LexNIPHA STEELS LTD. AND ANR. versus WEST BENGAL STATE ELECTRICITY BOARD AND ORS.
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NIPHA STEELS LTD. AND ANR. v. WEST BENGAL STATE ELECTRICITY BOARD AND ORS. MAY 7, 2003 [SHIVARAJ V. PATIL AND ARIJIT PASAYAT, JJ.] Electricity (Supply) Act, 1948-Section 2(8)-Electric power supply- Agreement for maximum demand charges-Interrupted supply of electricity- A B No provision for remission of charges in case of maximum demand charges- C Such remission provided in case of minimum guaranteed charges-Plea that in view of interrupted supply remission required by analogy of minimum guaranteed charges-Held: Consumers not entitled for remission of charges in case of interrupted supply-Parties are bound by the terms of agreement- What is applicable to minimum guaranteed charges cannot be applied to maximum demand charges as both operate in different areas-Indian Electricity D Act, 1910-West Bengal Electricity Energy (Maintenance of Supply) Order, 1977. Words and Phrases: "Maximum demand"-Meaning of, in the context of Section 2(8) of E Electricity (Supply) Act, 1948. Appellant-consumers entered into agreement with respondent-Board for supply of power on the basis of maximum demand charges, in terms of Indian Electricity Act, 1910, West Bengal Electricity Energy (Maintenance of Supply) Order, 1977 and Electricity (Supply) Act, 1948. F The agreement provided for remission of charges for interrupted supply of electricity in respect of minimum guaranteed charges but there was no such provision in respect of maximum demand charges. Previously, Board used to grant remission even in respect of maximum demand charges and the practice was later abandoned. In exercise of power under Section 22- G Hof the Indian Electricity Act, 1910 Board was prevented from supplying electrical energy during certain specified hours of each day of each month. Appellants, on receipt of bills, took the stand that in view of interrupted supply of electricity, the demand of maximum demand charges at the rate fixed in the agreement was not proper. Board rejected the plea of the 41 H 42 SUPREME COURT REPORTS [2003] SUPP. I S.C.R. A consumers. Single Judge of High Court accepted the view of the consumers but the Division Bench rejected the view. In appeal to this Court appellants contended that when a contract is for continuous supply there is an inbuilt intention that there should be abatement of charges in ease of ineontinuous supply; and that maximum B demand charge is relatable to electrical energy supply. Respondent-Board contended that the minimum guaranteed charges and maximum demand charges stand on different footing and logic applicable to one cannot be applied to the other. C Dismissing the appeals, the Court HELD: I. So far as the applicable clauses of the agreement are concerned, the terms are clear and unambiguous. In view of the purpose for which the maximum demand is levied, it is crystal clear that there is no scope for granting any remission in the manner claimed by the D appellants. [53-H; 54-Al 2. Maximum demand and minimum charges are levied for different purposes. The former is charged to defray capital costs and the latter to meet running charges. The various Boards require huge capital outlay for machinery, plants, equipments, transmission lines etc. Provision has to be E made for depreciation of machineries and other depreciable assets. In addition, maintenance of plants, transmission lines etc. has to be done requiring deployment of huge staff. Demand charges are levied and collected to meet the capital outlay, while running charges are met by levy and collection of consumption charges. These distinctive features make I.he F levies conceptually different. The two do not in any way overlap and the provisions therefor do not contradict each other or create identical base for their operation. Though the agreements contained conditions fixed by G the Boards in advance and are open to acceptance by the prospective customers, the patties are bound by the terms if they have been entered by the parties with their eyes open. [53-D, E, F, G] Orissa State Electricity Board and Anr. v. /Pl Steel Ltd. and Ors., (1995[ 4 SCC 320 and Ferro Alloys Corporation Ltd. v. A.P. State Electricity Board and Anr., AIR (1993) SC 2005, relied on. 3. The contract for supply of electrical energy cannot be treated on H par with any other contracts of mutual rights and obligations. The terms NIPHA STEELS LTD. r. WEST BENGAL STATE ELECTRICITY BOARD [PASAYAT . .I] 43 and conditions of
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