GUJARAT ELECTRICITY BOARD versus AHMEDABAD ELECTRICITY CO. LTD. & ORS.

Citation: [1974] 2 S.C.R. 492 · Decided: 28-11-1973 · Supreme Court of India · Bench: D.G. PALEKAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

492 
GUJARAT ELECTRICITY BOARD 
v. 
AHMEDABAD ELECTRICITY CO. LTD. & ORS. 
November 28, 1973 
[D. G. PALEKAR, V. R. KRISHNA ]YER AND R. S. SARKARIA, JJ.] 
Electricity Supply Act, 1948. Ss. 51A, 60(1), 76 (I) and (2) and Para 16of Sch. 6-
Reference by licensee of dispure between it and Electricity Board to arbitration of 
Central Electricity Authol'ity-Jf operates as bar ro appointment of Rating Committee 
by Board. 
In September 1963 the respondent company intimated to the appellant-Board 
and the State Governmfnt of its intention to revise the rates of electricity on certain 
grounds. Both the State Government and the Board informed the respondent th3t 
they were not satisfied , that there was any justification for the revision. The res-
pondent, however, brought the rates into effect in November, 1963. Being of the 
view that the ITSpondent'was over charging the consumers in breach of the provisions 
of the 6th Schedule to the Electricity Supply Act, the appellant issued a notice to show 
cause why a Rating Coirimittee under s. 57A should not be constituted for inquiring 
into .the matter. The respondent justified the increase and also intimated that if 
its explanation was not accepted the issues involved would be referred to the ar-
bitration of the Central. Electricity Authority under para 16 of the Schedule read 
with s. 76 of the Act. 
As the respondent did not receive any intimation, it referred 
the matter to the arbittation of the Central Electricity Authority. The appellant, 
however, not being satisfied with the explanation given to the show cause notice 
appointed a Rating Coi;nmittee. 
On a petition filed' by the respondent, the High Court held that a dispute or 
difference between the Soard and the Electricity Company which was referable to 
the arbitration of the Authority under para 16 of the 6th Schedule had arisen, and 
since pending such arbitration, no Rating Committee could be constituted because 
of the second proviso to s. 57A the constitution of the Rating Committee by the 
appellant was illegal and the Committee had no power to function. 
Allowing the appeal to this Court, 
HELD : There is no provision in the Act which makes a dispute between the 
Board and the licensee as to whether the provisions of the 6th Schedule had been 
complied with or not referable to the Central Electricity Authority, 
The second 
proviso to s. 57A does not contemplate holding up of the constitution of the Rating 
Committee merely on' the ground that such a dispute was referred by the licensee to 
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the Authority. [504 C-EJ 
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(a) Under s. 57A the State Electricity Board has power to interfere by the ap-
pointment of a Rating Committee if it is satisfied that the licensee has over charged 
the consumers by committing a breach of any of the financial principles mentioned 
in the 6th Schedule. The second proviso to the section contains three conditions 
which are to coexist, if the Rating Committee was not to be constituted by the Board: 
{i) there should be an alleged failure of the licensee to comply with any provisions 
of the 6th Schedule; (ii) such alleged failure niust raise a dispute or difference as to 
the interpretation of the said provisions or any matter arising therefrom; and (iii) 
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and such difference or dispute had been referred by the licensee to the arbitration of 
the Authority tJnder,para 16 of that Schedule before a certain date. [497 H-498 B; 
501 C·E; 502 FJ 
In the present case, there is an allegation by the appellant Board that the licensee 
had failed to comply with the provisions of the 6th Schedule. It could also be 
assumed that the alleged failure raised a dispute or difference as to the interpretation 
of the said provisions or any matter arising therefron;i, though it is not clear whether 
Parliament wanted, for.purposes ofs. 57A and para 16 of the 6th Schedule, that the 
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Authority should be approached not merely for the interpretation of the provisions 
of the 6th Schedule but also for sundry matters of detail arising out of the provisions. 
As regards the third condition the dispute had been referred by the licensee to the 
arbitration of the Authority within the time allowed by the statute, but it was not a 
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GUJARAT ELEC. BOARD V • . AHMEDABAD ELEC, CO. LTD. 
493 
(Palekar, l.) 
reference under para 16 of the Schedule, because, the reference to arbitration by the 
Authority under that paragraph could be made by the licensee only against the 
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