# MIS HYDERABAD VANASPATHI LTD v. ANDHRA PRADESH STATE ELECTRICITY BOARD AND OTHERS

- **Citation:** [1998] 2 S.C.R. 620
- **Court:** Supreme Court of India
- **Decided:** 1998
- **Case number:** Ci1il Appeal No. 2558 of 1998
- **Bench:** S.C. Agra Wal, S. Saghir Ahmad, M. Srinivasan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mis-hyderabad-vanaspathi-ltd-v-andhra-pradesh-state-electricity-board-and-others-16393
- **Pages:** 28

## Headnote

Electricity (Supply) Act, 1948-Section 49-Electricity-Andhra
Pradesh State Electricity Board-Terms and Conditions of Supply-Individual
agreements in writing with each consumer-Nature of-Held, Statutory in
C character.
Terms and Conditions of Supply of Electricity framed by Andhra Pradesh
State Electricity Board-Notified in B.P. Ms. No. 690 dated 171911975Clause 39 :
D
Validity· of-Safeguards to prevent unauthorised user, pilferage or
malpractices, provided for-Plea that Clause 39 repugnant to the provisions
of the Act, rejected-Orders passed under, held, subject to judicial reviewClause 39.10.6; Clause 39.11.
Plea that Clause 39 deviates from the provisions of the Electricity Act
E and the Rules, rejected-Held, the provisions in Clause 39 do not contravene
the relevant provisions of the Electricity Act as those provisions provide for
a different situation-Indian Electricity Act, 1910-Sections 20; 21(4); 26(6)
(b); 36; Clause VI (3), Schedule; Rules 4 to 6, Indian Electricity Rules.
F
Power to the officers to disconnect the supply immediately on a suspicion
of malpractice-Held, not violative of Article 14 of the Constitution-Principles
of Natural Justice not applicable in such cases-Constitution of India, 1950Article 14-Principles of Natural Justice-Administrative Law.
Aqjudicaiton of the matter by the officials of the board themselvesG Held, the pri~ciple of Nemo Judex in Causa Sua not applicable-Principles
of Natural Justice not violated-Administrative Law-Bias.
Contract-Standard form-Signing of the agreement with the Board in
standard form-Plea that it will not prevent the consumer from questioning
it-Held, not acceptable.
H
Maxims : Nemo Judex in Causa Sua-Applicability of
620
HYDERABAD VANASP.\THI LTD. '" A.P. STATE ELEC. BOARD
62 J
The aJlpellant in Chil AJIJleal 2558/1988 entered into two agreements A
with Andhra Pradesh State electricity Board fur SUJIJlly of High tension
JIOWer on 1/9/1970 and 27/8/73. In January, 1976 on insJlection of the
factoQ· Jlremises, pilferage of energy was discovered, punuant to which the
JIOWer supply was disconnected and a 11rmisional assessment of the loss was
made.
The said action was taken in Jlursuance of the powers confe1Ted on the
designated officials by Clause 39 of the 'Terms and Conditions of SupJlly'
which JlrDYidcs for safei,,'llards to prevent unauthorised user, pilferage or
malpractices relating to energy. Prosecution was launched under Section
B
379 I.P.C. read with Section 39 of the Indian Electricity Act, 1910 in the C
Court of the Chief Metropolitan Mai,,ristratc. The final <L~ses.~ment fixing the
loss was made at R~. 55,72, 511. 81 which was challenged by the appellant
in appeal which was dismissed. Thereafter, the appellant tiled a suit in the
Comi of Additional Chief Judge, City Civil Court fur a declaration that it
was not liable to Jlay any amount as penal damages. The suit was dismissed.
The appeal filed hefore the High Comi was also dismissed. The High Court D
held that the terms and conditions of supply on the basis of which the
agreements were entered into between the appellant and the Board did not
in any way contravene the provisions of either the Indian Electricity Act,
1910 or the Elcctiicity (Supply) Act, 1948. Agg1ievcd, the consumer preferred
the present appeal.
E
Similarly some industrial undertakings had also entered into
agreements with the Board for supply of electricity. Consequent upon
disconnection of supply by the Board on ground of pilferage of electrical
energy, these undetiakings moved the High Court by way of writ 11etitions
in which similar questions as decided by the aforesaid .iudgement were F
raised. Interlocutory Orders refusing to grant interim relief to the petitioners
were passed. Appeals against these orders and the main writ petitions were
heard by the Full Bench. The Full Bench held that Clause 39 of the 'Terms
and Conditions of Supply' which prescrihed the procedure for ad.indication
of the dispute relating to pilferage or malpractic

## Text

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A
MIS HYDERABAD VANASPATHI LTD.
v.
ANDHRA PRADESH STATE ELECTRICITY BOARD AND OTHERS
APRIL I, 1998
B
[S.C. AGRA WAL, S. SAGHIR AHMAD AND M. SRINIVASAN, JJ.]
Electricity (Supply) Act, 1948-Section 49-Electricity-Andhra
Pradesh State Electricity Board-Terms and Conditions of Supply-Individual
agreements in writing with each consumer-Nature of-Held, Statutory in
C character.
Terms and Conditions of Supply of Electricity framed by Andhra Pradesh
State Electricity Board-Notified in B.P. Ms. No. 690 dated 171911975Clause 39 :
D
Validity· of-Safeguards to prevent unauthorised user, pilferage or
malpractices, provided for-Plea that Clause 39 repugnant to the provisions
of the Act, rejected-Orders passed under, held, subject to judicial reviewClause 39.10.6; Clause 39.11.
Plea that Clause 39 deviates from the provisions of the Electricity Act
E and the Rules, rejected-Held, the provisions in Clause 39 do not contravene
the relevant provisions of the Electricity Act as those provisions provide for
a different situation-Indian Electricity Act, 1910-Sections 20; 21(4); 26(6)
(b); 36; Clause VI (3), Schedule; Rules 4 to 6, Indian Electricity Rules.
F
Power to the officers to disconnect the supply immediately on a suspicion
of malpractice-Held, not violative of Article 14 of the Constitution-Principles
of Natural Justice not applicable in such cases-Constitution of India, 1950Article 14-Principles of Natural Justice-Administrative Law.
Aqjudicaiton of the matter by the officials of the board themselvesG Held, the pri~ciple of Nemo Judex in Causa Sua not applicable-Principles
of Natural Justice not violated-Administrative Law-Bias.
Contract-Standard form-Signing of the agreement with the Board in
standard form-Plea that it will not prevent the consumer from questioning
it-Held, not acceptable.
H
Maxims : Nemo Judex in Causa Sua-Applicability of
620
HYDERABAD VANASP.\THI LTD. '" A.P. STATE ELEC. BOARD
62 J
The aJlpellant in Chil AJIJleal 2558/1988 entered into two agreements A
with Andhra Pradesh State electricity Board fur SUJIJlly of High tension
JIOWer on 1/9/1970 and 27/8/73. In January, 1976 on insJlection of the
factoQ· Jlremises, pilferage of energy was discovered, punuant to which the
JIOWer supply was disconnected and a 11rmisional assessment of the loss was
made.
The said action was taken in Jlursuance of the powers confe1Ted on the
designated officials by Clause 39 of the 'Terms and Conditions of SupJlly'
which JlrDYidcs for safei,,'llards to prevent unauthorised user, pilferage or
malpractices relating to energy. Prosecution was launched under Section
B
379 I.P.C. read with Section 39 of the Indian Electricity Act, 1910 in the C
Court of the Chief Metropolitan Mai,,ristratc. The final <L~ses.~ment fixing the
loss was made at R~. 55,72, 511. 81 which was challenged by the appellant
in appeal which was dismissed. Thereafter, the appellant tiled a suit in the
Comi of Additional Chief Judge, City Civil Court fur a declaration that it
was not liable to Jlay any amount as penal damages. The suit was dismissed.
The appeal filed hefore the High Comi was also dismissed. The High Court D
held that the terms and conditions of supply on the basis of which the
agreements were entered into between the appellant and the Board did not
in any way contravene the provisions of either the Indian Electricity Act,
1910 or the Elcctiicity (Supply) Act, 1948. Agg1ievcd, the consumer preferred
the present appeal.
E
Similarly some industrial undertakings had also entered into
agreements with the Board for supply of electricity. Consequent upon
disconnection of supply by the Board on ground of pilferage of electrical
energy, these undetiakings moved the High Court by way of writ 11etitions
in which similar questions as decided by the aforesaid .iudgement were F
raised. Interlocutory Orders refusing to grant interim relief to the petitioners
were passed. Appeals against these orders and the main writ petitions were
heard by the Full Bench. The Full Bench held that Clause 39 of the 'Terms
and Conditions of Supply' which prescrihed the procedure for ad.indication
of the dispute relating to pilferage or malpractice of energy and for final G
assessment of the additional charges was wholly 'itiated as !icing arbitrary
and violative of A11icle 14 of the Constitution and struck down the same.
Aggrieved, the Board filed Civil Appeals Nos. 7139-7144 of 1997.
On behalf of the consumers, it was contended that condition No. 39 in
the 'Terms and Conditions of Supply,' of electricity was purely contractual H
622
SUPREME COURT REPORTS
(1998] 2 S.C.R.
A and ultra 'ires the pro\isions of the Indian Electticity Act, 1910 and Electricity
(Supply) Act, 1948. It was further contended that the Board could neither
define 'malpractices' nor presc1ihe an adjudicator~· machiner)· for assessing
and Je,·ying 11enal damages. The Bo;ml could impose only such conditions as
ma)· he found in an agreement hctween other ordinary licensees and
consumers.
B
On behalf of the Board, it was contended that the Boan• was 11e1forming
a ~1atutory obligation to supply elcct1icity and was empowered hy the prmisions
of Section 49 of the Electticity Suppl)' Act to impose such tcnns and conditions
as it thought tit. The conditions which had heen so imposed including condition
C numher 39 were statutory in character and were in no way contrary to the
provisions of either of the enactments.
Dismissing the appeal filed hy the consumer and allowing those filed
hy the Board, this Comi
D
HELD : 1. The Terms and Conditions of Supply of electtity are statutory
in characte1: The Full Bench of the High Court was not tight in holding that
the te1ms and conditions of supply arc purely contractual. Section 49 of the
Electricity (Supply) Act, 1948 empowers the Board to prescribe such tc1ms
and conditions as it thinks fit for supplying electricity to any person other
than a licensee. The Terms and Conditions of Supply were made applicable
E to all consumers availing supply of electricity from the Board. The section
does not require the Board to enter into a contract with indhidual consumer.
Even in the absence of an indhidual contract, the Terms and Conditions of
Supply notified by the Board will he applicable to the consumer and he will
he bound by them. Probably in order to avoid any possible plea by the
F consumer that he had no knowledge of the Terms and Conditions of su11ply,
agreements in writing are entered into with each consume1: That will not
make the terms purely contractual. The Board in performance of a statutory
duty supplied energy on certain specific terms and conditions framed in
exercise of a statutory power. (634-G; 638-B-D)
G
Punjab State Electricity Board v. Bassi Cold Storage, Kharar and
Anothe1; (1994) Supp. 2 S.C.C. 124 and Bihar State Electricity Board and
others v. Parmeshwar Kumar Agariva/a and Others, (1996] 4 S.C.C. 686,
relied on.
Workmen v. Firestone Tyre & Rubber Co. of India (P) Ltd., (1973) 1
H s.c.c. 813, cited.
,.
HYDERABAD VA!'L\Sl'ATHI LTD.''· A.P. STXI'E ELF.C' BOARD
623
Shri lidva Ram Misra'" :\fanaging Committee, Shri .Jai A'arain College, A
(1972] 1 S.C.C. 623 and Executive Co111111ittee of r aish Degree College,
Shandi and others v. Lakshmi \'arain and others, [1976[ 2 S.C.C. 58, held
inapplicable.
2. Clause 39 does not violate any prO\ision in the Supply Act. Section
.t9 empowers the Board to supply electricity on 'such terms and conditions B
as it thinks fit'. It may also frame uniform tariffs. It is the staturory duty
of the Board to arrange for the supply of elect1icit~· throughout the State and
for transmission and\ distl'ihution of the same in the most efficient and
economical manner. For that purpose it has necessa1ily got to prevent
unauthorised user, pilferage or malpractices by the consume1·s. While on C
the one hand, the Board has to recoup the loss suffered by such pilferage
or other mal1m1ctices, it has also on the other got to stop immediately the
continuation thereof. Hence the terms and conditions of supply have to
prmide for com11ensation as well as immediate disconnection. For ascertaining
the loss and fixing the compensation, uniform procedure has to he framed ~
and a machinery constituted. Clauses 39 is only doing that. (640-B-D)
D
.Jiyajeerao Cotton Mills Ltd. & Another v. Madhya Pradesh Electricity
Board & Another, [1989) Supp. 2 S.C.C. 52; Relied on. Indian Exvress
Newspaper (Bombay) Pvt. Ltd. and others etc. etc. v. Union of India & others
etc. etc., (1985) 1 S.C.C. 41 and Agricultural Market Committee v. Shalimar
Chemicals Works Ltd., [1997) 5 Supp. S.C.C. 516, held inapplicable.
E
3. The provisions in Clause 39 of the Terms and Conditions of Supply
do not contravene the provisions of the Electricity Act. Clause 39 will come
into play whenever there is malpractice or pilferage on the part of the
consumer or a fraud played by the consuiner. The Electrical Inspector has
no Jurisdiction to deal with those matters. He can he approached only when F
there is a defective meter or any defect in wires, fittings, works or apparatus.
As regards Clause (VI) of the Schedule to the Electricity Act, it is not
applicable unless distribution mains have been laid down under the provisions
of Clause (lV) or Clause (V) and the supply of energy through those mains
or any of them has commenced. The difference or dis1111te referred to in sub- G
cl.(3) of Cl.(VI) will not cover fraudulent malpractice or pilferage. A perusal
of the said sub-clause makes it evident that the matter shall he referred to
an Electrical Inspector only in cases of defects mentioned therein and not
otherwise. [642-H; 643-A-D]
MPE.B. and others v. Smt. Basantibai, [1988] 1 S.C.R. 890; MP H
624
SUPREME COURT REPORTS
[1998] 2 S.C.R.
A Elecl1icitv Board, .Jahalpur and others\', Harsh ffood Products and Anotl1e1~
(1996] 4 S.C.C. 522; Helwal Spi1111i11g ,\fills & Ors. v. l!.P State Electricity
8oard and rmothers. f 19971 S.C.C. 740 and Municipal Corporation of Delhi
'" Ajanta Iron & Steel Company (Pvt.) Ltd., (1990] 2 S.C.C. 659, referred
to.
B
State of UP and others '" Hindustan Aluminium Corpn. And others,
(1979) 3 S.C.C. 229 and Andhra Pradesh Carbides Ltd. and another v.
Andhra Pradesh State Electricity Board, Hyderahad and others, A.LR (1986)
Andhra Pradesh 37; held ina1111licable.
C
4. The orders 11assed under Clause 39 of The Terms and Conditions
of Su11ply are subject to Judicial review. No doubt, Clause 39.10.6 provides
tha( the order on appeal shall be final subject to Clause 39.ll and not liable
to be questioned in any court of law. Similarly, Clause 39.11 makes the order
of the Chairman or his nominee final, not liable to be questioned in any court
of law. The jurisdiction of courts, however, cannot be taken away by the
D aforesaid clauses. (641-C-D)
E
5. When power theft wa5 found by the officials, immediate disconnection
of the su11ply was not \iolative of .\11icle 14 of the Con~1itution and principles
of Natural Justice would not a11ply. (645-E)
6 The 11rinci11le 'Nemo Judex in Cause Sua' will not a1>11ly in this case
as the officers have no person! lis with the consumers. They are similar to
Income Tax or Sales Tax Officials. There is nothing wrong in their
adjudicating the matter es11ecially when the consumers may be re11resented
by an Advocate and the fonnula for making 11rovisional assessment is fixed
F in the clause itself. [646-F)
Patel Parshotta111das Vanmalidas '" Gujarat Electricity Board and
another, A.I.R (1987); Gujarat 188, Approved. J.Mohapatra and Co. and
Another v. Stale of Orissa and Another, [1984) 4 S.C.C. 103; Stale of
G Karnataka v. Shree Rameshwara Rice Mills, Thirthahal/i, (1987) 2 S.C.C.
160; Krishna Bus Service Pvt. Ltd. '" State of Haryana and Others, (1985)
3 S.C.C. 711; Rattan Lal Sharma v. Managing Committee, Dr. Hari Ram (Coeducational Higher Secondary School and Others, [1993) 4 S.C.C. 10; L.I.C.
of India and Another v. Consumer Education & Research Centre and Others,
(1995) 5 S.C.C. 482 and Pawan Alloys & Casting Pvt. Ltd., Meerut v. U.P
H State Electricity Board and Others, (1997) 7 S.C.C. 251, held inap11licable.
HYDERABAD VANASPATHI I.TD.''· A.P. STATE ELEC. BOARD [SRINI\ASAN. J.[ 625
f'mrell v . . \fa_i.· (1946) All E.R 444 and Co111111issionl!I".\' o(Customs and A
F:t:cise Y. Cure & Deeley Ltd .. (1961) 3 All E.R. 641, referred to.
CIVIL APPELLATE JURISDICTION: Ci1il Appeal No. 2558 of
1998
From the Judgment and Order dated I 0.6.88. of the Andhra Pradesh B
High Court in C.C.C. A. No. 38of1982.
Civil Appeal Nos. 7139-7144 of 1977.
From the Judgment and Order dated 12.9.97. of the Andina Pradesh
High Court in W.P .No. 13185/88, 21388/95, W.A. Nos. 418/88, 456/89, 74.+/95 C
and W.P. No. 5549of1987.
Sunil Gupta, Ms. Manju Mishra and K.J. John for the Appellant in C.A.
No. 2558/88.
Shanti Bhushan, K Rajendra Chowdhary and Rakesh K. Sham1a for the D
Appellant in C.A. No and P.V.M Reddy 7139-44/97.
Rajendra Chowdhary, Rakesh K. Sharma, A. Subba Rao and Y. Raja
Gopala Rao for the Respondents.
The Judgment of the Court was delivered by
SRINIVASAN, J.
I. Relevant facts.
E
The appellant in the earlier appeal of 1988 is a public limited company
engaged in the manufacture of Vanaspathi. It entered into two agreements F
with Andhra Pradesh State Electricity Board hereinafter referred to as 'Board'
on 1.9.1970 and 27.8.1973 for supply of High tension power. In January, 1976
the officers of the Board inspected the factory premises and noticed pilferage
of energy. The power supply was immediately disconnected and a provisional
assessment of the loss was made at Rs. 61.28.535/-. A prosecution was G
launched under Section 379 I.P.C. read with Section 39 of the Indian Electricity
Act, 1910, hereinafter referred to as the Electricity Act in the court of the Chief
Metropolitan Magistrate, Hyderabad. The Board also initiated proceedings
calling upon the appellant to file its objections to the provisional assessment.
The appellant denied the allegations made by the Board. After enquiry, the
final assessment was made fixing the loss at Rs. 55,72,511.81 Ps. The order H
626
SUPREME CO\JRT REPORTS
[1998] 2 S.C.R.
A was challenged by the appellant in appeal but in vain. The appellant filed a
suit in the court of Additional Chief Judge, City Civil Court (Temp), Hyderabad
for a declaration that it was not liable to pay any amount as penal damages
and prayed for a direction for refund of the amount of Rs. 22.50 Jakhs
collected by the Board during the pendency of the assessment proceedings
B and for perpetual injunction restraining the defendants therein from
disconnecting the power supply.
2. The suit was contested by the Board. Several issues were raised
including one relating to the jurisdiction of the civil court. The trial court held
that it had jurisdiction to try the suit but negatived all the contentions of the
plaintiff and dismissed the smt. On appeal, a Division Bench of Andhra
C Pradesh High Court rejected the pleas of the appellant and dismissed the
same. The High Court held that the terms and conditions of supply on the
basis of which the agreements were entered between the appellant and the
Board did not in any way contravene the provisions of either the Electricity
Act or the Electricity (Supply) Act, 1948, hereinafter referred to as the Supply
D Act. It was also found that ample opportunity was given to the appellant
before the final order of assessment was made and that the enquiry held by
the officers of the Board was in no way vitiated. Aggrieved by the said
decision of the High Court the appellant preferred the said appeal on obtaining
Special Leave of this court.
E
3. The questions which were decided by the High Court in the aforesaid
proceedings were raised again in Writ Petitions under Article 226 of the
Constitution of India by some industrial undertakings which had also entered
into agreements with the Board for supply of electricity. When proceedings
were initiated by the Board against those industrial undertakings on the
ground of pilferage of electrical enerh'Y and supply was disconnected pending
F enquiry, those undertakings filed Writ Petitions challenging the validity of
such proceedings. In one of the writ petitions, an appeal was filed against an
Interlocutory Order refusing to grant interim relief to the petitioner therein.
When that appeal was admitted by a Division Bench the matter was placed
before a Full Bench for disposal as the Division Bench opined that the view
G taken by the Division Bench in the Civil Appeal referred to earlier was likely
to be in conflict with the •·possible view that the contractual obligation upon
the consumer of electricity that in case of a dispute as to the consumption,
the adjudication shall be by the officers of the Board shall be deviative of
Article 14 of the Constitution of India". Thus all the writ petitions and the
writ appeals against interlocutory orders were heard by a Full Bench of three
H Judges and disposed of by a common judgment dated 12.9.1997.
HYDERABAD VANASPATHI LTD. 1·. A.P. STATE ELEC. BOARD [SRINIVASAN. J.J 627
4. The Full Bench opined that the creation of the adjudicatory process A
by a contractual obligation in condition no_ 39 of the 'Terms and Conditions
~
of Supply' of electricity was wholly vitiated : The Full Bench observed that
though there is no bar against the Board to recover compensation for the loss
caused to it even when a consumer is prosecuted for the same offence under
the Act, the enquiry into and estimate of the loss should be made by an B
independent and properly constituted body. Ultimately the Full Bench
""
concluded its order as follows:
"In view of the above discussion, we have no hesitation to hold that
condition 3 9 of the conditions framed by the Board, to the extent it
prescribes the procedure for adjudication of the dispute relating to c
pilferage or malpractice of energy and for final assessment of the
additional charges, is ultravires of Section 24, 26 (6) and Cl.IV(3) of
schedule of!he Act of 1910 and Sect. 49 of Act of 1948, and is wholly
vitiated as being arbitrary and violative of Article 14 of the Constitution
and is accordingly struck down. However, the contention of the learned
Advocate General that the Board is i:mpowered to regulate the supply D
'f
of energy including the power of disconnection, on a prima facie
satisfaction or suspicion of a conduct amounting to malpractice or
pilgerage of energy, appears to lie unexceptionable. The Board is
certainly within its limits to discontinue supply of energy on ground
of including malpractice of pilferage of energy. The conditions in the E
agreements in Appendix III & IV also contain stipulation of
disconnection of supply on suspicion of violation of conditions.
Thus, if an allegation is made of malpractice or pilferage against the
consumer and if the consumer denied the allegation and makes an
application to the Electrical Inspector, under sub-section ( 6) of Sec. 26
or Cl. IV (3) of the Schedule to the Act of 1910, and the Electrical F
Inspector, holds on preliminary facts, that he has no jurisdiction in the
matter, then the Board is empowered to take such step as it may deem
proper and appropriate including disconnection of supply and for
restoration of supply on certain conditions. This action of the Board,
is however, subject to the scrutiny by a court of law".
G
5. It is against the said judgment of the Full Bench the Board has filed
,.
thi; Civil Appeals Nos. 7139-7144 of 1997. Aa the appeals have been heard
together as the contentions are common. For the sake of convenience, the
parties will be hereafter referred to as the Board on the one hand and the
consumers on the other.
H
628
SUPREME COURT REPORTS
(1998] 2 S.C.R.
A
6. The chief argument advanced on behalf of the consumers is that
condition number 39 in the ·Terms and Conditions of Supply' of electricity
which are purely contractual is ultravires the provisions of the Indian Electricity
Act, 1910 hereinafter referred to as the ·Electricity Act' and Electricity (Supply)
Act, 1948 hereinafter referred to as the 'Supply Act'. Alternatively, it is
B contended that even if the terms are statutory in nature, the condition is not
valid. Thirdly, it is argued that the said condition is violative of Article 14 of
the Constitution of India. Per contra, it is contended on behalf of the Board
:._
that it is performing a statutory obligation to supply electricity and has been
empowered by the provisions of Section 4 9 of the Supply Act to impose such
terms and conditions as it thinks fit. The conditions which have been so
C imposed including condition number 3 9 are statutory in character and are in
no way contrary to the provisions of either of the enactments. The conditions
are also quite reasonable and cannot in any sense be termed arbitrary and
violative of the provisions of Article 14 of the Constitution of India.
D
IL RELEVANT STATUTORY PROVISIONS
7. Before adverting to the rival contentions, it is necessary to refer to
certain provisions in the two enactments namely Electricity Act and the
Supply Act. An Electricity Act was passed originally in 1903 but it was
repealed by the Electricity Act which amended the law relating to the supply
E and use of electrical energy. The said Act was not a complete Code on the
subject. It was apparently found to be inadequate for coordinating development
of electricity on regional basis. Hence, the Supply Act was enacted in 1948
to provide for rationalisation of the production and supply of electricity and
generally for taking measures conducive to electricity. While the earlier Act
deals with the supply and u5e of electric energy and the rights and obligations
F of the licensees, the later Act deals with statutory powers and functions of
the Central Electricity Authority, State Electricity Boards and Generating
companies. Section 70(1) of the later Act provides for giving an overriding
effect to its provisions in so far as tl1ere is any inconsistency therewith in
the provisions of the earlier Act or any Rules made thereunder or any
G instrument having effect by virtue of the said Act or Rules. The proviso to
sub-section ( 1) clarifies that nothing in the later Act shall be deemed to
prevent the State Government from granting, after consultation with the
Board, a licence not inconsistent with the provisions of the earlier Act to any
person in respect of such area and on such terms and conditions as the State
Government may think fit. Sub-s.(2) makes it clear that save as otherwise
H provided in the later Act the provisions of the Act shall be in addition to
T
HYDERABAD VANASPATHI LTD. v. A.P. STATE ELEC. BOARD [SRINIVASAN, J.j 629
and not in derogation of the earlier Act.
A
8. Section 26 of the Supply Act is to the effect that the Board shall in
respect of the whole State haYe all the powers and obligations of the licensee
under the Electricity Act and the later Act shall be deemed to be the licence
of the Board for the purpose of the earlier Act. The first proviso to the Section
excludes the applicability to the Board, of Sections 3 to 11, sub-ss. (2) and B
(3) of Section 21, Section 22, sub-section (2) of Section 22A, Sections 23 and
27 or clauses (i) to (v), clause (vii) and clauses (ix) to (xii) of the Schedule
to the Electricity Act relating to the duties and obligations of a licensee. The
second proviso states that the provisions of clause (vi) to the Schedule to
the earlier Act shall apply to the Board in respect of that area only where C
distribution mains have been laid by the Board and the supply of energy
through any of them had commenced.
9. In view of the provisions of Section 26 of the Supply Act our
attention has been drawn by the learned counsel for the consumers to some
only of the provisions of the Electricity Act. Section 20 sets out the power D
of the licensee or any person duly authorised by the licensee to enter the
premises to which energy has been supplied and remove fittings, etc. in
certain circumstances and the procedure therefor. Sub-sections (I) and ( 4) of
Section 21 are in the following terms :
"Section 21(1). A licensee shall not be entitled to prescribe any
special form of appliance for utilizing energy supplied by him or save
as provided (in any conditions made under sub-s. (2) or) by Section
23, sub-s. (2), or by Section 26, sub-s.(7), in any way to control or
interfere with the use of such energy :
Provided that no person may adopt any form of appliance, or use the
energy supplied to him so as to unduly or improperly to (interfere
withE
F
(a) the safety or efficient working of licensee's electric supply lines
or other works ; or
G
(b) the supply of energy by the licensee to any other person) .....
Section 21 sub-sectin ( 4) reads as follows :
.. ( 4) Where any difference or dispute arises as to whether a licensee H
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has prescribed any applicance or controlled or interfered any
applicance or controlled or interfered with the use of energy in
contravention of sub-section (I), the matter shall be either referred to
an Electrical Inspector and decided by him, or, if the licensee or
consumer so desires, determined by arbitration.''
Section 24(1) and (2) read as follows:-
·'( 1) Where any person neglects to pay any charge for energy or any
(sum, other than a charge for energy,) due from him to a licensee in
respect of the supply of energy to him, the licensee may, after giving
not less than seven clear days notice in writing to such person and
without prejudice to his right to recover such charge or other sum by
suit, cut off the supply and for that purpose cut or disconnect any
electric supply-line or other works, being the property of the licensee,
through which energy may be supplied, and may discontinue the
supply until such charge or other sum, together with any expenses
incurred by him in cutting off and re-connecting the supply, are paid,
but no longer.
(2) Where any difference or dispute (which by or under this Act is
required to be determined by an Electrical Inspector, has been referred
to the Inspector) before notice as aforesaid has been given by the
licensee, the licensee shall not exercise the powers conferred by this
E
section until the Inspector has given his decision:
F
G
H
PROVIDED that the prohibition contained in this sub-section shall not
apply in any case in which the licensee has made a request in writing
to the consumer for a deposit with the (Electrical Inspector) of the
amount of the licensee's charges or other sums in dispute the deposit
of the licensee's further charges for or for energy as they accrue, and
the consumer has failed to comply with s11ch request.)
Section 26(6) is in the following terms :
"Where any difference or dispute arises as to whether any meter
referred to in sub-section ( l) is or is not correct, the matter shall be
decided, upon the application of either party, by an Electrical Inspector;
and where the meter has, in the opinion of such Inspector ceased to
be correct, such Inspector shall estimate the amount of the energy
supplied to the consumer or the electrical quantity contained in the
supply, during such time, not exceeding six months, as the meter shall
not, in the opinion of such Inspector, have been correct; but save as
. .A
T
HYDERABAD VANASPATHI LTD.''· A.P. STATE ELEC. BOARD !SRINIVASAN, J.) 631
aforesaid, the register of the meter shall, in the absence of fraud, be A
conclusive proof of such amount or quantity :
PROVIDED that before either a licensee or a consumer applies to
the Electrical Inspector applies to the Electrical Inspector under this
sub-section, he shall give to the other party not less than seven days,
notice of his intention so to do".
10. Learned counsel has also drawn our attention to Sections 35 and 36
.
of the said Act as well as Rules 4 to 6 of the Indian Electricity Rules framed
under the Act. Section 35 deals with the constitution of the Advisory Board
and Section 36 deals with the appointment of Electrical Inspector. Rules 4 to
B
6 provide for the qualifications of Inspectors etc. We are not extracting those C
provisions as they are unnecessary in this case. In the course of arguments
our attention has also been drawn to Rule 27 which provides for Model
conditions of supply as contained in Annexure VI.
11. Apart from the above, strong reliance is placed on Clause VI of the
Schedule to the Act which deals with requisition for supply to owners or D
occupiers of any premises situate within the area of supply of a licensee. Subclause (1) and sub-clause (3) of Clause VI read as follows :-
VI. Requisition for supply to owners or occupiers in vicinity
(1) Where, (after distributing mains have been laid down under the E
provisions of Clause IV or Clause V and the supply of energy through
those mains or any of them has commenced,) a requisition is made by
the owner or occupier of any premises situate within (the area of
supply) requiring the licensee to supply the energy for such premises
the licensee shall, within one month from the making of the requisition, F
(or within such longer period as the (Electrical Inspector) may allow)
supply. and, save in so far as he is prevented from doing so by
cyclones, floods, storms or other occurrence beyond his control
continue to supply, energy in accordance with the requisition.
G
(3) Where any difference or dispute arises as to the amount of energy
to be taken or guaranteed as aforesaid, or as to the cost of any
service-line or as to the sufficiency of the security offered by any H
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owner of occupier, (or as to the position of the meter board) or as to
the improper uses of energy, or as to any alleged defect in any wires,
fittings. works or apparatus, or as to the amount of the expenses
incurred under the third proviso to sub-cl.(!). the matter shall be
referred to and (Electrical Inspector) and decided by him.
B
12. Turning to the provisions of the Supply Act, apart from the Sections
c
D
E
F
G
H
which we have referred to earlier, reference may be made to Sections 18 and
19. While Section 18 sets out the general duties.of the Board, Section 19 sets
out the powers of the Board. Section 49 is the most relevant provision in this
case and it reads as follows :
''Section 49. Provision for the sale of electricity by the Board to
persons other than licensees.- (1) Subject to the provisions of this
Act and or regulations, if any, made in this behalf, the Board may
supply electricity to any person not being a licensee upon such tem1s
and conditions as the Board thinks fit and may for the purposes of
such supply frame uniform tariffs.
(2) In fixing the uniform tariffs, the Board shall have regard to all or
any or the following factors, namely-
(a) the nature of the supply and the purposes for which it is
required:
(b) the co-ordinated development of the supply and distribution
of electricity within the State in the most afficient and economical
manner, with particular reference to such development in areas
not for the time being served or adequately served by the licensee;
(c) the simplification and standardisation of methods and rates of
charges for such supplies:
(d) the extension and cheapening of supplies of electricity of
sparsely developed areas.
(3) Nothing in the foregoing provisions of this section shall derogate
from the power of the Board, if it considers it necessary or expendient
to fix different tariffs for the supply of electricity of 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.
HYDERABAD VANASPATHI LTD. v. A.P. STATE ELEC. BOARD [SRINIVASAN, J.]. 633
(4) In fixing the tariff and terms and conditions for the supply of A
electricity, the Board shall not show undue preference to any person"-
13. Section 78 enables the GoYcrnment to frame Rules to give effect to
the provisions of the Act. Section 79 empowers the Board to make regulation
not inconsistent. with the Act and the Rules rnade thereunder to provide for
all or any of the matters set out therein. One of them is ·'(j) principles B
governing the supply of electricity by the Board to persons other than
licensees under Section 49•·. Section 79A provides that every mle made by
the State Government under Section 78 and every regulation made by the
Board under Section 79 shall be laid as soon as may be before the State
Legislature.
Ill
RELEVANT CLAUSES OF THE TERMS AND CONDITIONS OF
SUPPLY
14. Clause 39 which is the main target of attack defines various
malpractices and provides for enquiries by designated officials. Clauses 39.4,
c
39.5., 39.6 read as follows:-
D
Clause 39.4. Officers authorised to inspect and deal with cases of
malpractice and pilferage of energy are as indicated below :
SI. No. Particulars
Officer or officers
authorised
2.
To inspect the
To disconnect
To make final ass.
E
premises and
and issue
Appeallate authority
make provision
provisional assessment
-al assessment
notice to the consumer
H.T. Service
ADE.DE
ADE
S.E.
CE.
including
&S.E.
F
temporary supply
incharge
"Clause 39.5. Where on the inspection of consumer's installations
or premises or on the basis of other information or data there is scope
for suspecting that a consumer is guilty of ··supply of electricity to
any service, which, is disconnected by the Board" or "pilferage of G
energy", the officer authorised in this behalf by the Board may without
prejudice to Board's other rights. casue the supply of electricity to
such consumer to be forthwith disconnected without any notice and
report the matter to the Final assessing authority. In the case of the
malpractices other than the one mentioned above, supply shall be H
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[1998] 2 S.C.R.
A
disconnected only in the event of failure on the part of the consumer
to pay half of the estimated amount within the period stipulated in the
proYisional assessment notice."'
B
··Clause 39.6 Provisional assessment of the loss sustained by the
Board and payment:
The inspecting officer shall make a provisional estimate of the
loss incurred by the Board by the reason of the malpractice or pilferage
of enerh'Y committed by the consumer which shall be assessed as
mentioned herein below and intimated to the Assistant Divisional
C
Engineer concerned. The A.D.E. concerned shall ensure disconnection
of such services forthwith in the case of malpractice with reference to
supply of electricity to any disconnected service or pilferage of energy.
The Assistant Divisional Engineer shall then serve the consumer with
a notice of provisional assessment in the prescribed form. Such notice
D
E
shall mention, interalia.
(a) the matters noticed during the inspection of the consumer's
premises and installations.
(b) the reasons for disconnection already effected or propose to
be effected and
(c) a provisional estimate of the loss sustained by the Board
computed in the prescribed manner.
He shall inform the consumer to pay half of the provisionally
assessed amount, pending the enquiry to be conducted by the
F
concerned authority into the case, to secure restoration of supply
where supply has been disconnected or to avoid discontinuance of
supply where disconnection has not been effected. If such payment
is made the consumer's service shall not be disconnected on this
ground pending the enquiry".
G
15. The provisional assessment of the loss referred to in Clause 39.6
shall made on the principles set out in clause 39.7.1and39.7.2. It is provided
that assessment shall be made for the estimated period of malpractice subject
to a maximum of one year prior to the date of inspection. Clause 39.8.1 and
39.8.2 provide for provisional assessment notice in the case of malpractices
H other than supply of electricity to a disconnected premises and disconnection
HYDERABAD VANASPAT!ll LTD. v. A.P. STATE ELEC. BOARD [SRINIVASAN, J.I 635
of serYice on the consumer's failure to pay the provisionally assessed amount. A
.<(
16. Clause 39.9 is in the following terms :
Clause 39.9.1 After the provisional assessment notice is serYed upon
the consumer as mentioned in clause 3 9 .3 tl1ereof the officer authorised
in this behalf by the Board (see statement referred to in clause 39.4 B
above) shall issue a shm\' cause notice in the forms prescribed therefore
advising the consumer to file his representation if any, within 30 days
from the receipt of the notice.
Clause 39.9.2 The said officer of the Board shall, after the expiry of
the aforesaid notice period, enquire into the matter and after giving c
reasonable opportunity to the consumer and taking into account all
relevant facts and circumstances shall decide whether the consumer
has committed malpractice or pilferage of energy and if so satisfied
proceed to assess to the best of his judgment, the loss sustained by
the Board on account of such malpractice or pilferage of energy by D
~
the consumer. The consumer may be represented by an advocate at
the time of personal hearing provided the consumer files proper
vakalatnama.
Clause 39.9.3 The final assessing authority shall then pass an order
setting out his conclusions and the reasons thereof and communicate E
a copy of the order to the consumer and demand the amount if any
due from the consumer on the basis of such order after giving credit
to the amounts paid by him.
Clause 3 9. 9 .4 Payment of amount of final assessment. The consumer
F
shall pay to the Board within 30 days of the receipt of final assessment
order, the amounts demanded therein".
17. Against the order of final assessment an appeal lies to the designated
authority. The appellant may be represented by an advocate before the
appellate authority at the hearing. The appellate authority shall give his G
reasons for his conclusions except in cases where the appeal is allowed in
;..
toto. Clause 39.10.6 provides that the order on appeal shall be final subject
to clause 39.11 and be not liable to be questioned in any court of law clause
39.11 is in the following terms :
Clause 39.11 The Chairman or his nominee (the nominee being any H
636
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[ 1998] 2 S.C.R.
member of the Board) may suo moto at any time call for and examine
the rzcord of any order passed or proceedings recorded by the final
assessment authority or appellate authority for the purpose of
satisfying himself regarding ti:~ propriety or legality of such order or
proceeding and may pass such order in reference thereto, as he may
B
think fit. No orders adverse to the consumer shall be passed without
giving notice and opportunity for making a written representation to
the consumer. The order passed by the Chairn1an or his nominee shall
be final and not liable to be questioned in any court of law. The
consumer shall have no right to invoke this provision".
C
18. Clause 46 reads thus :-
"Inter)lretation: These conditions shall be read and construed as
being subject in all respects to the provisions of the Indian ElectriGity
Act, 1910, Indian Electricity Rules, 1956 and the Electricity (Supply)
Act, 1948 in force and as amended from time to time and to the
D
provisions of any other law relating to the supply of electricity for the
time being in force and nothing herein above contained in these
conditions shall abridge or prejudice the rights of the Board and the
consumer under any Central Act or State Act or rules made thereunder".
19. Appendix-III contains the form of H. T. agreement. The relevant
E clauses read as follows :
APPENDIX- III Form ofH.T. Agreement
"Agreement executed this day of ...... .19 by .......... for themselves/
himself/itself and for their/his/its/hers assigns and successors in favour
F
of the Andhra Pradesh State Electricity Board a statutory corporation
constituted under section 5 of the Electricity (Supply) Act, 1948 and
its successors and assigns herein after called the Board.
2.