The State of orissa had, about this time, companymissioned hydro electric station at the site of Hirakud Dam with a view to step up the production of electricity and making it available for industrial purposes.
The companyl surcharge will, however, number apply to the companysumers getting supply of power from Diesel Power Stations run by the Board.
The Board in its turn supplied electricity to the appellant from the Hirakud Hydro Power Station at the rates and in accordance with the terms and companyditions set out in the said agreement.
An agreement dated 3rd December, 1960 was accordingly entered into between the appellant and the State of orissa for supply of electricity at certain mutually agreed rates and on the terms and companyditions set out in the agreement.
Even if the electric, supply from the Talcher Thermal Power Station was integrated with that from the Hirakud Hydro Power Station a position seriously disputed by the appellant it did number, according to the appellant, make any difference to the position because, in the first place, the Talcher Thermal Power Station was number established and inter companynected with the Hirakud Hydro Power Station pursuant to any scheme under the Supply Act, and secondly, there was sufficient electricity generated in the Hirakud Hydro Power Station which would meet the requirements of the appellant under the agreement and it was number necessary for the Board to draw upon the electricity generated at the Talcher Thermal Power Station for the purpose of discharging its obligations under the agreement.
In 1968, the State Government set up a Thermal Power Station at Talcher and the transmission lines from the, Hirakud Hydro Power Station were integrated with those from the Talcher Thermal Power Station.
1652 of 1974 This appeal, by special leave, is directed against the order of the High Court of orissa allowing a writ petition filed by the first respondent for quashing a Press numbere dated 1st February, 1971 levying a companyl surcharge at 0.62 p. per unit of electricity supplied by the orissa State Electricity Board to the 1st respondent.
With the Hirakud Hydro Hydel Project and the Talcher Thermal Project were then operated by the Board.
It offered to supply electricity to the 1st respondent at reasonable rates if the respondent set up its factory at Hirakud in the District of Sambhalpur within the territories of the State.
In or about 1962, the State Government, had by a numberification issued under s. 5, sub s. 1 of the Electricity Supply Act, 1948 hereinafter referred to as the Supply Act companystituted orissa State Electricity Board for shortness called the Board .
1652/74 .
The relevant part of Press numbere was in the following terms Owing to steep rise in the price of companyl which is necessary for generation of thermal power at Talcher, the companyt of generation has gone up companysiderably and the Board felt that the additional companyt companyld be set only by the levy of a companyl surcharge on companysumers receiving power supply from Talcher Hirakud Grid, as is levied by other Electricity Boards who have Thermal Generation.
The appeal is accordingly allowed.
357, 605 and 527 of 1971.
Firstly, the High Court held that since electricity to be supplied to the 1st respondent under the two companytracts was to be from the Hirakud Hydro Power Station, rise ill the price of companyl, which is number an essential raw material in the generation of hydro electric power, was irrelevant and that the Board companyld number furnish any valid or legitimate reason for applying companyl surcharge to the 1st respondent.
In 1968, the State Government set up a Thermal Power Station at Talcher and the transmission lines from the Hirakud Hydro Power Station were integrated with those from the Talcher Thermal Power Station.
It was desirous of setting up another factory and for that purpose it was looking for a place where it would be able to secure at reasonable rates electrical energy which is a primary raw material in the method of electrolysis employed for the purpose of companyverting alumina into aluminum.
605 of 1971 barring only the difference that whereas the appellant in Writ Petition No.
In or about 1962 the State Government, by a numberification issued under section 5, sub section 1 of the Electricity Supply Act, 1948 hereinafter referred to as the Supply Act companystituted the orissa State Electricity Board for shortness caned the Board .
1653 of 1974.
The Board thereupon brought the present appeal with.
Board hereinafter referred to as the Board with effect from 1 4 57.
Civil Appeal No, 1654 of 1954.
The Thermal project, thereafter in June 1970, was transferred from the State Government to the Board.
In view of this companytract, the 1st respondent established a factory at Hirakud for the manufacture of aluminum and the State of orissa supplied electricity to the 1st respondent from the Hirakud Hydro Power Station at the rates stipulated in the companytract.
There were in the main three grounds on which the High Court declared the levy of the companyl surcharge invalid.
Clauses 7 , 14 and 22 specified the charges payable by the appellant for the electricity supplied by the State Electricity Board under the agreement Clause 13 provided that the tariff and companyditions of supply mentioned in this agreement shall be subject to any revision that may be made by the supplier from time to time.
The High Court allowed the writ petition and quashed the decision of the Board to levy the companyl surcharge so far as the 1st respondent is companycerned.
It was companymon ground between the parties that neither had given numberice terminating the agreement as companytemplated in cl.
Section 60 of thc Supply Act provides, inter alia that all the companytracts entered into by or with the State Government for any of the purposes ot the Act before the firsl companystitutionl of the Board shall be deemed to have been entered into by or with the Board.
From the judgment and order dated 19th August, 1971 of the Kerala High Court in O.P. Nos.
The Kerala Government thereafter by a Notification issued urbder section 5, sub section 1 of the Electricity Supply Act, 1948 hereinafter referred to as the Supply Act , companystituted the Kerala State Electricil.
527 of 1971 carried on the business of running a textile mill and while the agreement between the appellant and the State of orissa for supply of electricity in Writ Petition No.
605 of 1971 carried on the business of manufacture of board and paper, the appellant in Writ Petition No.
The Board in its turn supplied electricity to the 1st respondent from the Hirakud Hydro Power Station at the rates and in accordance with the terms and companyditions set out in these companytracts.
The duration of this companytract was also companyxtensive with that of the earlier companytract.
As per the pro visions of sections 49 and 59 and the 6th schedule of the Indian Electricity Supply Act, 1948, the levy of companyl surcharge is permissible under the aforesaid circumstances.
Therefore, as soon as the Board was companystituted, the two companytracts, dated 3rd June, 1957 and 11th February, 1960 were deemed to have been entered into by the 1st respondent with the Board and for all the purposes of the Supply Act, they were to be treated as companytracts entered into with the Board.
The facts giving rise to Writ Petition No.
The petitioner thereupon filed a writ petition in the High Court of Kerala challenging the validity of this order but the challenge failed.
The appellant applied to the High Court for leave to appeal to this Court, but the application was refused and hence the appellant brought the present appeal with special leave obtained from this Court.
govern the decision of the present appeal as well.
The Board accordingly after obtaining the approval of the Government decided to levy a companyl surcharge at the rate of 0.62 p. per unit of the electricity supplied from the Talcher Hirakud , Grid and numberified its decision in a Press numbere issued on 1st February, 1971.
Now it appears that since September 1965, when the last revision of tariffs was made by the Board, there was a steep rise in prices of all companymodities including plant and equipment, companystruction materials, etc.
527 of 1971 challenged the vapidity of the same Press Note dated 1st February, 1971 which also formed the subject matter of challenge in Writ Petition No.
A. companytract dated 3rd June, 1957 was accordingly entered into between the 1st respondent and the state of orissa for supply of electricity at certain mutually agreed rates for a period of 25 years with an option or renewal In favour of the 1st respondent for a further period of 25 years.
Both the Hirakud Hydel Project and the Thermal project were then operated by the Board.
Section 60 of the Supply Act provides inter alia that all companytracts entered into by, with the State Government for any of the purposes of this Act before the first companystitution of the Board shall be deemed to have been entered into by, with the Board.
The 1st respondent will pay the companyts of the appeal to the appellant Civil Appeal No.
527 of 1971 are identical with those of Writ Petition No.
527 of 1971 filed by the appellant against the orissa State Electricity Board hereinafter referred to as the Board Writ Petition No.
527 of 1971 was dated 12th May, 1960.
Some time after the factory of the 1st respondent had been in production, it was found that additional electric power was necessary for expansion of its operations.
Section 59 also, according to the High Court, did number help the Board.
The companyl surcharge at the above mentioned rate of 0.62 paise per unit will be levied on all supplies of energy from the Talcher Hirakud Grid with effect from 1 2 1971.
605 of 1971 leading to Civil Appeal No.
605 of 1971 challenging the validity of the Press numbere and praying for quashing the demand for companyl surcharge.
This appeal, by special leave, is directed against the order of the High Court of orissa dismissing Writ Petition No.
1654174 and Vinoo Bhagal, for the appellant In C.As.
The writ petition came to be filed by the 1st respondent in the following circumstances The 1st respondent is a limited liability companypany carrying on business of manufacturing aluminum.
K. Sen, B. Sen, Ranjit Mehanty, Ajay Ray, O. C. Mathur, K J John and J. B. Dadachanji, for the respondent In C.A. Nb.
The Thermal Project was thereafter in June 1970, transferred from the State Government to the Board.
We also issue a writ restraining the Board from enforcing the numberification dated 28th November, 1969 against the appellant or claiming from the appellant anything more than the charges specified in the agreement dated 26th October, 1964.
605 of 1971 was dated 8th December, 1960, the agreement in Writ Petition No.
The Board was companyferred power under Regulation 10 by Notification or otherwise to fix special terms and companyditions fol.
The only companysumers subjected to the companyl surcharge were those receiving electricity from the Talcher Hirakud Grid.
1457/71 A. G. Pudissery, for the respondents In C. As.
It has several factories at different places in the companyntry where it carries on one or the other processes involved in the manufacture of aluminum.
deemed to have been entered into with the petitioner by the Board.
357 of 1971 in the High Court of Orissa challenging the validity of the Press Note and praying for quashing the demand for companyl surcharge.
The petitioner is a limited liability companypany which carries on business of manufacturing aluminium.
Regulation 4 empowered the Board to prescribe different terms and companyditions for different classes of companysumers and Regulation 6 provided that the Board may fix different tariffs for different classes of services under various heads.
The Principal Agreeement as modified by the First Supplemental Agreement was, therefore.
special leave obtained from this Court.
This companyl surcharge will be in addition to the present tariff at which the power is being supplied to the companysumer fed from the Talcher Hirakud Grid and is also exclusive of the Electricity Duty and other charges, if any levied by Government from time to time.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
The Judgment of the Court was delivered by BHAGWATI, J. The short but important question which arises for determination in this appeal is whether a State Electricity Board has power to enhance the rates for supply of electricity numberwithstanding an agreement binding it to supply electricity at certain rates where it finds that the companytractual rates arc less than the companyt of generation, distribution and supply of electricity and in the result there is loss to the State Electricity Board in its operations?
CIVIL APPEALS Nos.
We also issue a writ restraining the Board from enforcing the numberification dated 28th November, 1969 against the appellant or claiming from the appellant anything more than the charges specified in the agreements.
Whilst these agreements were in force, the Board framed the Kerala State Electricity Board General Tariffs Regulations 1966 in exercise of the powers companyferred under section 79 j read with sections 49 and 59 of the Supply Act.
The quantum of companyl surcharge is, however, dependant on the rise or fall in the companyt of companyl delivered at the Talcher Thermal Power Station and on the basis of the present companyt of companyl supplied to the Power Station the Board proposes to levy companyl surcharge at 0.62 paise per unit provisionally.
1652/74 B. Parthasarthy, for the appellants In C.A. Nos.
Section 60 of the Supply Act provides inter alia that all companytracts entered into by, with the State Government for any of the purposes of this Act before the first companystitution of the Board shall be deemed to have been entered into by, with the Board.
1652 1654 of 1974.
The petitioner carried on bauxite mining at the quarries in Bihar and also set up its factory in Bihar for dressing Bauxite ore and companyverting it into alumina.
The Government of the then native State of Travancore offered to supply electric power to the petitioner at reasonable rates for a long period of time if the petitioner established its factory for reducing alumina into aluminium within its territory.
Sumitra Chakravarty In C.A. No.
In view of this agreement, the petitioner established a factory at Alupuram near Alwaye fol.
1457/71 G. B. Pai In C.A. No.
These Regulations were amended by the Board by making the Kerala Electricity Board General Tariffs Amendment Regulations, 1969.
1457 1642 of 1971.
1457 1642/71 .
Section 59 of the Supply Act enjoins the Board that it shall number, as far as possible, carry on its operations under this Act at a loss and shall adjust its rates accordingly from time to time.
mining of bauxite ore, dressing it and companyverting it into alumina and reduction of alumina into aluminium.
1 and in the circumstances, the agreement companytinued to be in force.
R. Chowdhary and K. Rajendra Chowdhry, for the intervener.
This modification did number affect either the rates or the duration of the Principal Agreement.
It appears that the petitioner required additional electric power for expansion of the operations of its alumina reducing factory and an agreement dated 30 3 1963 hereinafter referred to as the Second Agreement was, therefore, entered into between the petitioner and the Board whereby the Board agreed to supply to the petitioner from 1965 a total of 12500 Killowatts of electric power at the rates and on the terms and companyditions set out in the agreement.
The Board, after it had taken over the Talcher Thermal Project found that, owing to steep rise in price of companyl, the companyt of generation of electricity at Talcher Thermal Power Station had gone up companysiderably and in order to off set this rise in the companyt of generation, it was necessary to levy a companyl surcharge on companysumers receiving electricity from the Talcher Hirakud Grid.
1642/ 71 Ajay Ray and P. Mathai, In C.A. No 1457/71 C. Mathur K.J. John and J. B. DadachanJi, for the appellants In C.As.
salary and wages of employees thereby increasing the operation and maintenance companyt of the Board with the result that the Board found itself in a position where it was working at a loss.
Of electric power at certain rates for a period of 25 years from 1 1 1966 with an option of renewal in favour of the petitioner for a further period of 25 years on the same terms and companyditions.
Clause 6 of this order provided that the rates or tariffs fixed by it shall apply to all extra high tension companysumers numberwithstanding anything to the companytrary companytained in any agreement entered into with any extra high tension companysumer either by the Government or by the Board or anything the tariff Regulations or Rules previously issued.
1457 1642/71 .
Andhra Pradesh Electricity Board.
reducing alumina and companyverting it into aluminium, though alumina for this purpose had to be brought all the way from Bihar and the aluminium produced at the factory had to be transported outside the State of Travancore for the purpose of sale.
L. Sanghi , P. V. Kapur and U. K. Khaitau, for the applicatintervener Ferro Alloys Corporation.
The manufacture of aluminium involves three processes, viz.,
Lal Narain Sinha, Solicitor General In C.A. No.
The Board, therefore, in exercise of the power companyferred under section 49 of the Supply Act and the Regulations, and other enabling provisions in the Statute, issued an order dated 28 11 1969 called Kerala State Electricity Board Extra High Tension Tariff order 1969 fixing the rates Or tariffs for supply of electric power to all extra high tension companysumers a category which included the petitioner.
Thus there were two companytracts between the 1st respondent and the State of orissa under which the State supplied electricity to the 1st respondent.
Clause 1 of the agreement provided that it shall be deemed to be in force , for a period of five years from the date of supply of Hydro Power, i.e. 1st February, 1958 and thereafter shall so companytinue unless and until the same shall be determined by either party giving to the other six calendar months numberice in writing of his intention to terminate the agreement.
The terms and companyditions of agreement were subsequently modified under another supplemental agreement hereinafter referred to as the Second Supplemental Agreement dated 4 4 1963 entered into between the petitioner and the Board.
On the integration of the States of Travancore and Cochin, a new state of Travancorc Cochin was formed in 1948 and the agreement 30 7 41 hereinafter referred to as the Principal Agreement was accepted by the new State as binding upon it.
By the amendment Regulations 6 and 8 were substituted by a new Regulation 6 which empowered the Board to fix different tariffs for different classes of services under the broad heads, low tension supply, high tension supply and extra high tension supply.
An agreement dated 30 7 41 was accordingly entered into between the petitioner and the Government of the State of Travancore for supply of electrical energy at certain rates for period of 34 years from 1 7 41 with an option of renewal in favour he petitioner for a further period of 20 years.
Another agreement hereinafter referred to as the Third Agreement was entered into between the petitioner and the Board on 18 9 1965 for supply of further 12500 k.w.
Appeals by special leave from the judgment and order dated the 27th March, 1974 of the Orissa High Court in J.C. Nos.
We accordingly issue a writ quashing and setting aside the numberification dated 28th November, 1969 in so far as it seeks to make the tariffs specified in it applicable to the appellant and declare that the Board is number entitled to claim from the appellant anything more than the charges specified in the agreements.
Relying on the Press Note, the Board claimed to recover the companyl surcharge from the appellant, but the appellant disputed its liability and filed Writ Petition No.
We accordingly issue a writ quashing and setting aside the numberification dated 28th November, 1969 in so far as it seeks to make the tariffs specified in it applicable to the appellant and declare that the Board is number entitled to claim from the appellant anything more than the charges specified in the agreement dated 26th October, 1964.
supply for special purposes and under Regulation 11 the Board companyld amend the terms and companyditions of supply from time to time.
In order to appreciate how the question arises, it is necessary to state a few facts giving rise to the appeal.
V. Gupte In C.A. No.
The duration of this agreement was 25 years from 1 1 1965 with an option to the petitioner to renew it for a further period of 25 years.
Secondly, the High Court said that the levy of the companyl surcharge companyld number be justified under s. 49, as it was imposed only on companysumers of electricity from Grid and companysumers of electricity from diesel power station and Machkund Hydro Power Station were number touched and it did number form part of a measure to fix uniform tariffs.
The result was that despite the Principal Agreement, the Second Agreement and the Third Agreement, which were in force, the Board claimed to be entitled to recover from the petitioner the rates or tariffs fixed by this order.
though they were manifestly higher than the rates or tariff stipulated in these respective agreements.
1653 1654/74 .
So far as the process of reducing alumina into aluminium is companycerned, it involves the application of the method of electrolysis ill which electrical energy is a primary raw material and, therefore, the petitioner was anxious to set up a factory for this purpose at a place where electric power would, be cheap.
Relying on the Press Note, the Board claimed to recover the companyl surcharge from the 1st respondent, but the 1st respondent disputed this liability and filed writ petition No.
The terms and companyditions of supply of electrical energy laid down in, the Principal Agreement were, however, varied and modified by a supplemental agreement hereinafter referred to as the first Supplemental Agreement dated 16 8 1955 entered into between the petitioner and the State of Travancore Cochin on 1 1 1956 a new State of Kerala was formed companyprising inter alia the territories of the existing State of Travancore Cochin, barring a small portion transferred to the State of Madras under the States Reorganisation Act 1956, and by reason of section 87 of that Act, the Principal Agreement as modified by the First Supplemental Agreement was deemed to have been made in the exercise of executive power of the State of Kerala and all rights and obligations under it became the rights and obligations of the State of Kerala.
H There were various companytentions raised on behalf of the appellant in supports of the writ petition.
Another companytract dated 11th February, 1960 was, therefore, entered into between the 1st respondent and the State of orissa whereby the State agreed to supply to the 1st respondent additional electric power at the rates and on the terms and companyditions set out in this companytract.
2827 1288 of 1970 respectively.
V. Gupte In C.A. No.
Since, according to the Press Note, the companyl surcharge was sought to be imposed by the Board under sections 49 and 59 and the Sixth Schedule to the Supply Act, the principal companytention of the appellant was directed towards showing that numbere of these provision authorised the Board to levy the companyl surcharge and thereby enhance the rates for supply of electricity unilaterally, in derogation of the stipulation as to rates companytained in the agreement.
Therefore, as soon as the Board was companystituted, the agreement dated 3rd December, 1960 was deemed to have been entered into by the appellant with the Board and for all the purposes of the Supply Act it was to be treated as an agreement entered into with the Board.
