or other charges in
respect of any electric meter or electrical
plant provided by the distribution licensee.

(4) Subject to the provisions of
section 62, in fixing charges under this
section a distribution licensee shall not
show undue preference to any person or
class of persons or discrimination against
any person or class of persons.

(5) The charges fixed by the
distribution licensee shall be in accordance
with the provisions of this Act and the
regulations made in this behalf by the
concerned State Commission.

46.
Power
to
recover
expenditure.- The State Commission may,
3-5 All. M/s Rathi Steel & Power Ltd. (Furnace Division) Vs. U.P. Electricity Regulatory Commission & Ors.
1141
by regulations, authorise a distribution
licensee to charge from a person requiring a
supply of electricity in pursuance of section
43 any expenses reasonably incurred in
providing any electric line or electrical
plant used for the purpose of giving that
supply.

47. Power to require security.- (1)
Subject to the provisions of this section, a
distribution licensee may require any
person, who requires a supply of electricity
in pursuance of section 43, to give him
reasonable security, as determined by
regulations, for the payment to him of all
monies which may become due to him -

(a) in respect of the electricity
supplied to such persons; or

(b) where any electric line or
electrical plant or electric meter is to be
provided for supplying electricity to
person, in respect of the provision of such
line or plant or meter, and if that person
fails to give such security, the distribution
licensee may, if he thinks fit, refuse to give
the supply or to provide the line or plant or
meter for the period during which the
failure continues.

(2) Where any person has not
given such security as is mentioned in
subsection (1) or the security given by any
person has become invalid or insufficient,
the distribution licensee may, by notice,
require that person, within thirty days after
the service of the notice, to give him
reasonable security for the payment of all
monies which may become due to him in
respect of the supply of electricity or
provision of such line or plant or meter.

(3) If the person referred to in
sub-section(2) fails to give such security,
the distribution licensee may, if he thinks
fit, discontinue the supply of electricity for
the period during which the failure
continues.

(4) The distribution licensee shall
pay interest equivalent to the bank rate or
more, as may be specified by the concerned
State Commission, on the security referred
to in sub-section (1) and refund such
security on the request of the person who
gave such security.

(5) A distribution licensee shall
not be entitled to require security in
pursuance of clause (a) of sub-section (1) if
the person requiring the supply is prepared
to take the supply through a pre-payment
meter."

(10) The U.P. Electricity Supply Code
2005 has been framed under Section 181 of
the Electricity Act, 2003. Clause 4.20 of
the U.P. Electricity Supply Code 2005
provides for security deposit. Clause 4.20
of the Supply Code is quoted below:-

" 4.20. Security Deposit

(a) [A security deposit to cover
the estimated power consumption for two
months shall be made by all consumer /
applicant.

(b) The estimated consumption
and security deposit amount for different
categories of new consumers shall be
determined by the Licensee with the
approval of the Commission.

(c) In case of enhancement of
load, only additional security to cover the
additional load (Load after enhancement
minus existing load) shall need to be
deposited.

(d) Deleted

(e) The Licensee may give notice
to any consumer for deposit of additional
security deposit if:

(i) The security deposit falls short
of
covering
the
estimated
power
consumption bill for 2 months based on his
average monthly consumption for the
preceding financial year.
1142 INDIAN LAW REPORTS ALLAHABAD SERIES

(ii) In case of a new connection,
additional security shall be demanded only
after completion of one full financial year.

(iii) Only when the required
additional security deposit payable by the
consumer exceeds 10% of the existing
security deposit, a demand for additional
security deposit, shall be made.

(iv) The security deposit is
reduced due to adjustment of outstanding
dues.

(v) Security deposit has become
invalid or insufficient due to any other
reason.

(f) [The consumer shall deposit
the additional security within 30 days after
the service of the notice. If a person fails to
give such security, the Licensee may
discontinue supply of electricity for period
during which failure continues. However, a
maximum
of
three
instalments,
if
considered prudent by the licensee, may be
permitted.]

(g) If the existing security deposit
is found to be in excess of more than 20%
of the required security deposit, refund of
the excess amount shall be made by
adjustment in the ensuing bills within three
billing cycles to the consumer.

(h) The security deposit shall be
returned to consumer, upon termination of
the agreement & finalization of permanent
disconnection, and after adjustment of all
dues, within 30 days. However, if the delay
in payment exceeds 90 days, interest at
bank rates of Reserve Bank of India, shall
be payable to the consumer. In this regard it
shall be the responsibility of the licensee to
keep a watch on the bank rate from time to
time.

(i) The Licensee shall pay interest
on security deposit to the consumers at
bank rate as on 1st April of applicable
financial year by way of credit in the bill of
the consumer in the months of April, or
May or June as per the applicable billing
cycle. However, no interest shall be
payable if the deposit is not made by way
of cash, cheque or bank draft. The interest
rates are subject to change as per the tariff
orders of Commission from time to time.]

(j) The amount of security deposit
shall be accepted in parts according to the
phasing agreed for release of load in case
of
"Phased
Contract
Demand".
The
subsequent additional security amount shall
be deposited 30 days prior to the release of
additional load.

The Licensee shall energise no
connection until the requisite security
amount has been deposited by the applicant
/ consumer.

A distribution licensee shall not
be entitled to require security in pursuance
of this section, if the person requiring the
supply is prepared to take the supply
through a prepayment meter, as and when
distribution licensee provides a choice to
consumer to opt for supply through prepayment meter."

(11)

Paragraph
4.43
of
U.P.
Electricity Supply Code 2005 deals with
enhancement of load. In the present case,
petitioner
has
made
application
for
enhancement of the load. Paragraph 4.43
(a), which is relevant for the purpose, is
quoted below:-

"4.43 Enhancement of Load for
cases other than Public Lighting:

(a) Applications for enhancement
of load shall be filed in duplicate to the
concerned sub divisional officer of the
Licensee in the prescribed form (Annexure
4.10) along with the following:

(i) Prescribed Registration-cumprocessing
fee
as
approved
by
the
Commission from time to time.
3-5 All. M/s Rathi Steel & Power Ltd. (Furnace Division) Vs. U.P. Electricity Regulatory Commission & Ors.
1143

(ii) Work completion certificate
and Test report from a LEC (Licensed
Electrical Contractor).

(iii) Letter of approval from the
Electrical inspector, if required.

(iv) Copy of the paid, latest
electricity bills/ arrears due.

(v) If matter related to dues is
stayed by court, the procedure as per clause
4.49 may be followed.

(vi) [Addendum to the Agreement
to act as supplementary to the main
agreement duly filled and signed by the
consumer."

(12)
 Clause
4.43
(v)
of
the
Constitution states that if matter related to
dues is stayed by the court, the procedure
as per clause 4.49 may be followed.
Paragraph 4.43 sub-clause (e) provides as
under:-

"(e)
The
application
for
enhancement of the sanctioned load will
not be accepted if the consumer has any
arrears of the licensee's dues."

(13) Clause 4.49, which is relevant, is
as under:-

"4.49
Permanent
disconnection/Release
of
Connection/
Enhancement and Reduction of Load where
arrears disputed are stayed by Court/ other
forums :

Where there is a stay order by
any
Court,
Forum
Tribunal,
or
by
Commission, staying the recovery of any
dues by licensee, and during the operating
period of any such order-

(i) If a consumer sells a premises
and an application for release of new
connection is made by the purchaser; or

(ii) If any application for new
connection, reconnection, enhancement or
reduction of load is made by a consumer;
or

(iii)
If
any
application
for
permanent disconnection is made by a
consumer the licensee shall release the new
connection to such consumer and also
permit
reconnection,
reduction
or
enhancement of Loads, as well as allow
permanent disconnection, subject to:-

- submission of Bank Guarantee
to the satisfaction of licensee, of equivalent
amount of pending dues, by the applicant
or owner, and,]

- agreement with licensee on
terms of extension / invoking of guarantee,
and \

- levy of surcharge amount on
pending dues, and the application of such
consumers shall not be kept pending by the
licensee."

(14) Sub-clause (1) of Section 47 of
the Electricity Act, 2003 provides that a
licensee may require any person, who
require supply of electricity in pursuance of
Section 43, to give him reasonable security
as may be determined by regulations, for
the payment to him of all monies which
may become due to him - (a) in respect of
the electricity supplied to such person; or
(b) where any electric line or electrical
plant or electric meter is to be provided for
supplying electricity to such person, in
respect of the provision of such line or
plant or meter.

(15) The U.P. Electricity Supply Code
2005 provides detail procedure for billing.
Clause 6.1 (a), (g) and (h), which are
relevant in the present case, are quoted
below:-

"6.1 General Provisions :

(a) The billing cycle for different
categories of consumers is specified at
1144 INDIAN LAW REPORTS ALLAHABAD SERIES
Annexure 3.1. The Licensee shall notify the
date by which each category of consumer
shall receive the bill, as per the billing
cycle
specified
in
this
Code.
Such
notification shall be made by the Licensee
every year or one month before any change
is made in the date.

(b) .....

(c) .....

(g) The Licensee shall dispatch
the bills giving at least 15 days time to the
consumer for making payments prior to the
due date of payment. Where the bills are
served to the consumer through hand held
system, the consumer shall deposit the
same within 7 days. The Bill shall contain
details of the energy consumption, various
charges,
due
date
of
52
payment,
disconnection
date,
arrears,
Security
deposit details, rebates, extracts pertaining
to consumer rights, Mode of payment and
collection facilities, Telephone Nos. and
address of Customer service, and call
centers, where consumers can make bill
related complaints, Telephone Nos. and
address of Consumer Grievance redressal
forums etc. In case of cheques and bank
drafts, the receiving authority in whose
favour the amount should be drawn should
be clearly mentioned.

(h) Bills of each consumer shall
clearly reflect the arrears and amount of
current billing separately. It shall be
obligatory on the part of consumers to pay
his electricity bills on or before due date of
payment."

(16) The provisions of the Electricity
Act, 2003 and U.P. Electricity Supply Code
2005, as noted above, clearly indicate that a
consumer is liable to pay charges for
consumption of electricity in accordance
with the tariff as fixed from time to time
and there is a procedure for preparation of
bill, sending of bill to the consumer and
time frame for payment of the bill. The
security/additional security is taken to
cover
up
the
advance
payment
for
electricity
to
be
consumed
by
the
consumer. The consequences for not
deposit of security/additional security has
been provided in Section 47 of the
Electricity Act, 2003 itself. Sub-section (1)
of Section 47 clearly provides that if a
person fails to give such security, the
distribution licensee may refuse to give the
supply of electricity or to provide the line
or plant or meter for the period during
which
the
failure
continues.
The
submission of security is thus condition
precedent for supply of electricity. The
licensee being entitled not to give supply
on failure of consumer to submit additional
security, the question of realisation of
amount of additional security does not
arise.

(17) Sub-section (3) of Section 47
further provides that in the event person
referred to in sub-section (2) fails to give
such security, the distribution licensee may
discontinue the supply of electricity for the
period during which the failure continues.
Section 56 of the Electricity Act, 2003 also
empowers the licensee to disconnect the
supply in default of payment. The security
deposit/additional security deposit cannot
be thus treated to be an arrear, which can
be recovered as arrears of land revenue.
The consequences of failure of giving
additional security/security are provided in
the Act itself. The provisions of the
Electricity Act, 2003 and U.P. Electricity
Supply Code 2005 does not indicate that in
the event additional security is not
provided,
the
licensee
shall
initiate
proceedings for recovery of the additional
security. The initiation of proceeding for
recovery of the amount of additional
security is not contemplated because
3-5 All. M/s Rathi Steel & Power Ltd. (Furnace Division) Vs. U.P. Electricity Regulatory Commission & Ors.
1145
licensee is empowered not to release the
supply in the event of non deposit and
further to disconnect in the event additional
security is not given as contemplated under
sub-section
(2) of
Section
47.
The
additional security/security is nothing but
an advance payment and when advance
payment is not made the consequence as
contemplated under the Electricity Act,
2003 have to take effect which no where
indicates recovery in any manner.

(18) In this context it is also relevant
to refer Clause 6.1 (h) of U.P. Electricity
Supply Code 2005, which provides that
bills of each consumer shall clearly reflect-
(i) the arrears and (ii) amount of current bill
whereas Clause 6.1(g) provides that bills
shall contain details of- (1) the energy
consumption; (ii) various charges; (iii) due
date of payment, disconnection date; (iv)
arrears and (v) security deposit detail,
rebates.

(19) A perusal of provisions of U.P.
Electricity Supply Code 2005 regarding
billing indicate that details of security
deposit has been separately provided.

(20) What is the object and purpose of
security deposit and what is its nature has been
considered by the Apex Court in the case of
Ferro Alloys Corporation Limited vs. A.P.
State Electricity Board and another reported in
1993 Supp (4) S.C.C. 136. The Apex Court in
the said case was considering the security
deposit under the provisions of Electric Supply
Act, 1948. The Apex Court laid down that very
nature of the security deposit is one of the
advance payment. Following was laid down in
paragraph 106 of the said judgment:-

"106. Thus, it will be clear that the
true nature of the transaction in these cases is
one of advance payment of charges for
consumption of electricity estimated for a
period of approximately three months. Such an
advance is liable to be made good and kept at
the stipulated level from month to month. It is
open to the consumer to permit adjustment of
the advance in the first instance. Thereafter, he
could make good the shortfall in consumption
charges and the security deposit before actual
disconnection. Actually speaking, it is only after
three months the disconnection takes place.
Hence, it is like a running current account."

(21) The Apex Court in the said judgment
has also laid down that there is no relationship
of debtor and creditor with regard to security
deposit and the relationship between consumer
and the licensee is that of depositor and
depositee.

(22) As noticed above, the scheme of
the Act and the Code does not indicate that
any process for recovery of additional
security is contemplated or provided for
because of the reason that the consequences
for non deposit of additional security has
been clearly provided in the Act itself. The
payment of additional security being
condition for release of additional load, in
the event it is not paid the additional load is
not to be released and further supply can be
discontinued. No more is contemplated
with regard to non payment of additional
security. Thus, we are of the view that in
the event of deposit of additional security
by the petitioner for grant of additional load
cannot be said to be any dues, which is to
be recovered from the petitioner and
therefore, the demand by the respondents of
giving bank guarantee or cash for grant of
additional load is perfectly justified.

(23) Now, we deal with the plea of
the petitioner that restrictions imposed for
granting additional load i.e. payment of
bank guarantee or cash, in Clause 4.46 of
1146 INDIAN LAW REPORTS ALLAHABAD SERIES
the
2005
Code
is
unconstitutional,
unreasonable and ultra vires to Article 19
(1) (g) and Article 14 of the Constitution of
India.

(24) While considering whether a
restriction is a reasonable restriction, one
has to test the reasonableness of the
restriction
imposed
upon
the
right
guaranteed by Article 19 (1) (g) of the
Constitution in an objective manner and
from the stand point of interests of the
general public and not from the stand point
of interests of persons upon whom the
restrictions have been imposed or upon
abstract considerations. A restriction cannot
be said to be unreasonable merely because
in a given case it operates harshly.

(25) Under Article 13 (3) of the
Constitution of India, for the purpose of Part-III
of
the
Constitution,
law
includes
any
Ordinance, order, bye-law, rule, regulation,
notification, custom or usage having in the
territory of India the force of law. It would thus
be clear that apart from the primary legislation,
it also includes various forms of subordinate
legislation. It is in that context that we can
examine the contentions as raised on behalf of
the petitioner.

(26) At this juncture, we may refer to the
judgment in Gainda Ram and others Vs.
Municipal Corporation of Delhi and others
[(2010) 10 SCC 715]. The Supreme Court held
that the reasonable restrictions on the
fundamental right under Article 19 (1) (g) can
be imposed either by existing law or by a law
made by a State in the interest of general public.
Therefore, nothing short of law can impose
reasonable restrictions. We may thereafter
reproduce para 49 of the said judgment, which
reads as under:-

"49. In Bijoe Emmanuel v. State of
Kerala [(1986) 3 SCC 615] this Court held:
(SCC pp. 624-25, para 16)

"16. ...The law is now well settled
that any law which may be made under clauses
(2) to (6) of Article 19 to regulate the exercise
of the right to the freedoms guaranteed by
Articles 19 (1) (a) to (e) and (g) must be 'a law'
having statutory force and not a mere executive
or departmental instruction."

In
coming
to
the
aforesaid
formulation in Bijoe Emmanuel this Court
relied on two Constitution Bench decisions of
this Court in Kameshwar Prasad Vs. State of
Bihar and another Constitution Bench decision
of this Court in Kharak Singh Vs. State of U.P."

(27) Restrictions to prevent a
person from carrying on his trade or
business, can be imposed only by law as
set out in Article 13 (2) of Part-III of
the Constitution of India. We may also
gainfully refer to the judgment of the
Supreme Court in Krishnan Kakkanth
Vs. Government of Kerala and others
[(1997) 9 SCC 495], where the Court
observed
that
infringement
of
fundamental right under Article 19 (1)
(g) must have a direct impact on the
restriction on the freedom to carry on
trade and not ancillary or incidental
effects on such freedom to trade arising
out of any governmental action. In that
case, the purchases could be made from
the approved dealers and that was a
subject
matter
of
challenge.
Considering
that,
the
Apex
Court
observed that the obligation to purchase
from approved dealer has been fastened
only to such farmer or agriculturist who
has volunteered to accept financial
assistance under the scheme on various
terms and conditions.
3-5 All. M/s Rathi Steel & Power Ltd. (Furnace Division) Vs. U.P. Electricity Regulatory Commission & Ors.
1147

(28) When a challenge is made that
the impugned clause is violative of Article
19 (1) (g) of the Constitution, it is for the
petitioner to demonstrate based on the
material, impact of the restrictions on their
business and in the absence of any material,
it is difficult for the Court to countenance
the said argument.

(29) In the case of Indian Drugs &
Pharmaceuticals Ltd. and Others Vs.
Punjab Drugs Manufacturers Association
and Others. [(1999) 6 SCC 247], the Apex
Court has held as under:-

"16. It is clear from the various
judgments referred to above that a decision
which would partially affect the sale
prospects of a company, cannot be equated
with creation of monopoly. In Ram Jawaya
Kapur
and
Naraindas
cases
the
Constitution Bench also held that the policy
restrictions, as discussed above, can be
imposed by exercise of executive power of
the State under Article 162 of the
Constitution. Therefore, the contention of
the appellants in regard to creation of
monopoly and violation of the fundamental
right under Articles 19 (1) (g) and 19 (6)
should fail. The judgments cited above also
show that preference shown to cooperative
institutions or public sector undertakings
being in public interest, will not be
construed as arbitrary so as to give rise to
a contention of violation of Articles 14 of
the Constitution. We have noted above that
this Court in the cases of Oil & Natural
Gas Commission v. Assn. of Natural Gas
Consuming Industries of Gujarat, Krishnan
Kakkanth and Hindustan Paper Corpn. Ltd.
Vs. Govt. of Kerala has held that the
preference
shown
to
cooperative
institutions or public sector undertakings
being in public interest, will not be
construed as arbitrary so as to give rise to
a contention of violation of Article 14 of the
Constitution."

(30) It would thus be clear that a
decision, which partially affects the sale
prospects of a company, cannot be equated
with creation of monopoly. We may also
refer to the observations in paragraph 8 of
the judgment in Cooverjee B. Bharucha
Vs. Excise Commissioner and the Chief
Commissioner, Ajmer and others [AIR
1954 SC 220). Para 8 of the said judgment
reads as under:-

"8. The contention that the effect
of some of these provisions is to enable
Government to confer monopoly rights on
one or more persons to the exclusion of
others and that creation of such monopoly
rights could not be sustained under Art. 19
(6) is again without force. Reliance was
placed on the decision in - 'Rashid Ahmad
v. Municipal Board of Kairana', AIR 1950
SC 163 (B). That decision is no authority
for
the
proposition
contended
for.
Elimination and exclusion from business is
inherent in the nature of liquor business
and it will hardly be proper to apply to
such a business principles applicable to
trades
which
all
could
carry.
The
provisions of the regulation cannot be
attacked merely on the ground that they
create a monopoly. Properly speaking,
there can be a monopoly only when a trade
which could be carried on by all persons is
entrusted by law to one or more persons to
the exclusion of the general public. Such,
however, is not the case with the business
of liquor."

(31) In the instant case, the occasion
for demanding bank guarantee arose only
due to the reason that petitioner has prayed
for enhancement of the load to 3100 KVA.
The requirement of asking bank guarantee
1148 INDIAN LAW REPORTS ALLAHABAD SERIES
is for insulating the Corporation against
apprehended or future losses. Clause 4.49
of U.P. Electricity Supply Code 2005 is
merely a protective provision rather than a
provision for enforcing recovery. Clause
4.43 of U.P. Electricity Supply Code 2005,
which relates to enhancement of load for
cases other than public lighting provides
that if the matter relates to dues is stayed by
court, the procedure as per Clause 4.49 may
be followed. Clause 4.49 comes into play in
the present case since the amount of
assessment under Section 126 of the
Electricity Act, 2003 has been stayed by
the
Court,
which,
according
to
the
petitioner, is pending consideration.

(32) It is not the case of the
petitioner that by any order or the
impugned clause has the effect of
totally prohibiting him from carrying on
any business but in the instant case, in
pursuance of Clause 4.49 of the 2005
Code, the petitioner was asked to
furnish bank guarantee or cash for the
purpose of release of additional load.
This will not amount to full prohibition.
(See State of Gujarat Vs. Mirzapur Moti
Kureshi Kassab Jamat and others
[(2005) 8 SCC 534].

(33) The another ground to
challenge
Clause
4.49
of
U.P.
Electricity Supply Code 2005 is that
Clause 4.49 overreach the order of the
Court. It is submitted that there being
stay
by
the
Court
against
the
assessment, the respondents cannot ask
for submission of bank guarantee for an
amount, which has already been stayed
by the Court. It is contended that asking
bank guarantee is a device to abridge
the Court's order and power of judicial
review. Reliance has been placed by
counsel for the petitioner on PGF
Limited and others Vs. Union of India
and another : 2015 (13) SCC 50.

(34) The judgment relied by the
learned counsel for the petitioner i.e.
PGF Ltd. vs Union of India and another
(supra) is not applicable in the facts and
circumstances of the case because in the
present case, Clause 4.49 of U.P.
Electricity Supply Code 2005 in no
manner affects the consequence of the
interim order of the Court. The Bank
guarantee has been asked on the
premise that petitioner has applied for
enhancement of load. Had the petitioner
not applied for enhancement of the
load, there was no question for asking
any bank guarantee.

(35) The next question for our
consideration
is
whether
by
the
impugned clause has the petitioner's
right to life and liberty been affected?
For this Court to intervene, it must be
shown that the impugned clause is
demonstrably
arbitrary,
capricious,
irrational, discriminatory or violative of
constitutional or statutory provisions.
Otherwise, it cannot be struck down by
a court, nor can the Court go into the
wisdom of the State policy. Here, the
petitioner has failed to demonstrate any
of the aforesaid.

(36) In view of the foregoing
discussions, we are satisfied that no grounds
have been made out to declare Clause 4.49 of
U.P. Electricity Supply Code 2005 as ultra
vires. Thus the prayer of the petitioner to
declare Clause 4.49 of U.P. Electricity
Supply Code 2005 as ultra vires is refused.

(37) With the aforesaid, the writ
petition has no merit and is, accordingly,
dismissed.
----------
3-5 All. Town Area Committee, Jhunsi, Allahabad & Anr. Vs. Rajendra Bind & Ors.
1149
(2020)03-05ILR A1149
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.12.2019

BEFORE