Patna High CourtAssociated Cement Companies Ltd. vs Bihar State Electricity Board And Ors. on 14 March, 1997Equivalent citations: 1997(2)BLJR1056Author:M.Y. EqbalBench:M.Y. EqbalJUDGMENTN. Rai and M.Y. Eqbal, JJ.1. In this writ application, the petitioner seeks declaration that clause 15.3 (f) of the Bihar State Electricity Board Tariff Notification dated 23.6.1993 is ultra vires to the provisions ofSections 49and59of the Indian Electricity Act. The petitioner has also prayed for quashing of the demand raised by the Electrical Superintending Engineer, Chaibasa, as contained in Memo No. 262 dated 3.3.1995 whereby the petitioner company has been directed to deposit in cash or by an account payee bank draft in favour of the respondent No. 1 Board the balance of security deposit of Rs. 1,09,05,120/-. A further prayer has been made for direction upon the respondent Board to accept the security in the shape of bank guarantees which were furnished by the petitioner for the sum of Rs. 1,05,14,000/- and were renewed upto December, 1995.2. The brief facts of the case are as under:3. The petitioner is a company registered under theIndian Companies Act, 1956and has established and running a cement factory, commonly known as the Associated Cement Companies Limited, Chaibasa having its work place at Jhinkpani. The petitioner entered into an agreement with respondent No. 1 on or about 21.8.1974 for supply of electrical energy in bulk in Chaibasa cement works. In pursuance to the said agreement, the petitioner furnished a bank guarantee of security amount of Rs. 32,26,700/- and the said bank guarantee was kept alive by the petitioner from time to time.4. The petitioner's case is that by letter dated 17.1.1977, an additional money of security was demanded from the petitioner when the petitioner wanted to enhance the amount of the bank guarantee and the same was refused. However, the petitioner deposited an additional amount of Rs. 3,80,690-70p. On 8.4.1977, the petitioner alleged to have been informed that under the Board's resolution dated 25.2.1977, the Board had decided that 50% of the security money from the industrial consumers will be adjusted in cash and the balance in the form of bank guarantee. The petitioner then moved this Hon'ble Court in CWJC No. 1782 of 1977 Challenging the validity of the resolution. It is stated that the said writ application was disposed of by this Court holding that the respondent Board in view of the agreement was not entitled to make demand from the petitioner of 50% security deposit in cash and in this way, the resolution of the Board was not given effect to. The petitioner's further case was that the petitioner however furnished the Bank guarantee of Rs. 32,26,700/-. According to the original agreement, the petitioner was required to furnish security of Rs. 28,46,000/-. The petitioner, therefore, has been asking the respondent Board to refund the amount of Rs. 3,80,68070p, which the petitioner had deposited in the year 1977 as additional security in the manner aforesaid, in case. It is stated by the petitioner that despite the order of this Court passed in CWJC No. 1702 of 1977, the respondent Board acted arbitrarily in refusing o refund the amount of additional security. The petitioner then again moved this Hon'ble Court in CWJC No. 450 of 1992 (R), which was allowed and the respondent Board was directed to refund the said sum of Rs. 3,80,670/- together with interest at the rate of 12% per annum from the date deposit i.e. 2.7.1977. A copy of the said order is Annexure-1 to the writ application. The petitioner's further case was that as per the agreement between the petitioner and the respondent Board for maximum KVA of the Maximum demand of 12,000 K.V.A. and the nature of the supply being 33V, 50 cycles of the category of H.T. (G-2), the petitioner company has to furnish bank guarantee on account of security as per clause 7 of the Agreement. From the year 1986 onward, the petitioner furnished bank guarantee of the amount of Rs. 1,05,14,000/- on account of security by different bank guarantees renewed from time to time, issued by the State Bank of India. The petitioner's further case is that a notification was issued on 23.6.1993 by the respondent Board in exercise of powers underSection 49and59of the Electricity Supply Act, 1948, whereby the Board has again provided for security deposit as per clause 15.3 of the said tariff notification of 1993. According the 1993 tariff, therefore, the security deposit due from the consumers to the Board in case of all category of consumers will be deposited in cash and in case of existing consumers deposit in the shape of bank guarantee was also being deposited in cash within six months of the framing of the tariff notification; otherwise the service line has to be disconnected giving seven days' notice thereafter. In terms of the said tariff, the petitioner has been served with the notice to deposit the total sum of Rs. 1,12,85,790/- in cash as security. According to the petitioner, the Board has demanded from the petitioner only a sum of Rs. 1,09,05,120/- adjusting the principal of Rs. 3,60,670/-, the amount of which the petitioner had deposited in 1977 in case as additional security. The petitioner, therefore, challenged the provision of Clause 15.3 (f) of the tariff as arbitrary and violative ofArticle 14of the Constitution of India.5. Counter affidavit has been filed by the respondent Board. The respondents case is that the respondent Board in exercise of powers-underSection 49of the Act of 1948 framed general tariff for different categories of consumers which laid down terms and conitions for supply of electricity to various categories of consumers. The said tariff of 1983 was revised by another notification dated 26.8.1991 with effect from 20.9.1991. Thereafter, another revised tariff notification dated 21.6.1993 was published in the Bihar Gazette which was made effective since 1.7.1993. Clause 15.3 of the said tariff notification provides for demand of enhanced security deposit in the manner provided therein. It is further stated that the provision with regard to security deposit i.e. clause 15.3 (c) remained the same in the 1983 tariff notification, 1991 tariff notification and 1993 tariff notification. It was further stated that the instant 1993 tariff was challenged in public interest litigation by CWJC No. 342 of 1993 and a Division Bench of this Court upheld the validity of the said tariff holding that clause 15.3. (c) of the tariff empowers the Board to demand additional/revised security deposit in cash. The respondent Board, therefore, in the counter affidavit have pleaded that the. question raised by the writ petitioner has already been decided by a Bench of this Court and the same has been confirmed in appeal before the Supreme Court. The instant writ application is, therefore, not maintainable.6. Mr. V. Shivnath, learned Counsel appearing for the writ petitioner tried to impress this Court that the question as to whether under the new tariff, consumers shall be compelled to deposit in cash the security amount which was deposited/furnished in the form of Bank guarantee has not been decided, by any court of law. The learned Counsel submitted that clause 15.3 (f) of the tariff of 1993 is arbitrary and violative ofArticle 14of the Constitution of India. learned Counsel further submitted that the condition of deposit of the whole amount of security in cash is unreasonable and cannot satisfy the requirements of the provisions of 1948 Act. learned Counsel further tried to impress this Court that by reason of furnishing of the bank guarantee by the petitioner on account of security, the object of the Board has been secured and, therefore, further demand of deposit of said security money in case instead of bank guarantee is not only arbitrary, but amounts to a colourable exercise of powers by the respondent-Board.7. For better appreciation of the submissions made by the learned Counsel for the petitioner, it is worth to look into the relevant clause 15.3 of 1993 tariff which is reproduced herein below:15.3. SECURITY DEPOSIT: (a) This is a deposit due from the consumer to the Board in respect of supply of energy on credit. No interest will be paid towards deposit of security.(b) The amount of security deposit is to be paid before commencement of supply shall cover three months estimated consumption subject to the following minimum:(c) The amount of security deposit is liable to be enhanced on review from time to time, such review shall take place twice every year namely in October-November for the period April to September and in April-May for the period October to March. If half of the aggregate amount of all the bills relating to any of the aforesaid-half yearly period exceeds by 20% of the existing security, then the security deposit shall be enhanced to that amount rounded off to ten rupees. Operational surcharge if applicable shall be taken into consideration in the aforesaid calculation but delayed payment surcharge levied during the year, if any, shall be excluded.(f) In case of existing consumers who have deposited secourity in shape of Bank Guarantee shall also have to deposit the same in cash within six months of this tariff notification. In case of non-depositing the case security the service line may be disconnected after giving seven days notice.8. In Bihar 440-Volt Vidyut Upbhokta Sangh v. Chairman, Bihar State Electricity Board, (1994 (2) PLJR 103), the validity of 1993 tariff, particularly clause 15.2, 15.3, 16.10, and 16.44 have been questioned by the writ petitioners as being illegal and wholly without jurisdiction. A Division Bench of this Court in its very elaborate and exhaustive judgment have gone into various questions formulated by it including" (a) whetherSections 49and 59 of the 1948 Act are ultra vires the Constitution of India? (b) whether the 1993 tariff is ultra viresArticle 14of the constitution of India, (g) whether the enhancement of the amount in security in terms of clause 15 of the tariff and deletion of the provisions about payment of interest on security deposit is valid in law?" This court while answering the first two question categorically held thatSection 49confers upon the Board a wide power to regulate its tariff for the supply to all persons requiring electricity. It was further held that the provisions of the aforesaid Act cast a statutory duty on the Board to carry out its tariff in a most economical and efficient manner. While anwering the question of validity of clause 15.3 of tariff 1993, their Lordships have held as under:146. From the statements as noticed hereinbefore it is evident that normally billing and recovery cycle can not be 45 days, but according to the Board certain situations may arise where in long period may be taken. There cannot be any dispute that the consumption peried would be 30 days whereafter the consumer will be directed to pay the amount in question within the time stipulated in bill itself. The consumers who did not dispute the correctness or otherwise of the bill, would deposit the amount forthwith failing which they would run the risk of disconnection of electrical energy. In relation to only such consumer who raises a bonafide dispute with regard, to the amount of the bill or defaults in making payment thereof, the notice of disconnection in terms ofSection 24may immediately be served on him. The Board in this regard is, however, expected to act promptly. The Supreme Court in FACOR's case (supra) has clearly pointed out that it is billing and recovery cycle which is relevant for the purpose of security deposit. There is absolutely no reason as to why the entire period of one month of consumption shall not be taken into consideration and only 15 days there of would be calculated as has been contended by the petitioners. As noticed hereinbefore even in Rajasthan the billing and recovery cycle is 74 days. In this situation, we do not think that payment of cash security by the Board for a period of three months would be unjustified. It may be true that the provisions ofSection 24of the Indian Electricity Act is not a substitute of but in addition to other modes of recovery provided for under the General law as also under the tariff itself. The cash security to the extent of 50% beyond a sum of rupees one lac and furnishing of Bank Guarantee to the extent of 50% of the remainder in our opinion, would not serve the purpose. We also do not agree with the submissions of the learned Counsel for the petitioners that no security amount should be directed to be deposited in relation to maximum demand charges and Electricity duty. The said charges are integral part of the Tariff. Security deposit are required to be made on three months estimated consumption subject to the minimum mentioned in clause 15.3 (b) of the tariff, which in our opinion cannot be said to be either arbitrary or irrational. This court, in our considered view cannot also decide the rationality of the quantum of the security deposit.9. From a reading of the whole judgment rendered by this Court in Bihar 440 Volt Vidyut Upbhokta Sangh (supra), we are of the definite view that the questions raised by the writ petitioner in the instant case have been finally concluded by this Court and, therefore, we are not supposed to go into all those questions again. When under the new tariff, the petitioner is required to deposit the security amount in cash instead of bank guarantee, then there is no question of deviation from the said tariff inasmuch as this is neither arbitrary, nor violative of any of the provisions of theElectricity Supply Act, 1948orArticle 14of the Constitution of India.10. A question with regard to demand of security deposit, additional security deposit and payment of interest of security deposit relating to various Electricity Boards, including the Bihar State Electricity Board have come for consideration before the Apex Court in a Batch of cases and the same has been decided by the Apex Court in the case ofFerro Alloys Corporation Limited v. A,P. State Electricity Board and Anr.. The Apex Court while answering the question has held that the condition requiring three months' security deposit is not unreasonable or arbitrary. It was further held that no reason is required to be given for enhancement of the additional security deposit and that there is no liability on the Board either under the Statute or in law to pay interest in the manner demanded by the consumer. The Apex Court held as under:102. The cycle of billing by the Board demonstrates that in the very nature of things, the consumer is supplied energy on credit. The compulsory deposit in the contest of billing cycle is hardly adequate to secure payments to the Board by the time the formal bill by the Board is raised on the consumer. In one sense, the consumption security deposit represents only a part of the money which is payable to the Board on the bill being raised against the consumer. Thus, the Board secures itself by resorting to such deposit to cover part of the liability.104. From the above, it is clear that while the Electricity Board is required to make colossal advances to generate electricity and supply to consumers, the consumers use and consume electricity on credit ranging from 2 to 3 months depending upon the category of consumers. To off-set part of the amount the consumer owes to the Board continually to ensure timely payment of bills by the Board to its suppliers, the advance consumption deposit is required to be kept with the Board before commencing supply to the consumer. The clauses in the contract in relation to conditions of supply of electric energy enable the Board to adjust the bill against such deposits. Therefore, this is not a case of mere deposit of money as in commercial transaction.In demanding security deposit, it is open to the Court to take note of pilferage aslaid down inAshok Soap Factory v. Municipal Corporation of Delhi(1993) 1 JT (SC) 128 p. 137: (1993 AIR SCW 650 at p. 659, para 27:...The variation in the electricity consumed by different consumers indicated that the charge of pilferage of electricity and gross under-utilisation or consumption of electricity compered to the sanctioned load was not without foundation....106. In these circumstances, we conclude that the object of security deposit is to ensure proper payment of bills.11. It cannot be disputed that the nature of transaction relating to security deposit is adjustible advance-payment of consumption charge approximately estimated for a period of three months. If the petitioner in the instant writ application has no grievance with regard to deposit of the amount of account of security in the form of bank guarantee, then I am of the view that the petitioner could not have any grievance when such security amount is demanded in cash instead of bank guarantee when, according to the petitioner itself, the bank guarantee is as good as cash. In Kaushalya Rani v. M.C.D, & Ors,. 1995 (suppl) (3) SCC 145, a question arose with regard to demand for security deposit on the basis of consumption in a block of three months.The Apex Court following the decision inFerro Alloys Corporation Limited(supra) directed the consumer to make the entire payment in cash.12. It is worth to mention here that the decision of this Court in Bihar 440Volt Vidyut Upbhokta Sangh (supra) was challenged before the Supreme Court in Civil Appeal No. 6320 of 1994 which was disposed of in terms of the judgment and order dated 7.2.1996. The Apex Court held as under:Learned Counsel for the consumers have raised two questions before us. The first contention relates to the first part of the issue (g). It is stated that the enhancement of the quantum of cash security from 45 days to 90 days in lieu of guarantee is arbitrary. The second question relates to issue (h). It is contended that the provisions for enhancing the transformer capacity not to exceed 150 of the contract demand and that also on the transformers which are already operating is arbitrary. So far as the quantum of security is concerned, wee see no ground to interfere with the reasoning and the conclusion reached by the High Court. There is nothing on the record to show that the enhancement of the security from 45 days to 90 days is arbitrary in any manner. There is no force in the second contention also.13. Mt.V. Shivnath, however, relied upon the order passed by learned Single Judge of this Court dated 28.3.1995 in CWJC No. 638 of 1995 (R). learned Counsel submitted that in the aforesaid judgment, the learned Judge has come to the conclusion that the question as to whether the demand of the respondentBoard asking the consumer to replace the security deposit, which was furnished in the shape of bank guarantee by depositing the same in cash was neither raised, nor decided by the Division Bench of this Court in Bihar 440Volt Vidyut Upbhokta Sangh(supra). The learned Judge, therefore, took the view that the said Division Bench judgment, therefore, has no application in that case and it was further held that there cannot be any justification for the Board to realise any amount in cash on account of security for the period when the consumer has already furnished the said security in the shape of bank guarantee.With due respect, the learned Judge has not correctly appreciated the judgment of the Division Bench as also the judgment of the Apex Court inFerro Alloys Corporation Limited(supra).As stated above, in the aforesaid judgment, (Bihar 440-Volt Vidyut Upbhokta Sangh, (supra), the Division Bench has categorically held in paragraph 146 of the judgment that the demand of cash security by the respondent Board for a period of three months cannot be said to be unjustified. Even assuming that the aforesaid point has not been decided by this Court in the case of Bihar 440 Volt Vidyut Upbhokta Sangh (supra), I am of the view that by existing consumers as provided under Tariff 15.3 (f) is neither arbitrary nor unreasonable. Earlier there was provision for deposit of 50% in cash deposit and 50% in security deposit. Now according to the relevant provision of the tariff the entire amount has to be deposited in cash security. I do not subscribe to the view as taken by the learned Single Judge of this Court in CWJC No. 638 of 1995 (R) that unless a fraud is alleged on the part of the consumer the Board cannot ask the consumer for payment of cash security. When the relevant provision of the tariff is found to be valid, this Court cannot put any additional ground like proof of fraud etc.14. For the a foresaid reasons, the view taken by the learned Single Judge in CWJC No. 638 of 1995 (R) is not a good law.15. In the result, I find that no relief could be granted to the petitioner in this writ application, which is accordingly dismissed.Before I part with the judgment, it is made clear that the petitioner would be entitled to an adjustment of the amount, which is payable to the petitioner by the Board against the security deposit.