LexINDIAN ALUMINIUM COMPANY ETC. versus KERALA STATE ELECTRICITY BOARD
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70
INDIAN ALUMINIUM COMPANY ETC.
v.
KERALA STATE ELECTRICITY BOARD
luly 23, 197!i
[A. ALAGIRISWAMI, P. N. BHAGWATI AND P. K. GOSWAMI, JJ.l
Electricity Supply Act (54 of 1948) Ss. 49, 57, 59 and 19(i)-Scope of.
Po1ver of public authority to fetter its discretion-Scove of.
Delegated
Jegislation-Na power to enhance charges in Act-If delegate
can do f>O by franiing regulation.
B
interpretation of statutes-Marginal Note, u.te of.
C
Under s. 49(1) and (2) of the Electricity Supply Act, 1948, the Lcgiolature
has crn~o\vered the State Electricity Board to frame uniform tnriffs and has
also indicated the factors to be taken into accoun't in fixing uniform tariffs.
Under sub-s. (3), the Board m~, in the special circumstances mentioned
therein, fix different tariffs for the supply of electricity, but, in doing so,
sub-s. ( 4) directs that the Botlrd is not to show undue preference to any person.
Under s. 59 the Board shall not, as far as practicable, carry on its operations
D
at a Joss and shall adjust its charges accordingly from time to time.
Certain consumers of electricity had entered into agreements for the supply
of clcctrlcity for their manufacturing purposes at specified rates for specified
periods. Some of the agreements were entered into with the State Governments
and the others with the State Electricity Boards. In one of the agreements
there was an arbitration clause. On account of the increase in the operation
and maintenance cost, due to various causes whi:h caused loss to the State
~
Electricity
Boards,
the Boards wanted
to
increase the charges
in
all
the cases. The consumers challenged the competency of the Boards to do so
by petitions in the respective High Courts. The High Court sustained the
Board's claim, in some ca·ses, under Ss. 49 and 59, and in others, held that
the Board was incompetent to do so. In the case of the consumer where there
\Vas the arbitration clause, the High Court refused to en'tertain the petition on
ac:ount of the clause.
In appeals to this Court by the aggrieved consumers a·nd the Boards,
HELD : ( 1) The agreements with the State Governments must also
be
F
•
treated as agreements entered into with 'the Boards. Section 60 of the Act provides
that all contracts entered into by or with the State Government for any of the
purposes of the Act, shall be deemed to have been entered into by or with the
Board. One of the primary purposes of the Supply Act is to provide for the
supply of electricty. An agreement for supply of electricity to a consumer is.
therefore, an agreement for one of the purposes of the Supply ,\ct, and s. 60
G
1
has application to such an a·greement.
[78G-H]
2(a) Fixation of special tariffs under s. 49(3) can be a unilateral Act 011
the part of the Board but more often it would be the result of negotiations
between the Board and the consumer and hence a matter of agreement betw-een
(
them. Therefore, the Board can, in exercise of the power conferred under the
sub·section, enter into an agreement with a consun1cr stipulating for special
tariff for supply of electricity for a specific period of tin1c.
The agreements
H
for su_pply of electricity to the consumers must therefore be regarded as having
been entered into by the Boards in exercise of the statutory power conferred
under s. 49(3). [81E-F. H-82BJ
..
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A
B
c
D
J'ODJAN ALUMINIUM co. v. KERALA ELECT. BOARD (Bhagwati, J.)
71
(b) When a public authority is entrusted by a statute with a discretionary
_po\ve.r to be exercised for the public good, it cannot, when making a private
cov·:ract in general terms, fetter itself in the use of that power or in the exercise
of s•.•_(.h discretion. This principle is attracted when an attempt is made to
fetter in advance the future exercise of statutory powers otherwise ihan by Lhe
\ alid exercise of a statutory power.
Where a statutory power i~ exercised to
e.nter in: .o a stipulation with a third party which fetters the future exercise
(tf other statutory powers, where such stipulation is made, not as part of a
private contract in general terms, but in exercise of a
s~a·'-utory power-'he
~xercise of the statutory power would not be held to be invalid as a fetter on
tbe fu :urc exercise of other statutory powers.
If it were so held, it w-0uld
rend<!r the siatutory power meaningless and futile.
Therefore, 'vhere a stipula·
i:on !n a contract is entered into by a public authority in exerdse ofExcerpt shown. Read the full judgment & AI analysis in Lexace.