KANORIA CHEMICALS AND INDUSTRIES LTD. AND ANR. versus STATE OF U. P. AND ORS. AND VICE VERSA

Citation: [1992] 1 S.C.R. 151 · Decided: 16-01-1992 · Supreme Court of India · Bench: S. RANGANATHAN · Disposal: Disposed off

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Judgment (excerpt)

y 
KANORIA CHEMICALS AND INDUS1RIES LTD. AND ANR. 
A 
v .. 
STAIB OF U. P. AND ORS. AND VICE VERSA 
JANUARY 16, 1992 
[S. RANGANATHAN, FATHIMA BEEVI AND N. D. OJHA, JJ.] B 
Electricity (Supply) Act, 1948: Section 60 (As introduced by section 
7 of Electricity Laws (U.P. Amendment) Act, 1983. 
Company-Electricity Board-Contract for supply of electricity at 
concessional rates on special considerations-Power of Electricity Board to C 
revise rates-V.P. Gazette Notification dated 29.10.82--Schedule-Levy of 
HV-2 rates i.e. uniform tariff applicable to "bulk power" consumers in 
substitution of contracted rates-Validity of-Held fixation of rates was not 
vitiated-Revision of rates can be given retrospective eff ecl-F ailure to 
specify the precise manner in which the rates were arrived at does not 
vitiate the rates fixed-Power to revise tariff can be exercised more than D 
once-Electricity Board can fix rates higher than HV-2 rates-But levy of 
rates higher than HV-2 rates on the Company held not justified under the 
circumstances. 
)·. 
Section 49-Electricity Board-Revision of rates-Factors to be taken 
into account-Di.,·tinction between section 49 and 60 explained. 
E 
Electricity Laws (U.P. Amendment) Act, 1983 (Act 12 of 1982): 
Section 7-Difference in English and Hindi version of Act, Absence of 
words "for the first time" in Hindi version of Act-Effect of. 
The appellant-company set up a caustic soda industry at Renukoot F 
involving the use of electricity as the main raw material. On 30.9.63 it 
entered into a contract with the State of Uttar Pradesh for supply of 
electricity for a period of 25 years from 1.4.64, to the extent of 6.5 NW 
from the Rihand Hydel station at a fixed rate of 2.5 paise per unit and 
an additional supply of 1.5 NW from an inter-connection at the rate of G 
5 NP per unit. The terms of the contract provided that the transmission 
and distribution losses were to be borne by the company and that the 
rates could be raised after sixteen years but any enhancement in rates 
was not to exceed 10 per cent of the rates agreed upon. 
Subsequently, the UP Government enacted the Electricity Laws H 
(Uttar Pradesh Amendment) Act, 1983 which came into force from 
151 
152 
SUPREME COURT REPORTS 
(1992] 1 ~. c. R. 
20.5.1983. Section 7 of the said Act amended section 60 of the Eleetricity 
A Supply Act, 1948 by inserting sub-sections (3) to (5) with retrospective 
effect from April 1, 1965. The Amended Act enabled the State and the 
Board to modify the rates of supply of Electricity to appellant under the 
contract of 30.9.63. Simultaneously the Parliament also amended Sec-
tion 59 of the Electricity Supply Act by the Act 18 of 1983 enabling the 
Electricity Board to fix the tariff in such a way so as to build up a 
B statutory surplus fixed by the State Government. 
On the passing of the Amendment Act, the Electricity Board in-
formed the appellant-company that the rates were proposed to be 
revised and later it informed the appellant-company that on 28.9.83 the 
State Government, by its Gazette Notification dated 29th October, 1982, 
C had approved the levy of HV -2 rates (i.e. uniform tariff applicable to 
'Bulk power' consumers) in substitution of the rates mentioned in the 
·agreement of 30th September, 1963. The effect of the revision was to 
oblige the appellant-company to pay 57.71 paise per unit for 1983-84 
and 61.60 paise per unit for 1984-85. Accordingly, supplementary bills 
were raised demanding Rs. 3.07 crores from the appellant-company. 
-,, 
D The appellant filed a writ petition in the High Court of Allahabad 
assailing the Validity of section 7 of the amending Act and the right of 
the Board to enhance the rates. 
By its order dated 2.4.87 the High Court allowed the writ petition 
and quashed the approval dated 28.9.83 given by the State Government 
E to the new rates and the consequential demands of the Electricity Board 
but left it to the Board and State to fix revised rates afresh by directing 
the respondents (1) not to charge the uniform tariff rate for the period 
beginning from 20th May, 1983 till the rates were fixed in accordance 
with section 60(5) (a); and (ii) that the rates applicable to the appellants 
F should be determined having regard to the individual circumstances of 
the appellant. 
The Electricity Board and the State Government preferred an 
appeal to this Court. Aggrieved by the fact that in applying the HV -2 
rates the Board and the ·State had not taken into 

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