JIYAJEERAO COTTON MILLS LIMITED AND ANOTHER versus MADHYA PRADESH ELECTRICITY BOARD AND OTHERS

Citation: [1988] SUPP. 2 S.C.R. 978 · Decided: 12-09-1988 · Supreme Court of India · Bench: A.P. SEN · Disposal: Dismissed

Judgment (excerpt)

A 
JIYAJEERAO COTTON MILLS LIMITED AND ANOTHER 
v. 
MADHYA PRADESH ELECTRICITY BOARD AND OTHERS 
SEPTEMBER 12, 1988 
B 
[A.P. SEN AND LALIT MOHAN SHARMA, JJ.] 
[
Indian Electricity Act, 1910--Section 22B-Company entering 
into agreement with Electricity Board for supply of electricity-Board 
supplying additional energy and billing at penal rates-Action of 
Board-Whether valid and legal. 
c 
Madhya Pradesh Electricity (Supply and Consumption Regula-
tion) Order 1975/Madhya Pradesh Electricity (Generation, Control and 
Consumption) Order 1975: Clause 3(i) Regulation Order-Consumers 
to reduce consumption-Board entitled to disconnect supply for breach 
~ 
or charge penal rates for excess energy consumed-Generation Order 
D provided for assessment of generating capacity of captive power of 
consumer. 
Words and Phrases: 'Regulate'-Meaning of. 
In October 1971 the appellant company entered into an agree-
E ment with the Madhya Pradesh Electricity Board, respondent No. l, for 
supply of electricity. The quantity of electricity to be supplied varied 
from time to time. 
To meet the situation arising out of insufficient generation of 
electricity, the State of Madhya Pradesh issued two orders. By the 
F Madhya Pradesh Electricity (Supply and Consumption Regulation) 
Order, 1975 the consumers were asked to reduce their consumption 
failing which they would have to pay charges at penal rates for excess 
consumption,_ without prejudice to the Board's power to disconnect the 
supply. By the Generation Order, the consumers who had alternative 
sources of captive power were required to generate electricity to the 
G maximum extent technically feasible, from their own sources of 
electricity. 
After the assessment of their generating capacity, the appellant 
was directed to generate additional electricity of 2,500 K. W. Suh-
Clause (iii) of Proviso to clause 3 of the Generation Order provided that 
;, 
H if in certain contingencies tnere was reduction in the generation of 
978 
' ,. 
JIYAJEERAO COTTON MILLS '· ELECTRICITY BOARD 
979 
electricity by . the consumer; the Board would try to make good thr 
deficit against the appropriate charge for it. Under this provision the 
appellant, on pleading emergency, was supplied additional energy from 
time to time. F Jr excess consumption drawn without the Board's prior 
approval, the appellant was sent bills at penal rate. 
The appellant company challenged the demand before the High 
Court by filing a writ application under Article 226 of the Constitution, 
which was dismissed by the High Court except for granting some minor 
reliefs. 
Before this Court, it was contended by the appellant: 
(I) There is no sanction in Law for charging at the Penal rate for 
the electricity consumed beyond what is permissible under the Genera-
tion Order. 
(2) That the assessment of their generating capacity was not made 
by the authority empowered to do so. i.e. the Divisional Engineer, and 
(3) that the assessment was based on irrelevant and extraneous consi-
derations. 
Dismissing the appeal, it was, 
A 
B 
c 
D 
HELD: (I) A perusal of the documents on record, including 
E 
admissions on the part of the appellant company, furnishes unimpeach-
able evidence, ·pr-Ol'ing that the assessment of the maximum feasible 
capacity of the appelant's capative power sets was duly made in accord-
ance with the Generation Order, and that the Divisional Engineer, who 
had been authorised by the Generation Order to assess the appellant's 
generating capacity, reached the conclusion after personally consider-
F 
ing the matter thoroughly. 
(2) In pursuance of the assessment of the generating capacity the 
required direction was issued which was acted upon by the parties for a 
number of years. The Company not only took steps to generate the 
additional energy as was required of it, it also took advantage of the 
G 
provisions of proviso (iii) to clause 3 of the Generation Order and 
benefitted by it from time to time. [988A-BI 
(3) The appellant company was fully conscious of the fact that it 
was consuming electricity beyond its entitlement under the two Orders. 
For several years the Company was particular to obtain the permission 
H 
A 
B 
98(1 
SUPREME COURT REPORTS 
I 1988] Supp. 2 S.C.R. 
of the Board for drawing electricity itl"'excess of what it<was entitled to 
by the agreement, as modified by the Regulation Order and the Genera-
tion Order, but later, it not only stopped seeking the advance sanction 
in this rega

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