GOPISETTI VENKATARATNAM AND OTHERS versus THE VIJAYAWADA MUNICIPALITY AND OTHERS

Citation: [1965] 3 S.C.R. 276 · Decided: 05-03-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Judgment (excerpt)

276 
GOPISETTI VENKATARATNAM AND OTHERS 
A 
v. 
THE VIJAYAWADA MUNICIPALITY AND OTHERS 
March 5, 1965 
[K. SUBBA RAo, J. C. SHAH AND R. S. BACHAWAT, JJ.J 
Indian _Electricity Act, 1910 (A~t 9 of 1910), ss. 21 (2)-Agreement 
betu:een Li'censee an~ Co!lS'U;mers-Supply of 
energy at "current 
official scale of rates' -Meaning of-Enhancement of rate-Sanction 
of State Government, if necessary. 
The Government of Madras issued a licence to the respondent-
Municipality, under s.3(1) of the Indian Electricity Act, 1910, for the 
supply of ele.ctric energy within its municipal limits at rates not 
exceeding the maximum charges given in the licence. The appellants, 
some consumers of the electric energy, entered into agreements with 
the Municipality for the supply and agreed to pay the "current offi-
cial scale of rates". The rates were increased by resolutions of the 
Municipality twice and on the second occasion the appellants filed 
a representative suit for a declaration that the later resolution was 
illegal, and for an injunction restraining the Municipality from col-
lecting charges at the new rates. The trial court dismissed the suit 
and the dismissal was confirmed on ~ppeal by the High Court. In 
appeal by special leave the appellants contended that (i) the rates 
agreed between the consumers and the Municipality could not be 
unilaterally altered and increased by the Municipality to the 
prejudice of the consumers· and, therefore, the impugned resolution 
was invalid and unenforceable; and (ii) as the impugned resolution 
was passed without obtaining the previous sanction of the State Gov-
·ernment under s.'21 (2)-' of the Act, it was void. 
HELD: (i) The consumers were under a contractual liability to 
pay the enhanced rates covered by the impugned resolution. 
Under ss. 22 and 23 of the Act the Municipality cannot discrimi-
nate tetween consumers in the matter of rates chargeable for the 
energy supplied. Unless the Municipality enters into agreement with 
the consumer. enabling it to charge him at a rate fixed from time to 
time, it would be difficult for the Municipality to maintain equality 
of treatment between the consumers. Tkat difficulty can be avoided 
if there is a term in the agreement executed by every consumer that 
he will pay the official rate fixed by the Municipality from time to 
time subject to the maximum fixed by the licence. Further, a public 
body in supplying electric energy to different consumeTs cannot run 
the risk of incurring loss by agreeing to fixed rates, for the Govern-
ment may increase the licence fee as had been done in the instant 
case, or there may be a rise in the cost of distribution. [280 A-DJ 
Therefore, having regard to the entire document and the sur-
rounding· circumstances, the words "current official scale of rates" ~n 
the agreement mean the official scale of rates current or prevalent 
from time to time during the currency of the agreement. [281 CJ 
(ii) No sanction of the State Government was necessary for 
enhancing the rates. 
There was no alteration of any condition of the agreement within 
the meaning of s. 21(2) of the Act. The consumers had agreed to pay 
the rates that would be fixed from time to time, and if that term 
was a condition within the meaning of that section, there was no 
change at all in that condition, for the change in the rates was not 
in derogation of the condition but in terms of it. [282 A-Bl 
B 
c 
D 
E 
F 
H 
VENKATARATNAM v. MUNICIPALITY (Subba Rao, J.) 
277. 
A 
CIVIL APPELLATE JuRiSDICTION: Civil Appeal No. 69 of 1964. 
Appeal by special leave from the judgment and decree dated 
October 10, 1961, of the Andhra Pradesh High Court in Second 
Appeal No. 872 of 1958. 
A. V. Viswanatha Sastri, K. Rajendra Chaudhuri and K. 
R. 
B 
Chaudhuri, for the appellants. 
0 
D 
E 
F 
G 
H 
S. V. Gupte, Solicitor-General, and T. Satyanarayana, for res-
pondent No. I. 
T.V.R. Tatachari and B.R.G.K. Achar, for respondent No. 2. 
The Judgment of the Court was delivered by 
Sobba Rao, J. On November 22, 1927, the Government of 
Madras, in exercise of its powers under s. 3(1) of the Indian Elec-
tricity Act, 1910 (IX of 1910), here'nafter called the Act, issued a 
licence to the Bezwada (now Vijayawada) Municipal Council for 
the supply of electric energy within the municipal limits of Bez-
wada at rates not exceeding the maximum charges given in the 
third annexure to the said licence. The appellants, who are some 
of the consumers of electric energy

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