# JIYAJEERAO COTTON MILLS LIMITED AND ANOTHER v. MADHYA PRADESH ELECTRICITY BOARD AND OTHERS

- **Citation:** [1988] Supp. 2 S.C.R. 978
- **Court:** Supreme Court of India
- **Decided:** 1988-09-12
- **Case number:** Civil Appeals Nos. H 3510-3511 of 1982
- **Bench:** A.P. Sen, Lalit Mohan Sharma
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/jiyajeerao-cotton-mills-limited-and-another-v-madhya-pradesh-electricity-board-10076
- **Pages:** 39

## Headnote

[
Indian Electricity Act, 1910--Section 22B-Company entering
into agreement with Electricity Board for supply of electricity-Board
supplying additional energy and billing at penal rates-Action of
Board-Whether valid and legal.
c
Madhya Pradesh Electricity (Supply and Consumption Regulation) Order 1975/Madhya Pradesh Electricity (Generation, Control and
Consumption) Order 1975: Clause 3(i) Regulation Order-Consumers
to reduce consumption-Board entitled to disconnect supply for breach
~
or charge penal rates for excess energy consumed-Generation Order
D provided for assessment of generating capacity of captive power of
consumer.
Words and Phrases: 'Regulate'-Meaning of.
In October 1971 the appellant company entered into an agreeE ment with the Madhya Pradesh Electricity Board, respondent No. l, for
supply of electricity. The quantity of electricity to be supplied varied
from time to time.
To meet the situation arising out of insufficient generation of
electricity, the State of Madhya Pradesh issued two orders. By the
F Madhya Pradesh Electricity (Supply and Consumption Regulation)
Order, 1975 the consumers were asked to reduce their consumption
failing which they would have to pay charges at penal rates for excess
consumption,_ without prejudice to the Board's power to disconnect the
supply. By the Generation Order, the consumers who had alternative
sources of captive power were required to generate electricity to the
G maximum extent technically feasible, from their own sources of
electricity.
After the assessment of their generating capacity, the appellant
was directed to generate additional electricity of 2,500 K. W. SuhClause (iii) of Proviso to clause 3 of the Generation Order provided that
;,
H if in certain contingencies tnere was reduction in the generation of
978
' ,.
JIYAJEERAO COTTON MILLS '· ELECTRICITY BOARD
979
electricity by . the consumer; the Board would try to make good thr
deficit against the appropriate charge for it. Under this provision the
appellant, on pleading emergency, was supplied additional energy from
time to time. F Jr excess consumption drawn without the Board's prior
approval, the appellant was sent bills at penal rate.
The appellant company challenged the demand before the High
Court by filing a writ application under Article 226 of the Constitution,
which was dismissed by the High Court except for granting some minor
reliefs.
Before this Court, it was contended by the appellant:
(I) There is no sanction in Law for charging at the Penal rate for
the electricity consumed beyond what is permissible under the Generation Order.
(2) That the assessment of their generating capacity was not made
by the authority empowered to do so. i.e. the Divisional Engineer, and
(3) that the assessment was based on irrelevant and extraneous considerations.
Dismissing the appeal, it was,
A
B
c
D
HELD: (I) A perusal of the documents on record, including
E
admissions on the part of the appellant company, furnishes unimpeachable evidence, ·pr-Ol'ing that the assessment of the maximum feasible
capacity of the appelant's capative power sets was duly made in accordance with the Generation Order, and that the Divisional Engineer, who
had been authorised by the Generation Order to assess the appellant's
generating capacity, reached the conclusion after personally considerF
ing the matter thoroughly.
(2) In pursuance of the assessment of the generating capacity the
required direction was issued which was acted upon by the parties for a
number of years. The Company not only took steps to generate the
additional energy as was required of it, it also took advantage of the
G
provisions of proviso (iii) to clause 3 of the Generation Order and
benefitted by it from time to time. [988A-BI
(3) The appellant company was fully conscious of the fact that it
was consuming electricity beyond its entitlement under the two Orders.
For several years the Company was particular to obtain the permission
H
A
B
98(1
SUPREME COURT REPORTS
I 1988]

## Text

_Characters 0–39,982 of 100,424. This is a partial read: ask again with offset=39982 for what follows._

A
JIYAJEERAO COTTON MILLS LIMITED AND ANOTHER
v.
MADHYA PRADESH ELECTRICITY BOARD AND OTHERS
SEPTEMBER 12, 1988
B
[A.P. SEN AND LALIT MOHAN SHARMA, JJ.]
[
Indian Electricity Act, 1910--Section 22B-Company entering
into agreement with Electricity Board for supply of electricity-Board
supplying additional energy and billing at penal rates-Action of
Board-Whether valid and legal.
c
Madhya Pradesh Electricity (Supply and Consumption Regulation) Order 1975/Madhya Pradesh Electricity (Generation, Control and
Consumption) Order 1975: Clause 3(i) Regulation Order-Consumers
to reduce consumption-Board entitled to disconnect supply for breach
~
or charge penal rates for excess energy consumed-Generation Order
D provided for assessment of generating capacity of captive power of
consumer.
Words and Phrases: 'Regulate'-Meaning of.
In October 1971 the appellant company entered into an agreeE ment with the Madhya Pradesh Electricity Board, respondent No. l, for
supply of electricity. The quantity of electricity to be supplied varied
from time to time.
To meet the situation arising out of insufficient generation of
electricity, the State of Madhya Pradesh issued two orders. By the
F Madhya Pradesh Electricity (Supply and Consumption Regulation)
Order, 1975 the consumers were asked to reduce their consumption
failing which they would have to pay charges at penal rates for excess
consumption,_ without prejudice to the Board's power to disconnect the
supply. By the Generation Order, the consumers who had alternative
sources of captive power were required to generate electricity to the
G maximum extent technically feasible, from their own sources of
electricity.
After the assessment of their generating capacity, the appellant
was directed to generate additional electricity of 2,500 K. W. SuhClause (iii) of Proviso to clause 3 of the Generation Order provided that
;,
H if in certain contingencies tnere was reduction in the generation of
978
' ,.
JIYAJEERAO COTTON MILLS '· ELECTRICITY BOARD
979
electricity by . the consumer; the Board would try to make good thr
deficit against the appropriate charge for it. Under this provision the
appellant, on pleading emergency, was supplied additional energy from
time to time. F Jr excess consumption drawn without the Board's prior
approval, the appellant was sent bills at penal rate.
The appellant company challenged the demand before the High
Court by filing a writ application under Article 226 of the Constitution,
which was dismissed by the High Court except for granting some minor
reliefs.
Before this Court, it was contended by the appellant:
(I) There is no sanction in Law for charging at the Penal rate for
the electricity consumed beyond what is permissible under the Generation Order.
(2) That the assessment of their generating capacity was not made
by the authority empowered to do so. i.e. the Divisional Engineer, and
(3) that the assessment was based on irrelevant and extraneous considerations.
Dismissing the appeal, it was,
A
B
c
D
HELD: (I) A perusal of the documents on record, including
E
admissions on the part of the appellant company, furnishes unimpeachable evidence, ·pr-Ol'ing that the assessment of the maximum feasible
capacity of the appelant's capative power sets was duly made in accordance with the Generation Order, and that the Divisional Engineer, who
had been authorised by the Generation Order to assess the appellant's
generating capacity, reached the conclusion after personally considerF
ing the matter thoroughly.
(2) In pursuance of the assessment of the generating capacity the
required direction was issued which was acted upon by the parties for a
number of years. The Company not only took steps to generate the
additional energy as was required of it, it also took advantage of the
G
provisions of proviso (iii) to clause 3 of the Generation Order and
benefitted by it from time to time. [988A-BI
(3) The appellant company was fully conscious of the fact that it
was consuming electricity beyond its entitlement under the two Orders.
For several years the Company was particular to obtain the permission
H
A
B
98(1
SUPREME COURT REPORTS
I 1988] Supp. 2 S.C.R.
of the Board for drawing electricity itl"'excess of what it<was entitled to
by the agreement, as modified by the Regulation Order and the Generation Order, but later, it not only stopped seeking the advance sanction
in this regard, it did not even care to inform the Board of the excess
drawaL [IOOIB-C; t'-G]
(4) Section 22B of the Indian Electricity Act, 1910 permits the
State Government to issue an appropriate order for regulating the
supply, distribution and consumption of electricity. I IO JOB]
(5) The expression "regulate" occurs in other statutes also, as for
example, the Essential Commodities Act, 1955, and it has been found
t
difficult to give the word a precise definition, It has different shades of
meaning and must take its colour from the context in which it is used
having regard to the purpose and object of the relevant provisions, and
as has been repeatedly observed, the Court while interpreting the
expression must necessarily keep in Yiew the object to be achieved and
the mischief sought to be remedied. [JOIOC·Dl
D
( 6) There does not appear to be any doubt that either under
S. 49( I) of the 1948 Act read with the agreement or under s. 49(3)
or under both the provisions the respondent Board was fully authorised to levy and to make a demand at a higher rate than the usual
tariff. I JO 14F..-F]
(7) The necessity for issuing the two Orders arose out of the
scarcity of electricity available to the Board for supplying to its customers. The situation did not leave any option to the Board but to make
limited snpply of electricity to its consumers, and it must be held to
have, in the circumstances, the right to stagger or curtail the supply.
F
The orders were issued in this background and to make the direction
mentioned therein effective it was considered essential to impose sanctions which could take any reasonable form; either disconnection in
case of gross violation or the lesser sanction of enhanced tariff. Hence
none of the two Orders was illegal or unreasonable.
G
Adoni Cotton Mills v. A.P. State Electricity Board, [1976] 4 SCC
68; State of U.P. v Hindustan Aluminium Corporation, [1979] 3 SCC
229 and New Central Jute Mills v U.P. State Electricity Board, [1986]
Supp. sec 581.
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos.
H
3510-3511 of 1982.
JIYAJEERAO COTION MILLS v. ELECTRICITY BOARD [SHARMA, J.l
981
From the Judgment and Order dated 23.9.1982 and 18/19.10.1982
A
of the Madhya Pradesh High Court in Misc. W.P. No .. 888/81 and
Review M.C.C. No. 352 of 1982.
D. Gupta, M.C. Bhandare, O.P. Khaitan, Anil Bhatnagar,
Krishan Kumar, Dhruv Agarwal and Mrs. Kiran Choudhary for the
Appellants.
B
S.N. Kacker, M.L. Jaiswal, Vivek Gambhir and S.K. Gambhir
for the Respondents.
The Judgment of the Court was delivered by
SHARMA, J. The dispute in these appeals is. in regard' to the C
additional demand of electric charges made by the respondent no. 1 on
the appellant no. 1 for energy consumed. By a writ application filed
before the Madhya Pradesh High Court the appellant challenged the
demand ofRs.1,86,97,880.97 for the period 12.11.1979 to 30.6.1981.
Except for .granting a minor relief as indicated in paragraph 45 of 'its
D
judgment, the High Court dismissed the writ application. The writ
petitioner-appellants have impugned the judgment before this Court
by special leave.
2. The appellant no. 1 Jiyajeerao Cotton Mills Ltd. (hereinafter
referred to as the Company) which runs a textile mill in Gwalior,
E
entered into an agreement dated 27.10.1971 with the respondent no. 1
Madhya Pradesh Electricity Board (in short the Board) a licensee
under the Indian Electricity Act, 1910 (hereinafter referred to as the
1918 Act) for supply of electricity in accordance with the terms and
conditions mentioned therein. The quantity of .electricity to be
supplied varied from time to time under supplementary agreements
F
and the Board had to supply 2,500 K. W. on A.T. basis with effect from
1. 11. 1973. Since 1975 the Board is not able to generate sufficient
electricity to meet the full demand of the consumers and with a view to
ease the situation. two orders were issued by the State of Madhya
Pradesh under s. 22B of the 1910 Act on 4.4.1975 called as the Madhya
Pradesh Electricity (Supply and Consumption Regulation) Order,
G
1975 and the Madhya Pradesh Electricity (Generation, Control and
Consumption) Order, 1975. The learned counsel for the parties have
in their arguments referred to these orders as Regulation Order ancj
•. "
Generation Order respectively. By the Regulation Order, the consum·
ers were asked to reduce their consumption in accordance with the
provisions therein. It was further provided ihat without prejudice to
H
--.;
982
SUPREME COURT REPORTS
[ 198§] Supp. 2 S.C.R.
A the Board's power to disconnect the supply in the event of any violation thereof, the consumer will have to pay the charges at penal rates
for the excess energy consumed. The Generation Order said that if a
consumer had an alternative source of generating power from his own
generating set (described as captive power by the parties) it may be
required to generate electricity to the maximum extent technically
B feasible and the supply by the Board would be reduced to that extent.
The Order in Clause 3 provided for assessment of the generating
capacity of the captive power of the consumer. The contract demand
under the agreement was directed to remain reduced accordingly. Subclause (iii) of Proviso to Clause 3 said, that if in certain contingencies,
there was reduction in the generation of electricity by the consumer,
c the Board would try to make good the deficit against an appropriate
charge for it. An arbitration clause with respect to any dispute was
included in the 6th paragraph of the Order as its last term.
3. Both the Orders came into force with effect from the 7th of
April, 1975. The Divisional Engineer, Gwalior informed the appellant
D Company by the letter dated 17.5.1975 (marked as Annexure 'B', page
121, Vol. II of the paper book) that its additional generation capacity
technically feasible by its own generating sets had been assessed at
2,700 K.W. In. view of the contract under which the Board was to
supply 2,500 K.W. with effect from 1.11.1973, the Company was
directed to generate-additional electricity to that extent, thus reducing
E the demand on. the Board to nil. After several letters passed between
the parties, which will be dealt with at some length later, another letter
dated 10. 10. 1975 (marked as Annexure 'O', page 136, Vol. II of the
paper book) was sent to the Company issuing a fresh direction for
generating additional electricity to the extent of 2,500 K. W. with effect
from 31.10. 1975.
F
4. It appears that the Board did not bill the appellant Company
for any additional energy supplied at the penafrate for the next several
years. According to its case the Company invoked the provisions of
Proviso (iii) to Clause 3 of the Generation Order pleading emergency,
arising from time to time, covered by the Proviso, and was supplied
G additional energy accordingly. The Company was under a duty to
place its difficulties before the Board and obtain permission before
drawing additional energy under this provision of emergency supply. It
appears that after 11.11.1979 additional power was drawn, by the
.,. f
appellant without the Board's prior approval and a letter Annexure 'T'
dated 5.8. 1980 was ultimately sent to the Company explaining the
·H situation and telling it that the supply availed by it with effect from
->
JIYAJEERAO COTION MILLS v. ELECTRICITY llOARD [SHARMA. J .I
983
12.11.1979 would be billed at the penal rate. In the meantime 1wo
A
additional contracts were executed by the parties; the first one on
11.7.1979 (Annexure 'C')"for supplying additional 800K.W., and the
second one dated 26.2.1980 (Annexure 'D' for additional 190 K.W.
Thus the total demand under the agreements added to 3,490 K.W. The
Board by its letter Annexure 'U' dated 13.10.1980 reiterated its stand
taken under Annexure 'T' intimating the appellant the maximum
B
amount of electricity it was entitled to consume at the normal rate.
The letter further added that no additional power would be allowed as
emergency supply to the Company even during the period of overhauling of the generating sets as was done earlier under Proviso (iii) to
Clause 3 of the Generation Order. The matter was debated for some
time and ultimately the additional demand for the period 12.11.19'79 to c
30.9.1980 amounting to Rs.94,41,745.60 was served on the appellant
Company by the letter Annexure 'X' dated 15 .1.1981. The further bills
Were also sent on the same basis.
5. On 5 .8.1981 the application under Article 226 of_the Cons ti tution was filed before the Madhya Pradesh High Court challenging D
Annexures 'H', 'O', 'T' and 'U'. The main case of the petitionerappellant was rejected by the High Court, but marginal reliefs with
respect to the Board's demands for the period 12.11. f979 to 25.2.1980
and from 26.2.1980 to 31.7.1980 were allowed on the basis of errors in
cfilculation. The High Court also pointed out that under the terms of
the Generation Order the Board was under a duty to consider and E
allow the additional emergency supply when conditions arose making
the Proviso (iii) to Clause 3 applicable and the Board could not refuse
to do so as was observed in some of its letters. Subject to these minor
modifications the writ application was dismissed by the judgment
dated 23.9.1982. The Company thereafter filed an application for
review, which was dismissed by a speaking order of 19.10.1982. The F
present appeals have been filed by special leave against these two
judgments.
6. The appeals have been argued at considerable length by Mr
Dipankar Gupta on behalf of the appellant and Mr. S.N. Kacker
represeming ihe respondents with great ingenuity and resourcefulG
ness. Mr. Gupta appearing in support of the appeals, however, did
not press some of the points urged on behalf of the appellant in the
' .
High Court and relied upon some new grounds. We, therefore, do not
consider it necessary to deal with all the points disposed of in the High
Court judgments except making reference to some of them while dealing with the points urged before us.
H
A
B
c
L
E
p
984
SUPREME COURT REPORTS
[1988] Supp. 2 S.C.R.
7. It will be necessary to examine the relevant portions of the
Regulation and Generation Orders (Annexures 'E' and 'G') before
considering the arguments of the learned counsel. They were both
issued on 4.4.1975 by the State Government of Madhya Pradesh under
s. 22B of the 1910 Act, which reads as follows:
"22. B(l) If the State Government is of opinion that
it is necessary or expedient so to do, for maintaining the
supply and securing the equitable distribution of energy, it
may by order provide for regulating the supply, distribution, consumption or use thereof.
(2) Without prejudice to the generality of the powers
conferred by sub-section ( 1) an order made thereunder
may direct the licensee not to comply, except with the
permission of the State Government with-
\i) The provisions of any contract, agreement or
requisition whether made before or af:er the commencement of the Indian Electricity (Amendment)
Act, 1959, for the supply (other than the resumption
of supply) or an increase in the supply of energy to
any person, or
(ii) any requisition for the resumption of supply of
energy to a consumer after a period of six months,
from the date of its discontinuance, or
(iii) any requisition for the resumption of supply of
energy made within six months of its continuance,
where the requisitioning consumer was not himself
the consumer of the supply at the time of its a1scontinuance."
Clauses 3 and 4(i) of the Regulation Order (Annexure 'E') have been
referred to by the learned counsel for the parties repeatedly and they,
G
are quoted below:
H
"3.(1). No consumer receiving supply of electrical energy
from the Board and consuming or using electrical energy
for any of the categories specified in column (2) of PA RTA of Schedule VII shall consume or use during any month
or day electrical energy in excess of that specified in respec-
~
JIYAJEERAO COTION MILLS v. ELECTRICITY BOARD [SHARMA, J.l
985
tive entry in column (3) of the said Schedule;
(2) (a). If at any time during the month, on inspection of
the meter reader or any other person authorised by the
Divisional EngineerJAssistant Engineer of the Board
having jurisdiction, the cunsumer is found to have already
-reached or exceeded the quantity of electricity indicated in
column (3) of Part-A of Schedule VII the Divisional
Engineer/Assistant Engineer of the Board, having jurisdiction over the area where the consumer's premises is
situated, may by an order in writing require the consumer
not to utilise electrical energy for the rest of the month and
such order shall be complied with by the consumer forthwith. Appeal shall, however, lie with the Deputy Chief
Engineer of the Board having jurisdiction whose decisions
thereon shall be final.
(b) Any H .T. consumer who makes default in complying with the directions contained in sub-clause (1) and
item (a) of this sub~clause shall be warned in the first
instance in writing by the Divisional Engineer/Assistant
Engineer of the Board having jurisdiction over the area
where the <:onsumer's premises is situated and if the
default continues, the said Divisional Engineer/Assistant
Engineer shall after reasonably satisfying himself disconnect power supply altogether to such consumer and supply
shall not be resumed without orders of the Deputy Chief
Engineer of the Board having jurisdiction."
"4. Without prejudice to the Board's powers to disconnect
supply in the event of violation of Clause 3 above, the
Board shall bill the electricity consumed or used in excess
of the monthly limit specified in column (3) of the Schedule
VII at the penal rates as mentioned below:
{i) All H.T. consumers as specified in Schedules I,
II, III and IV-Four times of normal tariff (both in
!"Spec! of demand charges and energy charges) including fuel cost adjustment charges."
•.
The e'xpressions "average monthly consumption"., "average demand"
A
B
c
D
E
F
G
•
and "average daily consumption" have been defined in Clause 2 of
Annexure 'E' by taking January, February and March 1975 as the base
H
986
SUPREME COURT REPORTS
[ 1988] Supp. 2 S.C.R.
A period. The VIIth Schedule mentioned in Clause 3 above has not been
included in the paper books with reference to which arguments have
been addressed but a copy thereof was filed during the hearing and
accepted as a correct copy by the both sides.
B
c
D
E
F
G
H
8. This Regulation Order was substituted by another Order and
later by still a third Order, amending the penal rate and the Schedules
to the Order. However, the learned counsel for the parties stated that
except for change in the penal rate and the figures in the Schedules,
the Order has remained the same all thro11g!i, and it is not necessary,
therefore, to refer to the other Orders.
9. So far as the Generation Order is concerned, it requires such
consumers, who have their private generating sets, to generate electricity to the maximum extent technically feasible in the following terms:
"3. Any consumer who is receiving electrical energy from
the Board and also has an alternative source of generation
of power by his own generation set may be required by the
respective Divisional Engineer of the Board having jurisdiction to generate electricity from his set (or sets) to the
maximum extent technically feasible in the opinion of the
Divisional Engineer and the Board's supply of electrical
energy to such consumer shall be reduced to the extent of
additional generation assessed as feasible by the Divisional
Engineer;
Provided that-
(i) Before assessing the additional generation feasible and directing the consumer accordingly, the Divisional Engineer shall consult the local Manager or
Engineer in charge of the set;
(ii) The Board shall, during the period such a direction is in force, reduce the contract demand of the
consumer to a corresponding extent and
(iii) if due to an emergency outage, whichjn the opinion pf the Divisional Engineer of the Board having
jurisdiction is not due to any negligence or failure of
those responsible for maintaining and running the
set, there is reduction is additional generation, or if in
\
JIYAJEERAO COTION MILLS v. ELECTRICITY BOARD [SHARMA, J.]
987
the opinion of the Divisional Engineer, the set has to
be taken out for maintenance during the period of
such emergency or maintenance outage the Board
shall try its best to make good the reduction to the
consumer, levying an appropriate charge for it."
Its 6th Clause directed any dispute between the consumer and the
Officer acting under Clauses 3 and 4 to be referred to the Electrical
Adviser arid Chief Electrical Inspector to the State Government, for
his decision.
10. While Regulatioli Order was meant for general application
to all consumers, the Generation Order was confined only to such
consumers who were having captive power source. It is also manifest
that such a consumer was under a duty to generate additional electricity orily when the maximum technically feasible capacity of the
generating set or sets of the consumer was assessed under Proviso (i)
to Clause 3 and was followed by a direction to that effect. The main
argument of the learned counsel for the appellant has been that none
of the two assessments and directions contained in Annexures 'H' and
'O' was sustainable in law on the grounds that-
(a) in making the assessment of the technically feasible
maximum capacity, relevant factors were not considered, and
A
B
c
D
irrelevant and extraneQus matters were taken into account;
E
(b) the requisite opinion was not arrived at and the assessment
was not made by the authority empowered to do so; and
( c) the participation of the appellate authority in process of
assessment, corr.pletely vitiated. it in law.
F
Mr. Gupta argued that instead of examining the point on its merit, the
High Court erroneously brushed it aside on the plea of waiver and
acquiescence. Relying on a number of letters sent by the appellant to
the respondent Board it was urged that the appellant Company was
protesting against the impugned directions issued by the Board and it
G
is not right to shut it out on the technical ground of estoppel. Mr.
Kacker, on the other hand interpreted the High Court's judgment
differently. According to him, none of the points raised by the
Company was rejected without examining the merits. He strongly
relied of! some of the letters referred to in the argument of the
Company itself as also a few other letters in support of his submission · H
988
SUPREME COURT REPORTS
[1988] Supp. 2 S.C.R.
A that they furnished unimpeachable evidence including admissions on
the part of the appellant Company proving that the assessment of the
maximum feasible capacity of the appellant's captive power sets was
duly made in accordance with the Generation Order and in pursuance
thereof the required direction was issued which was acted upon by the
parties for a number of years. The Company not only took steps to
B generate f!ie additional energy as was required of it, it also took
advantage of the provisions of Proviso (iii) to Clause 3 of the Generation Order and benefitted by it from time to time.
11. For appreciating the argument of the learned counsel for the
appellant it is necessary to examine some of the Orders and letters
C issued in March and April 1975. As has been mentioned earlier, the
two Government Orders were issued on 4.4.1975. It appears that the
matter was being discussed by the different authorities of the State
Government and the Electricity Board since before this date and
advisability to require the consumers having captive power to generate
as much energy as was technically feasible was under consideration for
D some time. The question as to their capacity in this regard, naturally
assumed importance and some steps for assessing the same were taken
a few days before the Orders actually came into effect. On 28.3.1975 a
letter sent from the Board to Sri H.K. Aggarwal, the Electrical
Adviser and Chief Electrical Inspector to the State Government
(Annexure 'R-1') referred to a telephonic talk in connection with the
E assessment of the generating capacity of the captive power set. It was
mentioned "that it would be necessary to make a realistic assessment
in respect of each of the consumers" by keeping in mind the suggested
factors. The letter further said that with that object the Board had
constituted a Committee consisting of Sri Aggarwal himself, the
Superintending Engineer of the concerned Circle of the Board and the
F Divisional Engineer (Generation), Jabalpur of the Board as Members.
The appellant Company is mentioned as one of the 17 consumers in
this category. Along with his letter dated the 3rd of May 1975 Sri
Aggarwal sent the report as desired. It has been contended on behalf
of the appellant that the Generation Order authorised the Divisional
Engineer of the Board to assess the additional feasible capacity of the
G captive power source and any other person or authority or Committee
could not usurp this jurisdiction. The impugned letter Annexure 'H'
issued by the Divisional Engineer has been characterised as illegal on
the ground that it was based upon the assessment by the Committee
headed by Sri H.K. Aggarwal and not by the Divisional Engineer. The
learned counsel proceeded to say that immediately after receipt of the
H intimation by the Board, the Company protested on 21.5.1975. The
J!Y AJEERAO COTION MILLS v. ELECTRICITY BOARD [SHARMA, J. J
989
Board's reply dated 2.6.1975 has been relied upon as showing that the
direction was issued on the basis of the assessment of the Committee
and not ·of the Divisional Engipeer. It was also pointed out that
_Electrical Adviser and Chief Electrical Inspector to the State
Government (the then incumbent being Sri H.K. Aggarwal) was the
appellate authority under Clause 6 of the Generation Order and could
not, therefore, take part in the original assessment proceeding. The
reply of the Board is that the Committee no doubt inspected the
generating sets and discussed the matter with the consumers, and thus
collected relevant data for the purpose of assessment of the capacity,
but the Divisional Engineer while relying on the material collected,
A
R
did not mechanically accept the conclusion of the Committee. He (the
Divisional Engineer) applied his mind before issuing the Order C
Annexure 'H'. Mr. Kacker further said that the matter did not rest
there. After taking into account the objection raised by the Company
the Divisional Engineer took up the matter afresh and applied his
mind independently. Ultimately he came to a similar conclusion as is
evident by the second direction as contained in Annexure 'O' dated
10.10.1975. The argument of Mr. Kacker appears to be well founded.
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12. On receipt of the letter Annexure 'H' dated 17.5.1975
whereby the Divisional Engineer directed the Company io generate
2,500 K.W. of electricity by its own generating sets, the appellant
Company protested by its letter dated 21.5.1975 (at page 195 of the
Paper Book Vol. II). Mr. Gupta strenuously relied on this letter which
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stated that the Company failed to understand as to how its additional
generating capacity had been assessed at 2,700 K.W. It will be necessary to discuss this letter in some detail later in the judgment while
dealing with another point as Mr. Kacker also has relied on certain
statements made therein. At this stage, however, we should like to
point out that the appellant did not challenge the assessment on the
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ground that it was not made by the authority mentioned in ihe Generation Order; and in the last paragraph the request made was for
"review". The next document referred to by the learned counsel for
the appellant is the letter dated 30.5.1975 (page 305 of the Paper Book
Vol. II), wherein the Company stated _that:
"as desired by the Board, we have started generating about
2,000 K.W. additional power at our generating station ....
our Coal consumption has, therefore, increased by 70
tonnes daily for this additional generation."
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Finally a request was made in the letter to the Superintending
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Engineer of the Board to recommend the appellant's case for allotment of additional wagons for transport of coal. Instead of advancing
the appellant's case, the letter shows that the assessment and the direction mentioned in Annexure 'H' were accepted by the Company and
steps were teken to implement the same. Chronologically proceeding,
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the letter dated 2.6.1975 (Annexure 'I' at page 122 of the Paper Book
Vol. II) was relied on by Mr. Gupta as proving the fact that the
assessment of additional generating capacity had been done by the
Committee mentioned in the letter dated 28.3.1975 (supra) and not by
the Divisional Engineer as required by the Generation Order. The
learned counsel for the parties next placed before us the letters dated
3.6.1975 (document no. 3 at page 302 of the Paper Book Vol. II) and
dated 4.6.1975 (document no. 1, at page 300 of the Paper Book Vol.
II), another letter of the same date (Annexure 'J' at page 123 of the
Paper Book Vol. II) and then dated 8.8.1975 (Annexure 'K' at p:ige
132 of the Paper Book Vol. II) and 10.10.1975 (Annexure 'O' at page
136 of the Paper Book Vol. II).
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13. The argument of Mr. Kacker has been that the Divisional
Engineer applied his mind independently to the question of assessment of the capacity of the appellant's generating sets, and while
so doing took in consideration the factual data collected by the
Committee mentioned in the letter of 28.3.1975. It was pointed out
that all the three persons constituting the Committee were very highly
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placed officers and there could not be any legitimate objection if the
Divisional Engineer referred to the data collected by them in presence
of the Company's Officers after personally verifying them. Evel) a
judicial tribunal or a regular court is allowed to rely upon evidence
collected by an enquiry officer or commissioner. The learned counsel
heavily relied on the letter dated 3.6.1975 from the Divisional
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Engineer to the Superintending Engineer (document no. 3). On behalf
of the appellant it was said that the Company had no knowledge of this
letter in 1975. We do not think that this is a correct stand. The letter
mentions an inspection of the Company's Power House by the Divisional Engineer and the materials supplied by the Company to him.
The details with respect to the boilers of the Company and the other
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figures mentioned therein, correctness whereof is not challenged by
the appellant, fully establish that the inspection was made in presence
of and the figures were collected with the assistance of the officers of
the appellant Company and the conclusion regarding the assessment
was reached after taking into account the case of the Company. It has
been argued on behalf of the Board before us ihat the method adopted
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by the Divisfonal Engineer as disclosed by this lettter (document
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JIYAJEERAO COTTON MILLS v. EI.ECTRICITY BOARD [SHARMA, J .]
991
No. 3) was different from that followed by the Committee, as a result
of which there was some difference in their final result. On the basis of A
his independent assessment the Divisional Engineer issued another
instruction as contained in Annexure 'O' dated 10.10.1975 (at page
136 of the Paper Book Vol. II), mentioned earlier. This second direction which was effective from 31.10.1975 naturally superseded .the
earlier one under· Annexure 'H'. The Board's impugned demand does · B
not relate to any period before 31.10.1975 and, therefore, it is immaterial if the direction in Annexure 'H' is completely ignored on account
of its supersession by Annexure 'O' or on any other ground and it be
assumed that in absence of a feasible assessment of the capacity, the
Generation Order was nor applicable to the appellant Company before
31.10.1975.
14. Mr. Gupta relied on the letter dated 4.6.1975 (document
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No. 1), referred to above, for showing that the Company emphatically
protested against the assumption that it could generate additional 2500
K.W. It was said that its capability ir, this regard was limited to 1200
K.W. The learned counsel referred to the other letters also for a o
similar purpose. We think that in view of the revised order of the
Divisional Engineer passed on 10.10.1975, vide Annexure 'O', earlier
correspondence is not matedal for the purpose for which the appellant
is trying to use them. The learned counsel for the respondent has
relied on some of them for his argument on the other poinis and we
will have to deal with them again when we take up those points. So far
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as the question as to whether an assessment of the feasible capacity of
the generating sets of the appellant Company was made by the Divisional Engineer as required by the Generation Order is concerned, we
.have no hesitation in deciding the issue in favour of the respondent.
15. On behalf of the appellant it was urged that since the Electrif'
• cal Adviser-cum-Chief Electrical Inspector of the State Government
_who has been mentioned as the appellate authority under Clause 6 of
the Generation Order was associated with the assessment by acting as
a member of the Committee (vi de Annexure 'R-1' at page 256 of the
Paper Book Vol. II), the entire process in this regard should be held to
be completely vitiated. In view of our finding in the preceding
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paragraph, the argument has to be rejected. Besides, it is not correct
to assume that an appeal against the assessment was provided by
Clause 6 of the Generation Order which reads as follows:
"6. ln case of any dispute between the consumer and the
Divisional Engineer acting under Clauses 3, .and 4, it ;shall H
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be referred to the Electrical Adviser and Chief Electrical
Inspector to the Government of Madhya Pradesh whose
decision sball be final."
The above is obviously an arbitration clause in case of a dispute and
since the maintainability of the appellant's writ application before the
High Court was decided·in)ts favour, it cannot make a grievance on
this score. Besides, if the appellant Company had a grievance against
the assessments which were made in 1975, it ought to have challenged
the same then and not to have waited for a number of years before
approaching the High Court.
16. Mr. Gupta challenged the assessment still on another
ground. He contended that while making the assessment, the relevant
factors were ignored, and irrelevant and extraneous considerations
were taken into account. The argument which is based on certain
scientific technical hypothesis proceeded thus: The Company had 3
Generator Sets described as M.V. Turbo Generator Set, B.B. Turbo
Generator Set and AEG Turbo Generator Set; and five Boilers.
Another Boner was added in 1977. Every generator set has a rated
capacity which has been described by the learned counsel as the level' at
which operation can continue satisfactorily for indefinite period. Th,is
rated capacity is declared by the manufacturer and can be accurately
ascertained without difficulty. The terms 'overload' and 'overload
capacity' have been explained by the learned counsel as "one exceeding the level •at which operation can continue satisfactorily for an
indefinite period" and "excess capacity of a generator over that of its
rating", respectively. It was urgued that overloading may lead to distortion or to overheating with risk of damage, depending on the type
of circuit or device, and so in many cases only temporary overloads are
permissible. The overload capacity, it has been said, is referrable
generally for a specified time. The criticism against the report of the
Committee is that the Committee took into account the overload
capacity of the sets and not the rated capacity. Mr. Gupta stressed on
the point that the AEG Turbo Generator Set was maintained as a
standby to be operated only when other sets were not available for any
reasons. He also said that the feasible generation capacity of a set is
also dependent on other factors and conditions, namely, age and
condition of the set, availability of coal of requisite quality and specification, adequate and continuous supply of water etcetera. Referring
to the report of the Divisional Engineer dated 3.6.1975 (document
No. 3 at page 302 of the Paper Book Vol. II) it was argued that the
Divisional E11_gineer picked out a moment of time when the plants
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JIYAJEERAO COTTON MILLS v. ELECTRICITY BOARD [SHARMA,J.]
993
reached the generation of 7500 K.W. and concluded therefrom that
the appellant was capable of generating 1800 extra K.W. from its
captive plant. It was further suggested that in any view of the matter
on the basis of the aforesaid opinion of the Divisional Engineer the
appellant Company ought to have been asked to generate only 1800
K.W. more and not 2500 K.W. Finally it was argued that the Board
has to be confined to the reasons in support of the assessment orders
which are mentioned therein and cannot be allowed to travel beyond
the same.
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17. Mr. Kacker took great pains in going into the reports and
specially through the aforementioned report of the Divisional
Engineer dated 3.6.1975, with a view to meet the criticism of the
appellant and support the report as a correct one on merits. He also
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relied on a number of letters sent by the appellant showing that the
assessment was accepted as binding on it and claiming from time to
time benefits under Proviso (iii) to Clause 3 of the Generation Order
which was allowed for a number of years. The learned counsel relied
on this aspect as furnishing strong circumstantial evidence in support
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of the correctness and binding nature of the assessment impugned
belatedly when the appellant approached the High Court.
18. It is significant to note that at no point of time either in 1975
or later the appellant chose to get a scientific assessment of its generating sets made by all" expert, nor even after filing the present writ
petition in the High Court did it file any opinion of a person having
scientific expert knowledge showing the impugned assessments to be
erroneous or undependable. It is also important to appreciate that the
appellant has not either earlier or now made any complaint of ma/a
fides or bias against any of the members of the Committee or the Divisional Engineer or for tha·t mattter against any officer of the respondent Board or the State. On the other hand, the Officers of the Board
appear to have taken a very sympathetic attitude towards the appellant
for more than four years and allowed it the benefit of additional
energy under Proviso (iii) to Clause 3 of the Generation Order very
generously. It was only when the Board discovered in 1980 that the
appellant had stopped even informing the Board and obtaining its
prior approval as envisaged by the Generation Order before consuming extra energy that the matter was closely examined by the Board's
Officers. Mr. Kacker is also right in relying upon the conduct of the
parties for about four or five years after the assessment was made as
furnishing importa,nt circumstance relevant to the issue. We may,
therefore, examine a number of letters in this regard some of which
have already been mentioned earlier.
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19. The very first letter of the appellant Company after receiving
the impugned direction in Annexure 'H' dated 17 .5 .1975 was sent
within 4 days on 21.5.1975 and is included at page 195 of Vol. II of the
paper book.