Jindas Oil Mill & Ors. v. Godhra Electricity Co. Ltd.

Hegde, J. Common questions of law arise for decision in these appeals, by cei:ificate. The suits fro~ which these appeals arise have been considered together and decided by common judgmems both in the High Court as well as in the courts below. It is con-vemient to do so in this Court as well.

The smls in questions are representative suits. The plaintiffs-appellants who are consumers of electricity in the Godhra area sued the respondent-company on behalf of all the consumers in that area ;ecking to restrain the respondent from enforcing the enhanced charges sought to be collected from the consumers of power used for lights and fans as well as of motive power.

The facts leading to these appeals may now be stated. On November 19, 1922, the then Government of Bombay granted a licence under the Indian Eleclricity Act, 1910 to a concern called Lady Sulochna Chinubhai & Co. authorising it to generate and supply electricity to the consumers in Godhra area. Clause 10 of the licence prescribed the maximum charges that the licensee could levy for the power supplied. The respondent is the succes-sor of the said licensee. After the Electricity (Supply) Act, 1948 (to be hereinafter referred to as the Supply Act) came into force, a rating committee was constituted under s. 57(2) of the Supply Act at the request of the respondent on January !9, 1950. On the recommendation of that committee, the Government fixed wirh effect from February I, 1952, the following charges for the power supplied : '

(i) 0-7-9 pies per unit for th~ electricity supplied for

lights and fans with a minimum of Rs, 3/- per month per installation and (ii1 for motive power at 4 annas per unit with a

minimum of Rs, 4-8-0 per month per installa-tion, The Supply Act was amended in 1956, The respondent incre."Lsed the charges for motive power from January 1, 1963 to 35 NP, per unit with a minimum of Rs, 7 /- per month for every installa-tion, On June 22, 1963, the rates for lights and fans were in-creased with effect from July I, 1963 to 70 NP. per unit with a minimum of Rs, 5/- per month for every installation, The con-tention of the appellants is that the respondent was not compe-tent to enhance the charges in question without the matter having been considered by a rating committee, Their suits to restrain the respondent from levying the proposed increased charges were decreased by the trial court Those decrees were affirmed by the first appellate court as well as by a single judge of the Gujarat High Court in second appeals but the appetlate bench of the Gujarat High Court reversed those decrees and dismissed the suits holding that under the Supply Act' as amended-in 1956 the res-pondent has a unilateral right to enhance the charges subject to the conditions prescribed in the VI ScheduJe to that Act It is as agail15t those decisions these appeals have been brought. Civil Appeal No. 15 of 1969 relates to the enhancement of charges for electricity power for lights and fans and Civil Appeal No. 16 of 1969 relates to the enhancement of charges for the motive power.

The only question that ·arises for decision in these appeals is n whether under the provisions of the Supply Act as amended in

1956, the respondent was competent to unilaterally enhance the charges.

In the~e appeals we are not concerned with the provisions of the Electricity Act, 1910. There is no disp11te as regards the charges fixed by the Government with effect from February 1, 1952, under s. 57(2)(c) of the Supply Act on the basis of the r!'COlllmendation made by the rating committee. The appellants admit their liability to pay enhanced charges that may be fixed by the Government on the basis of any recommendation by a freshly appointed rating committee. They merely challenge the respon-dent's right to unilaterally enhance the charges. According to the appellants they have a vested right to be governed by the charges fixed in 1952 until the same is revised by the Govern-ment on the basis of the recommendation of a rating committee. It was urged on their behalf that the amendments made in 1956 do not affect the charges fixed in 1952 and they continue to rule till altered by the Government in accordance with law. The respondent repudiates those contentions. It denies that the appellants have any vested right in the charges fixed. It was urged on its behalf that the amendments made to the Supply Act in 1956 have substantially altered the scheme as regards levying charges; it is now open to a licensee to alter the charges fixed by the Govermnent ·unilaterally subject to the conditions prescribed in s. 57(A) and in Sch. VI of the Supply Act. We may mention at this stage that even according to the appellants the charges that may be fixed by the Government now on the basis of the recom-men~ation of a rating co.mmittee can be unilaterally altered by the licensee after the penod fixed in the Government order in accordance with cl. {e) of s. 57(A){l), expires.

. In on;ier t~ ctecide the point in controversy, we have to take mto cons1derallon t;he relevan! provi.sions of the Supply Act as it stands now and as 1! stood we pnor to tis amendment in 1956. For the s.~e of convenience shall set out side by side the relevant proV1S10ns.

The Supply Act u ii llood before The Supply Act as amended in 1956 1956.

S, 57. Llcenace·s charges to consu-S. 57. The Provisions of tho Slxtlt

men. Schedule and the Seventh Scbodul<> (I) The provisions of the Sixth shall be deemed to be incorporated

Schedule and the Table •P-in the licence of every licensee. not pended to the Seventh Scho-being a local authority :- dule shall be deemed to be ( •) in the case of a licence granted incorporated in the licence of beore the commencement of. evtrf licensee, not being a this Ac~ from the date of the local authority, from the dale commencement of the Jicea. .. of the commencement of the see's next succeeding year of lcense-e's next mcceeding year account; and of account. and from such date the licensee shall comply ( b) in the case of a Ucencee graa-therewith accordingly and any ted after the commencemeat provisions of such licence or of this Act, from tho date Ill ot the Indian Electricity Act, the commencement of suJ)l'ly, 1910 (LX of 1910), or any and as from the said date, the other law, agreement or in-licensee shall comply with tho atrurnent applicable to the provisions of the said Sche-licengee in relation to the dules accordingly, and aay

~iall, licensee, be void and of no provisions of the Indiaa effect in so far as they are Electricity Ac~ 1910, and tbe inconsistent with the provi-the licence granted to hi• sions of thiS section and the thereunder and of any other said Schedule and Table. Jaw, agreement or instrumCllt applicable to the licensee Shill, (2) Where the provisions of the in relation to the licensee, be

Sixth Schedule and the Table void and of no effect in so far appended to the Seventh Sche-as they are inconsistent with dule are under sub-section ( 1) the provisions of section S7 A deemed to be incorporated in and the said Schedules. the licence of any licensee.

1he following provisions shall S. 57(A) (!): wh•rethepro-ilavc effect in relation to the visions of the Sixth Schedale said licensee, namely :- and the Seventh Schedule are

The Board or where no under section S7 deemed to (a) be incorporated in the licence

Board is constituted under of any licensee, the following this Act, the Provincial Government, may, if it provision~ shall have effect in iS satisfied that the licen-relation to. the said licenaec eee bas failed to comply namely:- with any provisions of (•) the Board or where no Board the Sixth Schedule and is constituted under this Act. shall when requested so the State Government-to do by the licensee. (i) may, if satisfied that tbe constitute a rating com· licensee has failed to mittee to examine the comply with any of the licensee's charges for the provisions of the Sixth supply of electricity and Schedule, and to recommend thereon to (ii) shali when so requoated the Provincial Govern-by the liceruec in writing ment; conttitute a rating com-Prol'ided t.'iat no rating com .. mittee to examine the mittee shall be constituted in licensee's charges for the respect of a licensee within three supply of electricity and years trom the date on which to make reeommenda. such a committee has reported tions in that behalf to the in respect of that licensee, unless State Government :

the Provincial Government de-Provided that where it is pro· clares that in its opinion cir-pooed to constitute a rating com· cumstances bavo arisen reador-mittee under this section on account ing the orders passed on the of. the failure of the licensee to recommendation of the pre-coinply with any provisions of the vi,om: rating committee unfair Sixth Schedule. such committee to the licensee or any of his shall not be constituted unlei:s the consumers. licensee has been given a notice ( b) The rating committee shall in writing of thirty clear days

after giving the licensee a (which period. if the circumstances reasonable opportunity of so warrant may be extended from being heard and after taking time to time) to show cauSe against into consideration the effi-the action proposed to be taken : ciency of operation and Provided further that no such management and the poten-rating committee shall be constitu. tialities of his undertaking ted if the alleged failure of the report to the Provincial Iicen*e to comply with any pro-. Government making recom-visions of the Sixth Schedule raises mendations (and giving any dispute or difference as to the reasons therefore) regard-interpretation of the said provisions ing the charges for electri-or any matter arising therefrom city which the licencee may and such difference or dispute has make to any clas~ or classes been referred by the licensee to ot consumers so however the arbitration of the Authority that the recommendations under paragraph XVI of that Sche-arc not likely to prevent dule before the notice referred to Lie licensee from earning in the preceding proviso was given clear profits sufficient when or so referred within the period taken with the sums avail-i~ of the said notice :

able in the Tariffs and Dividends Control Reserve Provided further that no rating to afford him a reasonable committee shall be constituted in return during his next respect of a licensee within three succeeding three year!: of years from the date on which such account if the potentialities a committee has reported in res))Cct of the undertaking of the of that licensee. unless the State 1icensee, with efficient Government declares that in its operation and management, opinion circum!.1ances have arisen so perm.it. rendering the orders passed on the recommendations of the previouo; (c) Within one month after the rating committee unfair to the

receipt of the report under licensee or any of the consumers : clause (b) the Provincial Government shall cause the ( b) a rating committee under repart to be published in clause (a) shall,- tho official Gazette. and J i) where such committee is to may at the same time make he constituted under sub· an order in accordance clause (i) of that clause. be therewith fixing the licen-constituted not later than ~ee's charges for the supply three months after the

of electricity with effect expiry of the notice referred from such date, not earlier to in the first proviso to than two months after the tha~ clause :

date of publication of the where such committee is to report, as may be fi'(>ecified tii) in the order; and the licen-be constituted at the request of the licensee, be constituted see shall forthwith . give within three months of effect to such order : the date of such request; Provided that nothing in this clause shall be deemed to pre- (c) a rating committee shall, after vent a licensee from reducing at giving the licensee a reason-any time any charges. so fixed. able opportunity of being heard and after taking into THE SIXTH SCHEDULE con!tideration the efficiency of 1. The Licensee shall so adjust his operation and management and

rates for the &"ale of' electricity the potentialities of his under-by periodical revision that his taking, report to the State clear profit in any year shall not Government within three as far as possible exceed the months from the date of its amount of reasonable return : constitution, making recom-mendations wit!l reasons Provided that the licensee shall therefor, regarding the charges not be considered to have failed for electricity which the so to adjust his rates if the clear licensee may make to any class profit in any year of account or classes of conr,'umers so, has not exceeded the a1nount of however. that the recommen. tbe reasonable return by more dations are not likely to pre. than thirty per centum of the vent the licensee from earning amount of the reasonable return. clear profit, sufficient when II. (I) If the clear profit of a taken with the sums available

licensee in any year of in the Tariffs and Dividends account is in excess of the Control Reserve to afford him amount of reasonable a reasonable return as define;d return in the Schedule during S~th one-third of such excess. not his next succeeding three years exceeding 7 1/2 per cent of of account:

the amount of reasonable i return shall b;e at the dis-Provided that the State Govern~ posal of the undertaking. rnent may, if it ~o deems nece~ary, Of the balance of the ex-extend the said period of three cess. one half r,'hall be ap-months by a further period not propriated to a reserve exceeding three monthS' within which shall be called the which the report of the rating Tariffs and Dividends Con-committee may be submitted to trol Reserve and the remain-it;

ing half shall either be dis- (d) within one month after the tributed in the form of a receipt of the report under proportionabte rebate on the clause (c), the State Govern-amounts coHected from the ment shall cause the report to sale of electricity and meter be published in the Official rentals or carried forward Gazette, and may at the same in the accounts of the licen-time make an order in accord .. see for distribution to the ance therewith fixine; the consumer!t in future, in licensee's charges for tbc such manner as the Pro-supply of electricity with vincial Government may ~ffect from such date, not direct earlier than two months or later than three months, after (2) The Tariffs and Dividends the date of publication of the

Control Reserve shall be report as may be specified in available for disposal by the the order and the licensee shall licensee only to the extent forthwith give effect to such by which the clear profit is order;

less than the reasonable return in any year of ( e} the charges for the supply of account. electricity fixed under clause On ( d) shall be in operation for 3) the purchage of the such period not exceeding

undertaking under the terms three years as the State Oov~ of its licence any balance ernment may specify in the remaining in the Tariff:t and order :

Dividends Control Reserve shall be handed over to the Provided that nothing 1n this purchaser and maintained clause shall be deemed to prevent as such Tariffs and Divi-a licensee from reducing at any dends Control Reserve. time any charges 00 fixed.

THE SIXTH SCHEDULE

I. Notwithstanding anything con~ tained in the Indian Electricity Act. 1910 except sub-aection (2) of section 9 of 1910, 22A. and the provisions in the licence of a licensee. the licensee shall so adjust his (charges) for the sale of electricity whether by enw hancing or reducing them that or his clear profit in any year account shall not, as far as possible, exceed ·the amount of reasonable return :

Provided that such (charges) snau not be enhanced more thaa once in any year of account : Provided further that the licensee shall not be deemed to have failed so to adjust his (charges) if the clear profit in any year or account has not exceeded the amount of reasonable return by (twenty) per centum of the amount of reasonable return ~ Provided further that the licmlset '1lall not enhance the ( charces) for the supply of electricity nntil after the expiry of a notice in wtiting of not 1.,. than sixty

clear days of his intention to so enhanc:e the (charges) given by him to the State Government and and to the Board :

Provided further th at i( the

(charges) of supply fixed m pursuance of the recommenda-tions of a rating committee. con-stituted under sec. S7 A are lower than those notified by the licensee under and in accordance with the preceding proviso, the licensee shall refund to the consumers the excess amount recovered by him from them :

Provided aJso that nothing in this

Schedule shall be deemed to prevent a licensee from levying. with the previous approval of the I State Govt. minimum charges for

supply of electricity t'or any purpose.

IA. The notice referred to in the

third proviso to paragraph I shall be accompanied by such finan-cial and technical data in rup-port of the proposed enhance-ment of charges as the State Government_ may, by general _or special order, specify, II. (!) If the clear profit of a

licensee in any year of account is in excess of the amount of reasonable return. one-third of such excess, not exceeding (five per cent) of the amount of reasonable return, shall be at the dh;- posal of the undertaking, Of the balance of the exccis, one-half shall be appro-priated to a res~rve which shall be called the Tariffs and Dividends Control Re-serve and the remaining half shall either be distri-buted 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 digtribution to the consumers in future, in such manner as the State Government may direct. (2) The Tariffs and Dividends

Contrdt Reserve shall be available for disposal by the 1iccnsee only to the ~xtent hy which the clear profit is less than the reason-able return in any year of account.

(3) On the purcha~ of the undertaking under the terms of its licence any balance remaining in the Tariffs and Dividends Control Ro-serve shall be handed over to tho purchaser and main-tained aa such Tariffs and Dividends Control Reserve: Provided that where the under-taking is purcbasod bY the Board / or the State Government the amount of the Reserve may be ded\lcted from the prico payable to the licensee.

From an examination of these provisions it would be seen that under the Supply Act prior to its amendment in 1956, the charges fixed by tile Govt. under s. 57(2)(c) remained in force unless reduced by the licensee in the meantime till the same were altered by a subsequent order made by the Govt. after getting a fresh recommendation from the rating committee but under the law as it now stands the rate fixed by the Government under s. 57 (A)(l)(d) would be in operation only for such period not exceed-ing three years as the State Govt. may specify in the order. There-after it can be enhanced by the licensee in accordance with the provisions contained in Sch. VI. It was urged on behalf of the appellants that the present s. 57(A(l )(e) can only govern the charges fixed under s. 57(A)(l)(d) and it has not impact on an order made under the old s. 57(2)(c). According to the appellants the charges so fixed can only be modifi,,d by the Government aftec getting a report from the rating committee. Mr. Chagla, learned Counsel for the appellants contended that the consumers who get power from the respondent have a vested right in the charges fixed in 1952 and that vested right cannot be considered to have been taken away by the provisions of the Amending Act. He argued that the provisions of the Amending Act are not retro-spective in character nor is there any inconsistency between those provisions and the present provisions as the two operate on different fields; hence in view of s. 6 of the General Clauses Act, 1897, we must hold that the charges fixed by the Government in 1952 continue to be in operation. In this connection he relied on certain observations made by this Court in Stare nf Punjab v. illohar Singh(') and Deep Chand v. State of U.P. & Ors.( 2 ). On the other hand it was contended hy the learned Counsel for the respondent that the rights and liabilities of the respondents at present are exclusively regulated by the provisions of the Supply Act as it stands now; the terms of licence as they originally stood or as they stood on the coming into force of the Supply Act in 1948 are of no consequence now; they cannot be looked into for finding out the rights or duties of the licensee as at present; for that purpo;e we must look into those terms as modified by the provisions of the Supply Act as it is now. It was also urged on its behalf that there is no 4uestion of vested rights in these cases; herein we are only concerned with the procednre to be ·adopted in modifying the charges fixed in 1952.

In Mohar Singh's case(') this Court laid down that the provi-sions of s. 6 ( c), ( d) and ( e) of the General Clauses Act, 1897 relating to the consequences of the repeal of a law are applicable not only when an Act or Regulation is repealed simpliciter but also to a case of repeal and simultaneous enactment re-enacting all the provisions of the repealed law. In the course of its judg-ment this Court observed that when the repeal is followed by a fresh legislation on the same subject, the Court has undoubtedly to look into the provisions of the new Act but that only for the purpose of determining whether they indicate a different intention. The line of inquiry would be, not whether the new Act keeps alive the old rights and liabilities but whether it manifests any intention to destroy them. In Deep Chand's case(') this Court was consid-erin7 the effect of repugnancy between a State Act and a Central Act. The observations made in that context, we think, have no bearing on the point in issue in this case. It is true that when an existing Statute or Regulation is repealed and the same is replaced by fresh Statute or Regulation unless the new Statute or Regulation specifically or by necessary implication affects rights created under the old law those rights must be held to continue in force even after the new Statute or Regulation comes into force. But in the cases before us there is no question of affecting any vested right. There is no dispute that the charges fixed can be altered. The controversy relates to the procedure to be adopted in altering them. That controversy does not touch any vested right. The procedure in question must necessarily be regulated by the law in force at the time of the alteration of the charges.

Section 57 of the Supply Act as it stands now lays down that the provisions of Sch. VI shall be deemed to be incorporated in the licence of every licensee not being a local authority, in the case of a licence granted before the commencement of the Act from the date of the commencement of the licensee's next succeed-ing year of account Admittedly the licence with which we are concerned in these cases was granted even before the Supply Act was enacted. Therefore quite clearly the licence in. question is governed by the present s. 57. Hence we have·to read into that licence the provisions contained in Sch. VI. If any of the earlier provisions in the licence either as they stood when the licence was originally granted or as they stood modified as per the provisions of the Supply Act prior to its amendment in 1956 are inconsistent with the provisions of Sch. VI or s. 57(A) as they are now they must be held to be void and of no effect. In other words we must read into the licence the provisions of Sch. VI and strike out therefrom such terms as are inconsistent with those provisions and thereafter give effect to Ihe same. For determining the rights and duties of the licensee as at present we have only to look into the terms of the licence as modified by Sch. VI. We cannot go behind them. That much is clear from the language of the Supply Act. The intention of the legislature is clear and unambi-guous. Therefore there is no need to call into aid any rule of statutory construction or any legal presumption. Further no reason was advanced before us, nor can we conceive of any why those who obtained licenses prior to the amendment of Supply Act in 1956 should be in a more disadvantageous position than those who got their licenses thereafter. Correspondingly we fail to see why those who are served by licensees who obtained their licences prior to the amendment of the Supply Act in 1956 should be placed in a better position than those served by licensees who obtained their licenses thereafter. After all, every law has some reason behind it. Section 57(A)(2)(e) was intended to meet the changing economic circumstances. The purpose behind the new provisions ·appears to be to permit the licensees to so adjust their charges as to get reasonable profits. But at the same time a machinery has been provided to see whether any excess charges have been levied and if levied, get the same refunded to the con- :;umers.

The law declared by the Amending Act does not affect any right or privilege, accrued under the repealed provision. It merely prescribes as to what could or should be done in future. Therefore there is no basis for saying that it affects vested rights. For finding but the power of the licensee to alter the charges one ~as to look to the terms of the licence in the light of the law as 1t stands, the past history of that law being wholly irrelevant. If the t~rrns of the licence, including the deemed terms permit him to umlaterally alter the charges then he has that right. If we mere~y look at those terms, as we think we ought to, then there ·is no dispute that the respondent was within its rights in enhancing the charges as admittedly it has followed the procedure prescribed by law. We also do not agree with Mr. Chagla in his contention that there is no inconsistency between the present scheme relat-ing to the enhancement of charges vis-a.vis the scheme provided under the Supply Act prior to its amendment in 1956. The two schemes are substantially different. Under the fonner scheme once the Government fixes the charges the licensee cannot alter it but at present at the end of the period fixed in the Government order the licensee has a unilateral right to enhance the charge,, in accordance with the conditions prescribed in the VI Schedule. Therefore in view of s. 57 the provisions contained in that schedule. have an over-riding effect.

In Amalgamated Electricity Co., Ltd. v. N. S. Bhathena mid Anr. (') this Court was called upon to consider the scape of s. 57 (A) and the Sch. VI as it stands now. Therein the ~ontro­ versy was whether the appellant therein was entitled to levy charges more than the maximum charges prescribed in its licence issued in 1932. It may be noted that in that case the notice of enhancement of the charges was given on September 25, 1958. This Court held that the maximum stipulated in the licence no longer governed the right of the licensee to enham;e the charg~; his rights were exclusively governed by the provisions contained in paragraph I of Sch. VI of the Supply Act. It is true that in that case this Court was considering the right of the licensee under the Supply Act vis-a-vis his right under the licence granted under the Indian Electricity Act, 1910 but th.at difference is not material. What this Court in fact considered was the right of the licens~e under the existing Jaw to enhance the charges. Dealing with the scope ot paragraph I of Sch. VI, Ayyangar, J. who spoke for the majority observed thus :

"Para I of Sch. VI both as it originally stood. and as amended, as seen already, empowered the licensee "to adjust his rates, so that his clear' profit in any year shall not, as far as possible, exceed the amount of reasonable return". We shall reserve for later considera-tion the meaning 'of the expression "so adjust his rates". But one thing is clear and that is that the adjustment is unilateral and that the licensee has a statutory right to adjust his rates provided he conforms to the require-ments of that paragraph viz .• the rate charged does not yield a profit exceeding the amount of reasonable re-turn. The conclusion is therefore irresistible that the maxima prescribed by the State Government which bound the licensee under the Electricity Act of 1910 no longer limited the amount which a licensee could charge after the Supply Act, 1948 came into force since the "clear profit" and "reasonable return" which determined the rate to be charged was to be compul!:d on the basis of very different criteria and factors than what obtained under the Electricity Act."

For the reasons above, these appeals fail and they are dis-missed with costs. One hearing fee. H•