ASHOK SOAP FACTORY AND ANR. versus MUNICIPAL CORPORATION OF DELHI AND ORS.

Citation: [1993] 1 S.C.R. 124 · Decided: 12-01-1993 · Supreme Court of India · Bench: J.S. VERMA · Disposal: Dismissed
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Judgment (excerpt)

A 
B 
ASHOK SOAP FACTORY AND ANR. 
v. 
MUNICIPAL CORPORATION OF DELHI AND ORS. 
JANUARY 12, 1993 
[J.S. VERMA, YOGESHWAR DAYAL AND 
N. VENKATACHALA, JJ.] 
Delhi Municipal Corporation Acr, 1957: 
C 
Section 283-Levy of charges for supply of electricity-Minimum co11-
sumption guarantee charges for 'large industrial powers' consumers--lncrease 
in rate in respect of Arc/induction furnaces-Validity of 
Electricity Ac~ 1910: 
D 
Section 21-Applicability to local authoritie~elhi Municipal Cor-
poration, being a 'licensee by virtue of provisions of the Delhi Municipal 
Corporation Act, and not one licensed under Part II to supply energy, Section 
not applicable. 
Section 22, proviso-Proviso does not deal with the minimum con-
E sumption charges. 
):; 
Constitution of India, 1950: 
Article 14--Price fu:ation-Fixation of tariff, a legislative func-
tion-Hence, fu:ation of higher rate not open to challenge on ground of 
F 
non-disclosure of reasons in the absence of any unreasonableness or arbitrari-
ness-Since arc/induction furnaces constitute a class by themselves, question 
of discrimination does not arise. 
Section 283 of the Delhi Municipal Corporation Act, 1957 em• 
powered respondent No.l - Delhi Municipal Corporation to levy charges 
G for the supply of electricity on such rates as may be f1Xed from time to time 
by it. For the purpose of charging the consumers, the Corporation bad 
divided the consumers into different categories/classes providing for dif-
ferent tariffs for each category. One oftbe categories was 'large industrial 
powers' (LIP) consumers. The consnmers who bad a sanctioned load of 
H 
100 KWs fell in the category of large industrial powers. 
124 
ASHOK SOAP FACTORY v. M.C.D. 
125 
For the levy of charges for the supply of electricity there were two A 
systems of tariff, namely, the Oat rate system and the other two-part tariff 
system. Under the former a Oat rate was charged on the units of energy 
consumed while the latter system was meant for big consumers of 
electricity i.e. industrial power, and it was comprised of two charges (1) 
minimum consumption guarantee charges (called demand charges) and B 
(2) energy charges for the actual amount of energy consumed. 
Under the two-part system an LIP consumer would pay minimum 
guarantee consumption charges at the rate fixed by the respondents. If the 
LIP consumer did not consume the specified minimum quantity of 
electricity or no energy at all even then he had to pay the minimum 
C 
guarantee charges. But in case the consumer consumed more electricity 
then what was prescribed by the minimum guarantee charges, then the 
consumer paid the minimum guarantee charges and also paid the 
electricity charges for the actual consumption of electricity, beyond the 
minimum guarantee charges, in such a manner that the minimum guaran-
tee charges were merged in the total bill of electricity consumed and a D 
rebate was given to the consumer. In other words, if a consumer consumed 
more than the specified minimum quantity of electricity then, in effect, he 
would pay for electricity which was actually consumed by him. 
For the period from 1985-86 to 1988-89, the respondents bad fixed E 
rates of minimum consumption guarantee charges at the rate of Rs. 40 per 
KV A for 1000 KV A and Rs.38 per KVA above 1000 KV A. However, pur-
suant to a Resolution passed by the respondent Corporation approving 
the resolution passed by the D.E.S.C., there was an upward revision of 
rates of minimum consumption guarantee charges in respect of arc/induc-
tion furnaces. 
As a result, for demand charges for the first 1000 KV A of billing 
demand for the month, instead of tariff being Rs. 40 per KV A or part 
thereof, it was enhanced to Rs. 340 per ·KV.A oi' part thereof. 
F 
The appellants bad set up/installed arc/induction furnaces for the G 
manufacture of castings in their factories. Electricity was one of the 
important raw materials for the appellants and had obtained electricity 
from the respondents. The sanctioned load was more than 100 KWS and, 
therefore, they fell into the LIP category and the two-part tariff was 
applicable to them. The appellants filed writ petitions before the High H 
126 
SUPREME COURT REPORTS 
(1993] 1 S.C.R. 
A 
Court challenging the enhancement of the minimum guarantee charges. 
B 
c 
It was contended that the provisions of Section 21 of the Indian 
Electricity Act, 1910 applied and the decision to increase minimum char-
ges was contrary to Section
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