ORISSA STATE ELECTRICITY BOARD AND ANR. ETC. versus M/S IPI STEEL LTD. ETC.

Citation: [1995] 3 S.C.R. 684 · Decided: 21-04-1995 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
ORISSA STATE ELECTRICITY BOARD AND ANR. ETC. 
B 
v. 
M/S !Pl STEEL LTD. ETC. 
APRIL 21, 1995 
(B.P. JEEVAN REDDY AND SUHAS C. SEN, JJ.] 
Indian Electricity Act, 19 ](}-Section 22-B-Orissa State Electricity 
Board (General Conditions of Supply) Regulation 1981-Proviso to Regula-
tion 46 as substituted by notification dated June 25, 1987-0rder under Sec. 
C 22-B to cut supply of energy /Jy fifty per cent-Regulation 46 substituted to 
provide for two pal! levy-Consumer charged for actual consumption plus the 
maximum demand but exempted from payment of minimum charges during 
the period of restricted supply-Held : Not unreasonable and arbitrary-Jus-
tification for levy of maximum demand charges under two part levy. 
D 
The respondent had entered into an agreement with the appellant 
Board for supply of power upto but not exceeding a maximum demand of 
7778 KV N7000 KW. The agreement between the appellant and the respon-
dent stipulated that the provision of the Orissa State Electricity Board 
(General Condition• of Supply) Regulation, 1981 as modified from time to 
E time, shall form a part of the agreement and shall bind the respondent. 
The agreement incorporated payment of electricity charges on the 
basis of two part levy where the consumer, apart from the charges for the 
actual consumption of electricity, also pays charges for the maximum 
demand (the highest level/load at which the consumer draws electricity 
F over any period of thirty minutes in a month) subject to payment of the 
minimum charges, which in this case was 80% of the r.ontract d•mand. This 
meant that even if the maximum demBnd of the consumer was less than 
80% of the contract demand of 7778 KV N7000 KW, as contemplated in the 
agreement the consumer has to pay charges for 80% of the contract 
G demand. 
For the period January, 1989 to August, 1990, the Government of 
Orissa, in view of short fall in generation of power, made an order under 
Section 22-B of the Indian Electricity Act, 1990 read with Section 78(A) of 
the Electricity (Supply) Act, 1948 directing the appellant to reduce the 
H supply of energy to the consumers to the extent as specified in the schedule 
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ORISSA STATE ELECTRICITY BOARD v. LP.I. STEEL LTD. 
685 
to the said order. The effect of the order was that the supply of energy to A 
the respondent's industry was reduced by 50 per cent. However, it was open 
to the respondent to distribute the maximum demand permitted to him in 
any manner convenient to him. If the respondent wished to run his unit 
drawing energy at the contract demand level of 7778 KV A be could do so 
but could run his unit for six months thus observing the 50 per cent cut . B 
or in the alternative the respondent could run bis unit throughout the year 
but at half the level of contract demand, i.e. at 3889 KV A. 
j 
Subsequently, by a notification dated June 25, 1987, the appellant 
substituted Regulation 46 of the Orissa State Electricity Board (General 
Conditions of Supply) Regulation, 1981 providing that during the period C 
of operation of an order under Section 22-B of the Indian Electricity Act, 
1910 the appellant shall be under an obligation to supply energy only in 
accordance with the restrictions placed by that order. The proviso to the 
substituted Regulation 46 provided that during the period of restricted 
supply, if the restriction on supply of electricity exceeds 150 hours in a 
month, the consumer shall not be liable to pay the minimum charges but D 
only charges for the actual energy consumption plus charges for the 
m~ximum demand. In the present case, as restriction was for In.ore than 
150 hours, the proviso to Regulation 46 was applicable. 
The respondent challenged the validity of the proviso to Regulation E 
46, by way a Writ Petition in the High Court. Before the High Court, the 
respondent contended that the proviso was unreasonable, arbitrary and 
confiscatory in so far as during the period.of restricted supply the supply 
of power is irregular. It was contended by the respondent that the appel-
lant charges the consumer on the basis of maximum demand which means 
that even if the consumer draws 7778 KV A on the first day of the month F 
and thereafter there is no drawal. throughout the month, the consumer 
would be charged for 7778 KV A on the basis of maximum demand. Specific 
instance of January, 1989 was pointed out in which month the quantity of 
demand was 478.3 KV A but the respondent
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