# BISRA STONE LIME COMPANY LTD. & ANR. ETC v. ORISSA STATE ELECTRICITY BOARD & ANR

- **Citation:** [1976] 2 S.C.R. 307
- **Court:** Supreme Court of India
- **Decided:** 1975-10-21
- **Case number:** Civil Appeals Nos. 106 and 107 of 1975
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/bisra-stone-lime-company-ltd-anr-etc-v-orissa-state-electricity-board-anr-6804
- **Pages:** 8

## Headnote

..
307
BISRA STONE LIME COMPANY LTD. & ANR. ETC.
v.
ORISSA STATE ELECTRICITY BOARD & ANR.
October 21, 1975
IP. K. GOSWAMI AND N. L. UNTWAUA, JJ.J
Electricity (Supply) Act, 1948-S. 49-Surcliarge on electricity-Whether
Electricity Board cdu/d /el')'.
Dispute het11•een parties referred to arbitrator-If .court could witlulraw and
deal with i't.
-
A
B~
Under cl. J 3 of the agreement between the parties the tariff and conditions
of supply of electricity were subject to any revision that may be made by the
C>
supplier from time to time. Clause 23 states that any dispute or difference
arising between the consumer and the supplier shall be referred to an arbitrator. The respondent issued a press note deciding to levy a surchage of
IO per cent on certain categories of customers, which included the appellants ...
The appellants challenged the levy but the High Court dismissed their writ
petitions.
On appeal to this Courb it was contended that (1) the Board had no power
under the Act to levy a surcharge, (2) cl. 13 of the Agreement could not take
Dt
in the levy of surcharge and as such it is not a matter for reference to arbitration under cl. 23 of the agreement and (3) fo exempting certain categories and
imposing surcharge upon the appellants the Board was guilty of discrimination,
which is impermissible under s. 49 of the. Act and cl. 2 of Schedule I to the
Agreement.
Dismissing the appeals,
HELD : (I ) Enhancement of the rates by way of surcharge i's well within the
E ..
power of the Board to fix or revise the rates of tariff under the provisions of
the Act. The word "surcharge" is not defined in the Act.
Etymologically it
stand~ for an additional or extra charge or payment, and in the present case
it is in substance an addition to the stipulated rate of tariff. [311 A-B; 3 lOH]
(2) (i) It is only where there is nothing in a special agreement with regard
to revision of rates during the subsistence of the
agr~ement that the existence
of the special agreements prevents any
increase of the rates stipulated in
the
special agreements by adding the surcharge. In the present case cl. 13 of the
Fe·
agt·eement provides for revisjon or rates and the, surcharge is not absolutely
uifferent from rates of tariff because the effect of the levy of surcharge would
be to enhance the rates of supply of electricity stipulated under the agree•
men!. l312 A-Bl
111 /s. Titagarh Paper Mills Ltd. v. Orissa Stale Electricitv Board and Another
[19751 2 S.C.C. 436, followed.
".
'
llldiai1 Aluminium Company v. Kera/a State Electricity Boa/'ll, [1975] 2 S.C.C.
G ..
414, explamed.
Therefore. the matter. in dispute is covered by the arbitration clause of the
Agreement. [313 BJ
(ii) Although the press note did not recite any provision of' the Act mere
omission to do so did not disentitle the Board to rely upon clause J 3 for ~ claim
to revision of the rates. [314 CJ
(iii) This is not a fit case for the Court in its discretion, to withhold the
matter f'rom arbitration and itself deal with it merely because the Court has
discretion to do so under s. 34 of the Arbitration Act or under Art. 226 of the
Hi
c
I)
F
G
308
SUPREME COURT REPORTS
[ 197 6] 2 S.C.R.
Constitrution and that the Court is better posted to decide such questions. The
arbitration clause is of wide amplitude, taking in its sweep even interpretation
of the agreement and necessarily, therefore, of cl. 13. [314 F]
(3) The totality of the provisions under s. 49, does not give any
scope
for the plea of discrimination raised in this case and in view o~ cl. 13 of the
agreement itself.
As regards the various industries which have not been sul;Jjected to the charge, it is not known whether there i~ a similar provision like
cl. 13 in the agreements. [313 G-H]
When the law makes it obligatory for certain special agreements to continue
in full f'orce during their currency stultifying the power of the Board to revise
the rates during the period, no ground of discrimination can be made out on the
score of exempting such

## Text

..
307
BISRA STONE LIME COMPANY LTD. & ANR. ETC.
v.
ORISSA STATE ELECTRICITY BOARD & ANR.
October 21, 1975
IP. K. GOSWAMI AND N. L. UNTWAUA, JJ.J
Electricity (Supply) Act, 1948-S. 49-Surcliarge on electricity-Whether
Electricity Board cdu/d /el')'.
Dispute het11•een parties referred to arbitrator-If .court could witlulraw and
deal with i't.
-
A
B~
Under cl. J 3 of the agreement between the parties the tariff and conditions
of supply of electricity were subject to any revision that may be made by the
C>
supplier from time to time. Clause 23 states that any dispute or difference
arising between the consumer and the supplier shall be referred to an arbitrator. The respondent issued a press note deciding to levy a surchage of
IO per cent on certain categories of customers, which included the appellants ...
The appellants challenged the levy but the High Court dismissed their writ
petitions.
On appeal to this Courb it was contended that (1) the Board had no power
under the Act to levy a surcharge, (2) cl. 13 of the Agreement could not take
Dt
in the levy of surcharge and as such it is not a matter for reference to arbitration under cl. 23 of the agreement and (3) fo exempting certain categories and
imposing surcharge upon the appellants the Board was guilty of discrimination,
which is impermissible under s. 49 of the. Act and cl. 2 of Schedule I to the
Agreement.
Dismissing the appeals,
HELD : (I ) Enhancement of the rates by way of surcharge i's well within the
E ..
power of the Board to fix or revise the rates of tariff under the provisions of
the Act. The word "surcharge" is not defined in the Act.
Etymologically it
stand~ for an additional or extra charge or payment, and in the present case
it is in substance an addition to the stipulated rate of tariff. [311 A-B; 3 lOH]
(2) (i) It is only where there is nothing in a special agreement with regard
to revision of rates during the subsistence of the
agr~ement that the existence
of the special agreements prevents any
increase of the rates stipulated in
the
special agreements by adding the surcharge. In the present case cl. 13 of the
Fe·
agt·eement provides for revisjon or rates and the, surcharge is not absolutely
uifferent from rates of tariff because the effect of the levy of surcharge would
be to enhance the rates of supply of electricity stipulated under the agree•
men!. l312 A-Bl
111 /s. Titagarh Paper Mills Ltd. v. Orissa Stale Electricitv Board and Another
[19751 2 S.C.C. 436, followed.
".
'
llldiai1 Aluminium Company v. Kera/a State Electricity Boa/'ll, [1975] 2 S.C.C.
G ..
414, explamed.
Therefore. the matter. in dispute is covered by the arbitration clause of the
Agreement. [313 BJ
(ii) Although the press note did not recite any provision of' the Act mere
omission to do so did not disentitle the Board to rely upon clause J 3 for ~ claim
to revision of the rates. [314 CJ
(iii) This is not a fit case for the Court in its discretion, to withhold the
matter f'rom arbitration and itself deal with it merely because the Court has
discretion to do so under s. 34 of the Arbitration Act or under Art. 226 of the
Hi
c
I)
F
G
308
SUPREME COURT REPORTS
[ 197 6] 2 S.C.R.
Constitrution and that the Court is better posted to decide such questions. The
arbitration clause is of wide amplitude, taking in its sweep even interpretation
of the agreement and necessarily, therefore, of cl. 13. [314 F]
(3) The totality of the provisions under s. 49, does not give any
scope
for the plea of discrimination raised in this case and in view o~ cl. 13 of the
agreement itself.
As regards the various industries which have not been sul;Jjected to the charge, it is not known whether there i~ a similar provision like
cl. 13 in the agreements. [313 G-H]
When the law makes it obligatory for certain special agreements to continue
in full f'orce during their currency stultifying the power of the Board to revise
the rates during the period, no ground of discrimination can be made out on the
score of exempting such industries as are governed by special agreements.
[314 BJ
Mis. Titagarh Paper Mills Ltd. v. Orissa State Electricity Board and Another,
[1975] 2 S.C.C. 436, applied.
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 106 and 107
of 1975.
Appeals by Special Leave from the Judgment and
Order dated
18-10-74 of the Orissa High Court in O.J.C. Nos. 851 and 850 of
1972 respectively.
S. V. Gupte (In CA 107 /75) and Vinoo Bhagat for the Appellant.
G. Rath, Advocate General, and B. Parthasarthi for Respondent
No. 1 (In CA 106175 and Respondent in CA 107 /75).
The Judgment of the Court was delivered by
GOSWAMI, J. This judgment will govern both the above mentioncq
appeals.
We may take the facts briefly from Civil Appeal No. 107 of 1975.
The Orissa Textile Mills Limited is a public limited
co111pany
(briefly the company) and is engaged in manufacture of textile articles. It is located at Choudwar in the District of Cuttack (Orissa).
On May 12, 1960, the company (described in the agreement as Con-
.sumer) entered into an agreement with the State of Orissa (described
in the agreement as the Supplier) for supply of electric power.
The
contract was for a period of five years from the date of supply of electric power, namely, February 1, 1963 and it was thereafter to so continue unless and until the same was determined by either party giving
to the other six calendar months' notice in writing of the intention to
terminate the agreement. It is common ground that the agreement
has not been terminated.
It may be appropriate at this stage to refer to a few clauses in the
agreement.
Clause 12 provides for charges to be paid by the consumer as well as about maximum demand. Clause 13 reads as follow~:-
H
"The tariff and conditions of supply mentioned in this
Agreement shall be subject to any revision that may be made
by the Supplier from time to time".
..
BISRA STONE LIME co. v. ORISSA ELEC. BOARD (Goswami, J.) 309
Clause 22 deals with extra charge regarding domestic lighting, fans,
A
.domestic power and street lighting, etc. in the colony of the Mills.
Clause 23 reads as follows :-
"Any dispute or difference arising between
the Consumer and the Supplier or their respective Electrical Engineers as to the supply of electrical energy hereunder or the
pressure thereof or as to the interpretation of this Agreement
B
or the right of the Supplier or the consumer respectively to
determine the same or any other question, matter or thing
arising hereunder shall be referred to a single arbitrator who
shall be mutually agreed upon by both parties.
The arbitrator's decision thereon shall be final and the provisions of
the Arbitration Act of 1940 (X of 1940) or of any other
statutory modification thereof for the time being in force
C
shall apply to any such reference".
On April 1, 1962, the Orissa State Electricty Board (briefly the
Board) was constituted by the State Government under section 5 of the
Electricity (Supply) Act, 1948 (briefly the Act).
Under section
60(1) of the Act "all debts and obligations incurred, all contracts
entered into and all matters and things engaged_ to be done by, with
or for the State.Government for any of the purposes of this Act before
the first constitution of the Board shall be deemed to have been incurred, entered into or engaged to be done by, with or for the
Board .... " By this section, therefore, the Board assumed all obligations of the State Government in respect of matters to which the
Act applied. It is common ground that the contract entered between
the company and the State Government is binding on both.
The Board decided to levy a surch1rge of 10 per cent on the power
tariff then in force with effect from July 1, 1972, and a Press Note was
issued accordingly.
The material portion of the Press Note may be
extracted :
D
E
"The Orissa State Electricity Boarc! has decided to levy
F
a general and uniform surcharge of 10 per cent on the power
tariff now in force except on the following categories of consumers who will pay the1 existing tariff :-
( 1) Power Intensive Industries which are governed
Special Agreements.
(2) Domestic power and lighting.
by
In respect of irrigation loads (Q_umping and agriculture)
the power tariff will be Re. 0.16p (sixteen paise) per unit
(Kwh) with a rebate of Re. O.Olp (one paise)
per unit
'KwhP' for timely payment ....
G
The above levy of surcharge of 10 per cent is also appliH
cable to the power supply to the Hindustan Steel Ltd.
Rourkela and Kalinga Iron Works, Barbi!.
'
A
Il
c
D
E
310
SUPRE~IE COURT REPORTS
·[1976] 2 S.C.R.
The levy of 10 per cent surcharge will be on demand
charges, unit charges, maximum and minimum charges and
reservation charges .
•
•
•
•
The levy of surcharge and revised tariff for irrigation
. loads has become necessary for
improving the · Board's
overall financial return and enabling it to undertake larger
developmental programmes like rural electrification.
*
•
*
*
It appears that the second purpose in the above Press Note with rcfeference to "l;uger developmental programmes like rural electrification"
was omitted by a revised Press Note.
The company unsuccessfully challenged the levy of the surcharge
by an application under article 226 of the Constitution in the Orissa
High Court.
Several contentions were raised in the petition before
the High Court. The surcharge was, inter alia, challenged as being
violative of article 14 of the Constitution. This objection was repelled by the High Court and the learned counsel apearing on behalf of
the company was unable to press the same before us iri view of the
Presidential suspension of that article during the emergency. ·
Some other groilnds, including that clause 13 is ultra vires the Act,
were taken before the High Court but have not been pressed before us.
Mr. Gupte, the learned counsel appearing on behalf of the appeJ.c
!ants, submits as follows :-
_ 1
(l) The Board has no power to levy a surcharge under
the provisions of the. Act.
(2) Clause 13 of the agreement cannot take in the levy
of surcharge. It is, therefore, not a matter for reference to arbitration under clause 23 of the agreeF
ment.
G
H
.
(3) Assuming it has power under the Act or under
clause 13 to levy a surcharge, the Board in exempting
certain categories and imposing. surcharge upon the
appellants is guilty of discrimination which is impermissible under section 49 of the Act and clause (2)
of Schedule I to the agreement.
With regard to his first contention Mr. Gupte submits that surcharg~
is unknown to the provisions in the Act and the Board has no power
under the Act to levy a surcharge. It is not possible to accede to the
submission that the demand of surcharge cannot be included in the
revision of rates of tariff.
·
The word surcharge is not defined in the Act, but etymologically,
inter alia, surcharge stands for an additional or extra charge or payment (sec Shorter Oxford English Dictionary). Surcharge is thus a
. .. ,
..
•
~
BISRA STONE LIME co. v. ORISSA ELEC. BOARD (Goswami, J.).
311
0
.
superadded charge, a. charge over and a~o~e. the usual or current dues.
Although, therefore, m the present case it is m the form of a si:rcharge,
it is in substance an addition to the stipulated rates of tanff.
The ·
nomenclature, therefore, does not alter the position.
Enhancement of
the rates by way of; surcharge is well within the power of the Board to
fix or revise the rates of tariff under the provisions of the Act.
The
first submission of counsel is, therefore,. of no avail.
Before we dea1 with the second submission of counsel, we may
refer to a recent decision of this Court in M/s Titagarh Paper Mills
Ltd. v. Orissa ,Sta.le Electricity Board and Another(!)
(briefly the
Titagarh's case) to which one of us was a party.· This Court following the decision in the Indian Aluminium Company v:
Kerala State
Electricity Board (2) with regard to the scope of sections 49 and 59
of the Act held in the Titagarh's case (supra) as follows :-
" .... neither section 49 nor section 59
confers
any
authority on the Board to enhance the rates for supply of
electricity where they are fixed under a stipulation made in
an agreement.
The B.oard has no authority under either of
these two sections to override a contractual stipulation and
enhance unilaterally the rates for the supply of electricity".
It is clear from the above decision that an agreement entered in exercise of the power conferred by the statute, such as under section 49(3)
of the Act, cannot be set at naught by unilateral exercise of power by
the Board under the Act to enhance the rates agreed upon between
A
B
c
D
the parties in the absence of. any provision in that behalf in the agreeE
ment itself. In the Indian Aluminium Company's case (supra) there
was no provision in the agreement. with regard to the revision of tariff,
such as we find in clause 13 of the present agreement.
This Court,
therefore, had not to consider in that case about the eifect of a clause
like clause 13.
ftt the Titagarh's case (supra), however, this Court
had to take into consideration dause 13 of the agreement therein
which is the identical clause in the present case.
F
Sub-sections (1) and (2) of sectio:1 49 empower the Board to fix
uniform rates of tariff. Sub-section (3) of section 49 on the other
hand reserves to the Board the power of fixing different tariffs having
regard to certain factors mentioned therein.
Section 49(3) contemplates what are known as 'special agreements'.
Power under section
49(1) and (2) cannot be invoked during the subsistence of special
G
agreements providing for stipulation of rates of tariff in absence of
any reservation therein.
Exercise of power under section 49 ( 1) and
(2) as also under sec~on 59 will remain suspended during the currency
of the special agreements between the parties and no unilateral·enhancement of rates is permissible under law. There is only a pro tempore
ban on revision of rates during the subsistence of statutory special agreements entered in conformity with section 49(3) of the Act.
H
(1) [1975] 2 S. C. C. 436.
(2) [1975] 2. SC. C. 414.
21-1276SCI/75
A
B
c
D
E
F
G
H
312
SUPREME COURT REPORTS
( 197 6] 2 S.C.R.
·Mr. Guptc, however, submits that since there have been special
agreements between the parties the stipulated rates could nm be increased by adding the surcharge in question.
This
argument proceeds on a wrong assumption that surcharge is
absolutely different
from rates of tariff.
Besides the submission fails to take count of
clause 13 of the agreement with regard to revision of rates. The ratio
of the Indian Aluminium Company's case (supra) will be available on
all fours only where there is nothing in the special agreement with
regard to revision of rates during the subsistence of the agreement.
With regard to the second submission, which overlaps to some
extent with the first, Mr. Gupte points out that revision of tariff under
clause 13 cannot include levy of surcharge which is
distinct from
tariff.
He also draws our attention to the various clauses in the Press
Note where both the expressions 'surcharge and tariff' are freely used.
On the other hand, the learned Advocate General submits that the
import of surcharge depends upon the nature of the original charge.
If the surcharge is appended to a tariff it partakes of the character of
tariff.
When the Press Note introduces the surcharge in addition to tariff
rates, not much can be made o{ for use of the two words separately.
We have already noted the meaning of the word
'surcharge' while
dealing with the first submission of the learned counsel.
We may
only add that this Court in Titagarh's case (supra) put the mattet
beyond controversy in the following words :-
"Now, the effect of the levy of coal surcharge would be
to enhance the rates for the supply of electricity stipulated
under the agreement".
Besides in the Titagarh's case (supra) this Court further observed
as follows :-
"Questions such as : whether the Board has power under
clause ( 13) of the agreement to levy any coal surcharge at
all when no such power was conferred on it by the Act,
whether the action of the Dcard in levying the coal surcharge
on the appellant under clause ( 13) of the agreement was
arbitrary and unreasonable or whether it was based on extraneous and irrelevant considerations and whether, on the
facts and circumstances of the case, the Board was justified
under clause ( 13) of the agreement to levy the coal surcharge on the appellant, are plainly questions arising under
the agreement and they arc covered by the arbitration provision contained in clause ( 23) of the agreement.
All the
contentions raised by the appellant against the claim to
justify the levy of the coal surcharge by reference to clause
( 13) of the agreement would, therefore,. seem to be covered
by the arbitration agreement and there 1s no reasol! "".hy
the appellant should not pursue the remedy of arbitration
which it has solemnly accepted under clause (23)
of the
agreement
and
instead
invoke
the
extraordinary
+
,. i
)
1
>
I
l!ISRA STONE LIME co. v. ORISSA ELEC. BOARD (Goswami, J.)
jurisdiction of the High Court under Article 226 of the Constitution to determine questions which really form the subjectmatter of the arbitration agreement."
313
Although this Court was dealing with the coal surcharge in the
above decision, there is no distinction in principle between the coal
.surcharge or a surcharge simpliciter and the ratio of the above decision
will be applicable in this case.
'.fhe second submission of the learned
counsel, therefore, fails and the point is squarely covered by the above
decision.
The matter is, therefore, covered by the arbitration clause
23 of the agreement.
With regard to the last submission regarding discrimination founded upon section 49 of the Act and clause (2) of the Schedule I to the
agreement, Mr. Gupte relied upon sub-section ( 4) of section 49 which
provides th~t in fixing the tariff and terms and conditions for the supply
of electricity, the Board shall not show undue preference to any person.
He also draws our attention to clause (2) of the conditions of
supply in the First Schedule to the agreement to the effect that "the
Department shall not be entitled to discriminate between different consumers in fixing the charges for the supply of energy".
The agreement is entered under the provisions of section 49(3) of the Act.
If
we read section 49 as a whole we find that under sub-section ( 1) of
that section, the Board in supplying electricity to any person not being
a licensee "may for the purposes of such supply frame uniform tariffs".
However, under sub-section (2) of that section in fixing the uniform
tariffs· the Board shall have regard to the various factors under four
heads (a), (b), (c) and (d). Then comes sub-section (3)
which
preserves the power of the Board, "if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person
not being a licensee having regard to the geographical position of any
area, the nature of the supply and purpose for which supply is required and any other relevant factors".
Mr. Gupte submits that there is no reason why the power-intensive
industries, which are governed by special agreements, should have been
exempted from the levy of_ surcharge in the Press Note.
He further
points out that there are eight industries referred to in paragraph 20
of the Special Leave Petition which have not been subjected to the
aforesaid 10 per cent surcharge even though the rates of electricity
charged per unit in their case are less than those of the Orissa Textile
Mills.
It is enough to point o_ut that the industries referred to in
the
Special Leave Petition were covered by special agreements and
we
are not even told whether these special agreements had a similar clause
like clause 13 in the present case.
This Court has held that special
agreements entered under section 49(3) cannot be given a go-by
while exercising the power of revision of rates under section 49 read
with section 59.
That being the position, the objection on the score
of discrimination loses all importance.
The totality of the provisions
under section 49 does not give any scope for the plea of discrimination
raised in this case and in view of clause 13 in the agreement itself.
A
B
c
D
E
F
G
H
A
B
c
D
E
F
G
314
SUPREME COURT REPORTS
[1976] 2 S.C.R.
We can appreciate the handicap of counsel in advancing his arguments under the head of discrimination having lost the protective
amulet of article 14 of th~ Constitution under the Presidential embargo
during the emergency.
A plea of discrimination which is
available
when article 14 is in free play is not at par with the interdict of 'undue
favour' under section 49 of the Act.
Apart from this,
when law
makes it obligatory for certain special agreements to continue in full
force during their currency stultifying the power of the Board to revise
the rates during the period, no ground of discrimination can be madeout on the score of exempting such industries as are governed by special agreements.
Although the Press Note in the instant case did not recite any provisions of the Act under which the same was issued, mere omission to
do so does not disentitle the Board to reply upon clause 13 of the
agreemen.t for a claim to revision of the .~ates, although in the form
of a surcharge in this case.
We, therefore, do not give any significance to the omission in the Press Note to refer to clause 13 or to any
other provision of the Act. The matter is, therefore, covered by the
arbitration clause 23 of the agreement. It is not for this Court to
speculate what answers the Arbitrator will enter with regard to the disputed questions that may be raised before him.
We are Pot to be
understood as expressing any opinion on the merits of the dispute or
difference between the parties with regard to the surcharge.
It is then submitted that this Court should not use its discretion
in favour of arbitration in a matter where it is a pure question of law
as to the power of the Board to levy a surcharge.
This submission
would have great force if the sole question involved were the scope
and ambit of the power of the Board under sections 49 and 59 of the
Act to levy a surcharge, as it was sought to be initially argued.
The
question in that event may not have been within the content of clause
23 of the agreement.
But all questions of law, one of which may be
interpretation of the agreerμent, need not necessarily be
withdrawn
from the domestic forum because the court has discretion under section
34 of the Arbitration Act or under article 226 of the Constitution and
that the court is better posted to decide such questions.
The arbitration clause 23 is a clause of wide amplitude taking in its sweep even
interpretation of the agreement and necessarily, therefore, of ~la?sc
13 therein.
We are, therefore, unable to accede to the subm1ss1on
that we should exercise our discretion to withhold the matter from
arbitration and deal with it ourselves.
We therefore find no justification in interfering with the conclusion ol the High' Court in disrnising the writ
application. In the
result the appeals fail and are dismissed.
We will, however, make no
order as to costs.
P.B.R.
Appeals dismissed.
\