# THE AMALGAMATED ELECTRICITY CO. LTD v. N.S. BHATHENA AND ANOTHER

- **Citation:** [1964] 7 S.C.R. 503
- **Court:** Supreme Court of India
- **Decided:** 1963-02-06
- **Case number:** Civil Appeals Nos. 590591 of 1963
- **Bench:** A. K. Sarkar, K. C. Das Gupta, Rajagopala Ayyan· Gar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-amalgamated-electricity-co-ltd-v-n-s-bhathena-and-another-3157
- **Pages:** 36

## Headnote

Eiectricity Supply Act, 1948 (54 of 1948), ss. 57, 57A, 70 Sch.
VI Indian Electricity Aot, 1910 (9 of 1910). s. 3 Schedule
-Electricity
Rates-Enhancement-Powers
of
!icenseeLimits of such power-Legality of rates-J11.nsdiction of civil
court-Burden of proofThe appellant company was supplying electricity under ~
licence issued in 1932 by the Government of Bombay under the
Indian Electricity Act, 1910. The licence fixed the limits r·f the
prices which the appellant rould charge but these limits were altered by an order made by the Government on December 30, 1942,
acting under para XI of the Schedule to that Act, Due to the
conditions brought about by the seeond world war, the licensee
was permitted to add a surcharge not exceeding 33-1/3 % to the
existing charges. On September 30, 1946, tho Bombay Electricity
(Surcharge) Act, 1946, was passed which continued the surcharges
for a period of·three years. Though the Surcharge Act of 1946 expired on September 30, 1949, the appellant continued charging
the consumers at rates which included the surcharge and thi'
was sought to be justified by resort to the provisions' of the Electricity Supply Act, 1948, which came into force on September 10,
1948. On September 25, 1958, the appellant gave notice to its customers that with effect from November 1, 1958, it would charge
them at certain rates which the customers considered to be illegal and unauthorised on the ground that they were in excess of
those prescribed in the order of December 30, 1942. In the suits instituted on behalf of the consumers challenging the legality of
the rates levied by the appellant in excess of the maximum prescribed by the Government of Bombay in its order dated December 30, 1942, the defence of the appellant was that the charges
were well within the limits prescribed by the Electricity Supply
Act, 1948, which according to its contention. effected such a radical change in the method of determining the reasonable rate as
to completely supersede the rates and the maxima fixed under
the Electricity Act of 1910. The question was also raised as to
whether having regard to the provisions contained in ss. 57 and
57A of the Act of 1948 a civil court would have jurisdiction to entertain a suit challenging the legality of the rates levied by the
appellant.
·
Held-(i) The maxima prescribed by the State Government
which bound the licensee under the Indian Electricity Act. 1910.
no longer limited the amount which he could charge after the
Electricity Supply Act, 1948, came into force and that the licensee
had a statutory right to adjust his rates as provided by Part I of
Sch. VI of the latter Act.
(ii) Where a party challenged the legality oi the rates on the
ground
that they contravened the provisions
contained
in Sch. VI of the Act of 1948 there was no duty on the
licensee to prove that the rates were within the limits indicated
in Sch. VI and it was for the party alleging his right to relief to
prove his case.
1964
March JO
504
SUPREME COURT REPORTS
[1964],
196A
Per Sarkar, J.-The respondents were not entitled to canvass
TM. Amalgamakd in a civil court any question ao to the rates of a licensee being in
Elutrici<yOo. Lid. excess of the limit prescribed in para I of Sch. VI to the Act of
v.
1948. A civil court could not declare that the rates charged by a
N.S. Bha<lu:na licensee were illegal as they made its clear profit exceed the reaandAiwther
sonable return. If there ~as such excess. the relief could be obtained. only if'the Government set up a rating committee, a refund became due thereupon under the last proviso to para I of
Sch. VI or if relief was available under para Il(l) of that Schedule.
Sarkar, J.
Per Das Gupta and Rajagopala Ayyangar, JJ.-(i) There
could be unilateral adjustment of the rates by a licensee but such
an adjustment must not leave him with more than the reasonable return. Where the amount of reasonable return is exceeded,
para II of Sch. VI comes into play and the excess over the reasonable return is

## Text

_Characters 0–39,902 of 100,883. This is a partial read: ask again with offset=39902 for what follows._

..
is.c.R.
SUPREME COURT REPORTS
503
THE AMALGAMATED ELECTRICITY CO. LTD.
v.
N.S. BHATHENA AND ANOTHER
(A. K. SARKAR, K. C. DAS GUPTA AND RAJAGOPALA AYYAN·
GAR, JJ.J
Eiectricity Supply Act, 1948 (54 of 1948), ss. 57, 57A, 70 Sch.
VI Indian Electricity Aot, 1910 (9 of 1910). s. 3 Schedule
-Electricity
Rates-Enhancement-Powers
of
!icenseeLimits of such power-Legality of rates-J11.nsdiction of civil
court-Burden of proofThe appellant company was supplying electricity under ~
licence issued in 1932 by the Government of Bombay under the
Indian Electricity Act, 1910. The licence fixed the limits r·f the
prices which the appellant rould charge but these limits were altered by an order made by the Government on December 30, 1942,
acting under para XI of the Schedule to that Act, Due to the
conditions brought about by the seeond world war, the licensee
was permitted to add a surcharge not exceeding 33-1/3 % to the
existing charges. On September 30, 1946, tho Bombay Electricity
(Surcharge) Act, 1946, was passed which continued the surcharges
for a period of·three years. Though the Surcharge Act of 1946 expired on September 30, 1949, the appellant continued charging
the consumers at rates which included the surcharge and thi'
was sought to be justified by resort to the provisions' of the Electricity Supply Act, 1948, which came into force on September 10,
1948. On September 25, 1958, the appellant gave notice to its customers that with effect from November 1, 1958, it would charge
them at certain rates which the customers considered to be illegal and unauthorised on the ground that they were in excess of
those prescribed in the order of December 30, 1942. In the suits instituted on behalf of the consumers challenging the legality of
the rates levied by the appellant in excess of the maximum prescribed by the Government of Bombay in its order dated December 30, 1942, the defence of the appellant was that the charges
were well within the limits prescribed by the Electricity Supply
Act, 1948, which according to its contention. effected such a radical change in the method of determining the reasonable rate as
to completely supersede the rates and the maxima fixed under
the Electricity Act of 1910. The question was also raised as to
whether having regard to the provisions contained in ss. 57 and
57A of the Act of 1948 a civil court would have jurisdiction to entertain a suit challenging the legality of the rates levied by the
appellant.
·
Held-(i) The maxima prescribed by the State Government
which bound the licensee under the Indian Electricity Act. 1910.
no longer limited the amount which he could charge after the
Electricity Supply Act, 1948, came into force and that the licensee
had a statutory right to adjust his rates as provided by Part I of
Sch. VI of the latter Act.
(ii) Where a party challenged the legality oi the rates on the
ground
that they contravened the provisions
contained
in Sch. VI of the Act of 1948 there was no duty on the
licensee to prove that the rates were within the limits indicated
in Sch. VI and it was for the party alleging his right to relief to
prove his case.
1964
March JO
504
SUPREME COURT REPORTS
[1964],
196A
Per Sarkar, J.-The respondents were not entitled to canvass
TM. Amalgamakd in a civil court any question ao to the rates of a licensee being in
Elutrici<yOo. Lid. excess of the limit prescribed in para I of Sch. VI to the Act of
v.
1948. A civil court could not declare that the rates charged by a
N.S. Bha<lu:na licensee were illegal as they made its clear profit exceed the reaandAiwther
sonable return. If there ~as such excess. the relief could be obtained. only if'the Government set up a rating committee, a refund became due thereupon under the last proviso to para I of
Sch. VI or if relief was available under para Il(l) of that Schedule.
Sarkar, J.
Per Das Gupta and Rajagopala Ayyangar, JJ.-(i) There
could be unilateral adjustment of the rates by a licensee but such
an adjustment must not leave him with more than the reasonable return. Where the amount of reasonable return is exceeded,
para II of Sch. VI comes into play and the excess over the reasonable return is to be distributed in the manner !&id down in that
paragraph.
(ii) In view of the machinery that is provided for complaints
in the event of the licensee deriving more than a reasonable
return as contemplated by Sch. VI, the failure consciously to adjust the rates by working out the details so as to reach at the
same rate as·was charged previously did not constltute a failure
to adjust the rates as required by para I.
(iii) There being no express bar to the jurisdiction of the
civil court, its jurisdiction could not be held to be excluded in
respec't of such matters which were not assigned by s. 57A of
the Act of 1948 to the rating committee, or in regard to which
the rating committee could not afford
the consumer relief
aga,inst an infraction of a statutory provision by which he was
aggrieved.
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 590591 of 1963-Appeals from the judgment and decree dated
February 6, 1963 of the Mysore High Court in Second Appeals
Nos. 471and472 of 1960.
H. N. Sanyal, Solicitor-General, M. M. Gharekhan and
I.N. Shroff, for the appellant (in C.A. No. 590/1963).
H. N. Sanyal. Solicitor-General, M.C. Setalvad, M.M.
Gharekhan and I.N. Shroff, for the appellant (in C.A. No. 591 /
63).
Naraindas C Malkani, J.B. Dadachan/i, 0. C. Mathur and
Ravinder Narain, for the respondents (in both the appeals).
March 30, 1964. The judgment of DAS GUPTA and AYYANGAR JJ. was delivered by AYYANGAR J. SARKAR J. delivered a separate opinion.
SARKAR, J.-The appellant is a company carrying on
business as supplier of electricity in a certain area in the State
of Bombay. The respondents Bhathena and ,Tendulkar were
consumers of electrical energy supplied by the appellant. The
7 S.C.R.
SUPREME COURT REPORTS
505
present appeals arise out of disputes between these consumers
1964
and the appellant concerning the legality of the charges made The Amalga111ated
by the appellant for electricity supplied by it.
Electricity Co. Lid.
v.
The supply of electrical
energy is controlled by two
statutes and the questions involved in the present cases will
turn on them. These statutes are the Electricity Act, 1910 and
the Electricity (Supply) Act 1948. I will first consider the Act
of 1910. Section 3 of this Act gives power to the Government
to grant a licence to• a party to supply electrical energy in any
specified area and to prescribe in the licence the limits of
price to be charged by it for the supply. This section further
provides that the provisions in the Schedule to the Act would,
unless otherwise directed, be deemed to be incorporated in
the licence. Paragraph XI of that Schedule states that a
licensee would not be entitled to exceed the limits of price
fixed in his licence. This paragraph, however, gives power to
the Government to alter these limits on the recommendation
of an Advisory Board appointed under s. 35 of the Act. It
is not necessary to refer to the other provisions of this Act.
The appellant had been supplying electricity under a
licence issued in 1932 by the .Government of Bombay under
the Act of 1910. The licence fixed the limits of the prices
which the appellant could charge but these limits were altered
by an order made by the Government on December 30, 1942
under paragraph XI of the Schedule and stood thereafter as
follows:
A. For lights and fans annas -/5/- (= 31 nP.) per
unit and,
B.
For motive power, (i) upto 4 B.H.P. anna -/1 /.
(=0.06 nP.) per unit in addition to standing
charge of Rs. 2/- per month per B.H.P connected.
(ii) over 4 B.H.P. ·i:/9 pies (=0.05 nP.) per unit
in addition to the standing charge at the same rak
of Rs. 2/- per B.H.P. per month.
Due to the conditions brought about by the Second
World War, certain orders were made from time to time permitting the licensees to add a surcharge n0t exceeding 33!
per cent to the existing charges. Lastly, on September 30, 1946
an Act was passed by the Bombay legislature called the
Bombay Electricity (Surcharge) Act, 1946, hereinafter refer·
red to as the Surcharge Act, which continued the surcharge
specified therein for a period of three years. This Act expired
on September 30, 1949. It is said that even thereafter the appellant continued charging the. consumers at ra.tes which included the surcharge under the Surcharge Act, and, therefore.
at rates in excess of those fixed by the Order of December 30,
1942 and that was illegal. The appellant on its part claims
N.S. Bhathena
and AnnlMr
Sarkar, J.
506
SUPREME COURT REPORTS
[1964]
1964
that its charges after the expiry of the Surcharge Act were air
TA< ..A._malganuzted justified under the Act of 1948 the relevant provisions of
Electricity Go. Ltd. which came into force on September 10, 1948. This Act will
v.
N.S. Bhathena be referred to later.
and Another
Sarkar,
J,
The respondent Bathena commenced taking electricity
from the appellant sometime in
1954. Soon thereafter he
started disputes about the legality of the charges realised
from him by the appellant in respect of energy supplied for
purposes of motive power of over 4 B.H.P. and in 1955 filed
a suit against the appellant for refund of amounts alleged to
have been illegally collected from him in excess of the limits
fixed by the order of December 30, 1942, namely, an excess
standing charge of 0.69 nP. per B.H.P. per month over that
fixed by the Order of December 30, 1942 and a similar excess
unit charge of 0.01 nP. per unit. That suit is still pending and
with the disputes involved in it I am not concerned in this
judgment.
On September 25, 1958, the appellant gave notice to its
customers that with effect from November 1. 1958 it would
charge for motive power 0.09 nP. per unit plus a standing
charge of Rs. 2.69 per B.H.P. per month. The unit charge
mentioned in the notice was in excess of that prescribed
in the order of December 30, 1942 by 0.04 nP. per unit. There
is no dispute that this notice revised the unit charge existing
at its date but it seems that it did not enhance the then existing standing charge. The notice gave rise to further disputes
as a result of which two suits were filed against the appellant
on March 31. 1959 in the court of the Civil Judge, Belgaum.
The first of these suits was filed by the respondent Bathena
acting for himself and all other consumers of electricity supplied by the appellant for purposes of motive power over 4
B.H.P. for the following reliefs:
"(a) That a declaration be granted by this Hon'able
Court thai the standing charges of 2.69 nP. per
B.H.P. per month and the excess sum of 0.04 nP.
per unit of energy consumed, for motive power
whether oonnected or otherwise, are illegal and
unauthorised, inoperative and ultra vires of the
Defendant company and the Plaintiff is not bound
to pay the same and that the Defendant-Company
have no 'authority to control or interfere in the
supply of electric energy or its use, and that the
restrictions imposed in Notice dated 25-9-58 are
illegal, bad in law, and,
(b) an injunction restraining the Defendant-Company,
its servants, its agents or its representatives from
levying and recovering the excess and illegal
charges, (such as standing charges and per unit
7 S.C.R.
SUPREME COURT REPORTS
507
of consumed energy at 0.04 nP.) from the plain1964
tiff, by means of any coercive measures and from The Amalgamai.
interfering or controlling with the electric supply".ElectrieityOo.Ltd.
The other suit was filed by the respondent Tandulkar also
s •·
N . . Bhathena
in a representative capacity in respect of the charge of 0.37
andAnother
nP. per unit for electricity supplied for lights and fans, and it
.
1. f
Sarkar,J.
sought the followmg re 1e s:
"(a) That a declaration be granted by this Hon 'able
Court that the excess sum of 0.06 nP. per unit of
energy consumed for lights and fans, are illegal
and unauthorised, inoperative and ultra vires of the
Defendant-Company and the plaintiff is not bound
to pay the same.
(b) An injunction restraining the Defendant-Company
its servants, its agents or its representa.tives from
Iexying and recovering
the excess and illegal
charges, i.e. 0.06 nP. per unit of consumed energy
from the plaintiff by means of any coercive measures and from interfering or controlling with the
electric supply".
Various persons were on their own applications later added as
plaintiffs in these suits.
The suits were decreed by the trial Court but that decision
was reversed on appeal by a District Judge. On second appeal,
however, the High Court oj Mysore set aside the decision of
the learned District Judge and restored that of the trial Court.
The present appeals are against the judgment of the ·High
Court.
I will first take up the suit relating to the charges for
motive power. To clear the ground it may be stated that this
suit is not concerned with any charge made prior to the date
that it was filed. As earlier stated, it asks for a declaration and
an injunction. An injunction cannot of course be in respect
of a past period and the declaration sought must also, therefore. be confined to the future. In anv case, since the declaration is sought in respect of the charges as revised by the said
notice as from November I, 1958 it is clear that no question
as to the legality of any charge made before November I, 1958
was sought to be raised. It would have been noticed that the
suit was concerned with disputes about two charges, namely,
the unit charge of 0.09 nP. per unit fixed by the notice of
September 25, 1958 and the standing charge of Rs. 2.69 per
B.H.P. per month.
I will first consider the dispute about the unit charge.
Could the appellant enhance the charge? It is not disputed
that a licensee can on his own enhance his charges upto the
maximum limit fixed in the licence or otherwise fixed by the
Government. The dispute is as to the right to enhance them
1964
Tiie Amalgamated
Eltdri<ily Co. Ltd.
T.
N.S. BhatheM
an:l.A.nofher
8ar'/v.Jr, J.
508
SUPREME COURT REPORTS
[1964]
beyond that limit and in this judgment I will be _discussing
such enhancement cnly. It is not in controversy that under the
Electricity Act of 1910 it could not do so but as already
stated, the appellant bases its claim to enhance the charge on
the Electricity (Supply) Act, 1948 as amended by Act 101 of
1956 with effect from•December 30, 1956. It will be noticed
that this amendment was in force when the revised rate came
into force under the notice of September 25, 1958. The relevant provisions of this Act so amended are these :
S. 57. "The prO'Visions of the Sixth Schedule and the
Seventh Schedule shall be deemed to be incorporated fo the licence of every licensee, not being a
local authority-
(a) in the case of a licence granted before the com·
mencement of this Act, from the date of the
commencement of the licensee's next succeeding--
year of account; and.
(b) in the case of a licence granted after the commencement of this Act, from the date of the
commencement of suply,
and as from the said date, the licensee shall comply 'IVith
the provisions of the said Schedules accordingly, and any pr()-
visions of the Indian Electricity Act, 1910 (9 of 1910), and the
licence granted to him thereunder and of any other Jaw, agreement or instrument applicable to the licensee shall, in relation
to the licensee, be void and of no effect in so far as they are
inconsistent with the provisions of section 57 A and the said
Schedules".
S. 57A. "(1) Where the provisions of the Sixth Schedule and the Seventh Schedule are under section
57 deemed to be incorporated in the licence of any
licensee, the following provisions shall have effect
in relation to the said licensee, namely:-
(a) the Board or where no Board is constituted under
this Act, the State Government-
(i) may, if satisfied that the licensee bas failed to
comply with any of the provisions of the
Sixth Schedule; and,
(ii) shall, when so requested by the licensee in
writing,
constitute a rating committee to examine the licensee's charge.~
for the supply of electricity and to make recommendations in
that behalf to the State Government:
*
*
*
*
•
(c) a rating committee shall ............ report to the
State Government .................. making recommendations regarding the charges for electricity
which the licensee may make ............ .
7 S.C.R.
SUPREME COURT REPORTS
509
(d) within one month after the receipt of the report
1Yt14
under clause (c), the State Government . . . . . . .. . .. Tht A~
inay ............... make an order in accordance Electricity Go. Ltd.
therewith fixing the licensee's charges for the supN 8
;hathena
ply of electricity ......... and the licensee shall
~,;,iAnother
forthwith give effect to such order".
Sixth Schedule
I. "Notwithstanding anything contained in the Indian
Electricity Act, 1910 (9 of 1910), and the provisions in the licence of a licensee, the licensee shall
so adjust his rates for the sale of electricity whether
by enhancing or reducing them that his clear prcfit
in any year of account shall not, as far as possible,
exceed the amount of reasonable return;
•
•
•
•
•
how the first paragraph of the Sixth Schedule to the Act
of 1948 clearly gives a licensee the power to adjust and therefore also to enhance his rates on his own. It, however, fixes
a limit for the enhancement and that. is, so as not, as far as
possible, to make his "clear profit", for the year exceed the
amount of "reasonabie return". The methods of determining
"clear profit" and "reasonable return" are stated respectively
in els. (2) and (9) cf paragraph XVII of the Schedule but it
will not be necessary for me to go into their details. Now under
paragraph I of the Sixth Schedule the rates can be enhanced "Notwitllstanding anything contained in the Indian
Electricity Act, 1910 (9 of 1910), and the provisions in
the licence of a licensee". Nothing to the contrary, therefore,
contained in the Act of 1910 or the licence can make the enhancement of the rates by the licensee in terms; of this paragraph illegal. It would follow that the · pqwer under paragraph I of the Sixth Schedule would justify ~ enhancement of
.the rate beyond that fixed by the licence or any order of the
Government. This seems to me to be perfectly plain. It will
be remembered that paragraph XI of the Schedule to the Act
of
1910 prohibited a. licensee from charging a rate in
excess of the maximum fixed by the licence:· That provision,
howeyer, was repealed by Act IOI of 1956. This was obviously
done because it was realised that paragraph I of the Sixth
Schedule to the Act of 1948 made the prohibition in paragraph
XI of the Schedule to the Act of 1910 quite ineffective. Then
we have s. 70(1) of the Act of 1948 which provides that
"No provision of the Indian Electricity Act, 1910 (9 of 1910),
or of any rules ma.de thereunder or of any instrument having
effect by virtue of such law or rule shall, so far as it is inconsistrnt with any of the provisions of this Act. have any effect".
This provision also supports the view that the power t(}
Sarkar,J.
.510
SUPREME COURT REPORTS
[1964]
1964
enhance the rates given by the Act of 1948 is not in any way
The A-;;;;;lgamateil affected by anything in the Act of 1910 or the licence granted
Blectrieity. Go. Ltd under it.
v.
:N.8. Bhathena
andAnotlter
Sarkar,J.
Learned counsel for the respondents, however, first contended that the power to enhance cannot be exercised by the
iic'cnsee on its own. If, it wants an increase in its rates it has
first to ask the Government under s. 57 A of the Act of l 948 to
constitute a rating committee. This contention appears to
me to be entirely unfounded. No doubt a licensee can ask the
Government to constitute a rating committee under that section and if the Government does so and fixes rates on the
·b~sis of the recommendations of that committee, the licensee
would be bound by such fixation of rates. But I find nothing
in s. 57 A or anywhere else in the Act of 1948 to lead to the
view that the licensee cannot increase his rates except after a
rating committee has recommended such increase and the Government has permitted it.
Such a view would largely
render paragraph I of the Sixth Schedule nugatory. Nor do l
think that there is any conflict betweens. 57A and paragraph
J as was contended by the respondents. Quite clearly s. 57 A
giYes a licensee the power to call for the constitution of rating
committee. If he does so. be does not take the risk of
Ii ~ing an enhanced rate on his own with the possible consequences of having to refund part of the amounts collected
under provisions to which reference will be made later. That
seems to be the only reason why the licensee has been
given the right to ask for the constitution of a rating commit~
If he does not mind taking the risk of these consequences,
J find nothing in the Act of 1948 requiring him to ask for the
constitution of a rating committee before he can proceed to
enhance the rates on bis own.
Learned counsel for the respondents then relied on subs. (2) of s. 70 of the Act of 1948 which states that "Save as
otherwise provided in this Act, the provisions of this Act shall
be in addition to, and not in derogation of, the Indian
Electricity Act, 1910". He contended that thjs showed that an
attempt· has to be made to harmonise the two Acts and, therefore, the power to enhance the rates given by the Act of 1948
must be confined to an enhancement upto the maxima
limits specified in the Iicel}ie granted or any order made
by the Government. I am wholly unable to agree that subs. (2) of s. 70 of the Act of 1948 requires the two Acts
to be harmonised. In fact sub-s .. m of s. 70 of the Act of
1948 provides that when there is inconsistency between the
two Acts, the earlier Act is not to have effect. There can be
no question of harmonising unless there is inconsistency and
sub-s. (\) says what is to happen in case of inconsistency;
it is that one is to give way to the other and not that
'1 S.C.R.
SUPREMJ<~ COURT REPORTS
511
an allemprshould be made to harmonise the two. Furthermore
1964
sub-s. \2.) of. s. 70 cl the Act of 1948 says that "Save as otherTheAmalgammuf
wise provided in this Act" the later Act is not to be read as Electricity Co. Ltd;
in derogation of the earlier Act. When, therefore, it is otherN 8 B/;;;th
wise pro~ided in the Act of 1948, this Act might be read as
·.;.,lAno:£:
in derogation of the Act of 1910. Now s. 57 of the Act of
1948 and paragraph I of the Sixth Schedule to it clearly pro8 • i•r,J
vide that the provisions therein contained are to override the
provisions of the earlier Act. It would thus be against the
express terms of the Act of 1948 to .attempt to harmonise the
power to enhance the rates given to the licensee by it with any
of the provisions of the licence or the Act of 1910.
Lastly, learned counsel for the respondents relied on
Babula! Chaganlal Gujerathi v. Chopda Electric Supply Co.
Ltd.('\ to support his contention that under paragraph I of
the Sixth Schedule to the Act of 1948 a licensee had the power
to enhance the rates only upto the maxima limits specified
in the licence er Government's order but not beyond those
limits. It was no doubt so decided in that case but then it
turned on paragraph I ofthe Sixth Schedule as it stood before
the amendment in 1956. Before the amendment, that paragraph did not contain the words "Notwithstanding anything
contained in the Indian Electricity Act, 1910 (9 of 1910! and
the provisions in the licence of a licensee". It sems to me
plain that these words have made a material change in the
provision and as it now stands, it cannot be said that the enhancement permitted must be restricted to the limit fixed in
the licence or an order by the Government. The decision cited,
therefore, is of no assistance in interpreting paragraph I of the
Sixth Schedule as it stands after the amendment in 1956.
Whether Chhaganlal's case(') was correctly decided in view
of the terms of paragraph I as it stood before the amendment
is not a question which arises for determination in this case
and on that question I express no opinion. I think that it must
be held on the terms of paragraph I of the Sixth Schedule
to the Act of 1948 as it stood at the time of the notice
that a liomsee had power to enhance the rates and such power
was not 1imited to an enhancement up to the limits fixed by
the licence or otherwise by any order of the Government.
On the question whether under paragraph I of the Sixth
Scheclul.e to the Act of 1948 a licensee could enhance his
rates beyond the limits fixed by the Government or in the
licence the High Court took the same view as I have done
and held that the respondents could not claim any relief
solely on the ground that the rates charged had exceeded
those limits. The High Court, however. observed that the
appellant had failed to establish that it had revised its rates
-----------~------------
'') I.L.R. [1955] Born. 42.
1964
The A.malgam.ated
Electricity Co. Ltd.
v.
N.S. Blvtthena
and Another
Sarkar, J.
512
SUPREME COURT REPORTS
[1964]
as provided by the Act of 1948 before its amendmen! in
1956 and, therefore, held tha.t the appellant must be taKen
to have illegaliy continued the surcharge which it was levying under the Surcharge Act, 1946 even after its expiry
on October. 1, 1949. It is somewhat difficult to understand
these observations. As I have earlier said, no question as
to the legality of any charge made before the suit or at
any rate, before November 1, 1958, arises in this case.
Therefore, even if the appellant had not revised its charges
prior to the amendment. no grievance on that account can
be made on the plaint on which the present suit is based.
Furthermore I do not see why the burden of proving that
those charges were the charges duly revised under the Act
of 1948 prior to its amendment should be upon the appellant. No issue on this question also appears to have been
framed by the trial Court a.t all. Even the plaint does not say
that what the appellant had done was to continue an illegal
charge. I repeat that whether the charges made before Novem·
ber 1, 1958 were illegal or not, is not a question that arises
for decision in these cases. Admittedly the notice of September 25, 1958, revised the unit charge and, therefore, in fact
there was no continuation of an earlier illegal charge, assuming the earlier charge to have been illegal.
The High Court, however, also held that the appellant
was under a statutory duty under the Act of 1948 to adjust
its rates so that its ciear profit did not exceed the amount of
reasonable return and it had not established that it had done
so after the Act was amended, nor had it proved that the enhancement mentioned in the notice of September 25. 1958
would not result in its clear profits exceeding the amount of
reasonable return. Lastly, the High Court observed that "even
otherwi.se the enhancement is the continuation of the illegal
charges and that by itself is invalid". It was on these grounds
that the High Court decided the cases in favour of the respondents. I am unable to agree with the High Court on any of
these points.
I will take the last point first. With respect to the learned
Judges of the High Court, I do not understand what exactly is
meant by the enhancement being the continuation of the
illegal charge. That there was a revision of the rates by
the notice of September 25, 1958 is the respondent's own
case in the plaint. I will assume that the revision raised the
rates to the figures that were chargeable under the expired
Surcharge Act of 1946. But the identity of the figures cannot
by itself make the enhancement illegal if it was legal under
the Act of 1948 as amended. Indeed as there was admittedly
a revision there was really no continuation of a previous charge.
This point must, therefore, be rejected.
'
~./
7 S.C.R.
SUPREME COURT REPORTS,
513
The other points on which, as stated above. the High
1964
Co.urt based itself, appear me to. be eqaally untenable. These T1" Amalgamated
pomts are really one and that 1s whether the appellant hasElectricityOo.Ltd.
established that the revised rate fixed by the notice of
"•
September 25, 1958 would not make its clear profit exceed
N.~~d
11~~~,:
the amount of reasonable return. As already stated, it is
admitted in the plaint that there was a revision of the unit
Sarkar, J.
charge by the notice. So it is not in dispute that after the
amendment of paragraph I of the Sixth Schedule the appellant had revised its unit charge. I am unable to agree that the
onus of establishing that the revision did not make the appel-
· 1ant's clear profit exceed the amount of a reasonable return
should be on the appellant. I think that onus should be on
the respondents because it is they who allege that "the rates
mentioned by the defondant are exceeding the reasonable
return". The more serious objection to this point, however,
is that it does not seem to me that it is competent for a Civil
Court to go into the question whether the enhanced rates are
illegal because they take the clear profit beyond the amount
of the reasonable return, and to give any relief on that basis.
The reasons for this view will now be stated.
Paragraph I of the Sixth Schedule to the Act of 1948
no doubt prohibits the licensee from enhancing his rates beyond
a figure which would make his clear profit exceed the amount
of reasonable return. The Act, however, at the same time provided the consequences of a breach of the prohibition. Thus
the fourth and the last proviso in paragraph I of the Sixth
Schedule to the Act of 1948 states, "Provided further that if
the rates of supply fixed in pursuance of the recommendations
of a rating committee constituted under section 57 A are
lowef' than those notified by the licensee under and in
accordance with the preceeding proviso,
the licensee shall
refund to the consumers the excess amount recovered by him
from them". One consequence of the breach of the prohibition, therefore, is the liability to refund the difference between
the enhanced rate which has to be notified under the third
proviso and that fixed by the rating committee. But a rating
committee may not have been constituted for it is constituted
only where the licensee wants it, or the Government is entitled to constitute it under s. 57(1) of the Act of 1948. Where
a rating committing is not constituted, there is no liability to
refund· but the provisions of paragraph II of the Schedule
would then apply and this equally whether there is an enhancement of the charge under paragraph I and where there
is none. That paragraph is in these terms:
Paragraph 11 . . (!) H the clear profit of a licensee in any
year of account'is in excess of the amount of
L/P(D)ISCI-17
1964
The .Amalgamated
Eleetrieity Co. Ltd.
v.
N.S. Bhathena
and
A notlier
Sarkar, J.
514
SUPREME COURT REPORTS
[19641
reasonable return, one-third of such excess, not
exceeding five per cent of the amount of reasonable return, shall be at the disposal of the undertaking. Of the balance of the excess. One-half
shall be appropriated to a reserve which shall be
called the Tariffs and Dividends Control Reserve
and the remaining half shall either be distributed
in the form of a proportional rebate on the amounts
collected from the sale of electricity and meter
rentals or carried forward in the accounts of the
licensee for distribution ,to the consumers in future,
in such manner as the State Government may
direct.
This provision shows that where there was a revised rate
and that rate exceeded the limit prescribed in paragraph I, a
consumer might get a refund of a part of the excess but that
too only at the discretion of the government. l1e had clearly
no right to any refund even in such a case. Quite obviously if
the consumer could obtain refund of the whole excess as determined by a civil court, these provisions would be completely
meaningless. Equally obviously if a civil court could decide
that the charne m3de had exceeded the limit and was. therefore. illegal, it could also direct a refund of the amount illegally realised. Therefore, it seems to me clear that the question
of a brea,ch of the terms of the first part of paragraph I of the
Sixth Schedule was not intended to be canvassed in a civil court;
a civil court has no power to decide that question ncr can it
give any relief in respect thereof. Indeed if this were not so, the
consequences would be most anomalous. If the Civil Court
could decide the question whether the enhanced rate resulted in the clear profit exceeding the amount of the reasonable return, then it is ,onceivable that different courts might
come to different conclusion on different
materials placed
before them and the result of that would be to destroy the uniformity of rate chargeable by a licensee. Such a situation could
not have been intended. Again the Act of 1948 did not give
to the consumer the right to have a rating committee constituted. This was obviously because it would be impossible to
work a public utility concern like an electric supply business if every consumer could get a rating committee to go into
the question of rates. There may then be a continuous succession of rating committees and there would be no fixity of the
rates chargeable. The convenience of all had to be kept in
mind. Power was hence given only to the Government to take
steps when, a licensee committeed a breach of its obligations. Therefore, in my opinion, the High Court was in
errot in holding that the appellant should have shown that the
enhancement did not result in its clear profit exceeding the
amount of reasonable return and in deciding in favour of the
7 S.C.R.
SUPRE.ME COURT REPORTS
515
respondents on that basis.
I hold that the respondents were
1964
not entitled to canvass in a Civil Court any question as
The Amalgamal<4
to the rates of a licensee being in excess of 1'\e Limit pre>- Electricity Co. Lid.
cribed in paragraph I of the Sixth Schedule to the Act of N.S. vBnmhena'
1948. A Civil Court could not declare that the rates charged
and Another
by a licensee were illegal as they made its clear profit exceed
the reasonable return. lf there was such excess. the relief could
Sarkar, J.
be obtained only if the Government set up a. rating committee,
a refund became due thereupon under the last proviso to paragraph I of the Sixth Schedule to the Act of 1948' or if relief
was available under paragraph II (!) of that Schedule.
Then it was said that the revision by the notice of September 25, 1958 was bad in any case because under the third
proviso to paragraph I in the Sixth Schedule there could be
no revision of rates under that paragraph unless a notice in
writing of the intention to enhance was given by the licensee
to the Government or to the State Electricity Board and
no such notice was in fact given. That proviso no doubt requires a notice to be given but the contention is none the less
clearly without foundation for. as I shall immediately show
such a notice was in fact given. Now Ex. 62 is a copy of a
letter received by the appellant from the Secretary of the State
Electricity Board and it refers to a letter "No. AMAL/BEL/
C-2, dated 7-8-1958" written by the appellant to the Board and
the letter last mentioned, which is Ex. 60, is the notice
by the appellant to the Board expressing its intention to
revise the rates. It is quite clear, therefore, that notice had been
given to the Board of the proposed enhancement. This point
it may be stated does not seem to have been taken in the High
Court.
It was also said that the notice was bad as it did not
state that the standing charge was being increased from Rs. 2 /-
'to Rs. 2.69 per B.H.P. per month. This again is an unfounded
contention for the standing charge had not been increased by
the notice at all. Indeed the plaint itself in paragraph 5 states
that prior to November !, 1958 the appellant had been levying standing charges at the rate of Rs. 2.69. So there was no
enhancement of this charge by the notice and, hence no question of giving any notice of any enhancement of the standing
charge arises.
Lastly, it was said that in the notice to the consumers
it was stated that the power supply would be restricted between certain hours but the notice to the Government did not
mention this restriction in the suppl)': The notice to the consumers no doubt stated that the revised unit charge would be
in respect of restricted hours of supply but that does not
make the contention of any substance. There was nothing in
the notice to show that the supply would be restricted. Further
L'P(D)ISCI-17(a) •.
..
516
SUPREME COURT REPORTS
[1964)
1964
it is neither alleged in the plaint nor does it appear from any-
,.,.. Amalgamated thing on the record. that there wa~ in fact ~ny res!riction in
EleelricityOo. Ltd. the supply. That being so, the failure to give notice to !he
N 8
11ia11it.
Government of the restriction in the supply is wholly 1m-
·a;..,Anotkuna material. I have not, further been shown any provision under
which notice to the Government of a restriction in the supply
Sarkar, J.
of electricity is necessary. It is certainly not required by anything in paragraph I in the Sixth Schedule to the Act of 1948.
I am, therefore. of the opinion that there is no reason to
hold that the appellant was not entitled to levy the charge
mentioned in its notice of September 25, 1948.
I come now to the standing charge of Rs. 2.69 per B.H.P.
per month. As in the case of fue other charge and for the
same reasons, I am not concerned with any qnestio!l as to its
legality in respect of any period prior to the suit. It has to be
remembered that there is no complaint that this rate had been
increased by the notice. Lastly, as already sta.ted, a Civil Court
cannot go into the question whether a charge is illegal inasmuch as it has been revised to an amount exceeding the limit
mentioned in paragraph I of the Sixth Schedule to the Act of
1948 .. The only ground on which this charge is questioned is
put in paragraph 23 of the plaint in these words: "any standing charges along with the usual Unit Charges is against equity
and law, it being double charge for the industry to pay for
the enrichment of the defendants"; the legality of the standing charge is not challenged on any other ground. Now where
a charge is permitted by a statute no question of its being inequitable can be raised in a Court of law, neither can the
question whether the charge is in excess of the limit justified
by the statute be canvassed in such a Court. Therefore. the
respondents cannot in these cases challenge the legality of
the standing charge.
What l have said so far disposes of the appeal in the suit
concerning' the rates charged for the supply of motive power.
That appeal must, therefore, be allowed.
The appeal in the suit with regard to the charges for light
and fans can be disposed of substantially on the grounds earlier
discussed. The High Court also placed its decision in respect
of this matter on the same ground on· which it had disposed
of the other matter. The only point made in this case is that
the appellant had been wrongfully charging a rate in excess
of the limit fixed by the order of December 30, 1942 by 0.06
nP. per unit. On this basis a declaration that the excess charge
was illegal was sought and also an injunction restraining the
appellant from levying it. It will be observed that in this case
there was no notice given by the appellant of any increase in
the charge. No question of the charge being illegal by reason
of any enhancement, therefore, arises. The only complaint is
•
7 S.C.R.
SUPREME COURT REPORTS
517
that the charge is illegal as it is in excess of the limit fixed by
1964
the Government. As I have said, under paragraphs I and II of The Amalgamated
the Sixth Schedule to the Act of 1948 a licensee can charge Eleetridty Go.