LexTHE MADRAS ALUMINIUM CO. LTD. versus THE TAMIL NADU ELECTRICITY BOARD AND ANR.
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A B C D E F G H 742 SUPREME COURT REPORTS [2023] 10 S.C.R. THE MADRAS ALUMINIUM CO. LTD. v. THE TAMIL NADU ELECTRICITY BOARD AND ANR. (Civil Appeal Nos. 7224-7226 of 2009) JULY 06, 2023 [B. R. GAVAI, SANJAY KAROL AND ARAVIND KUMAR, JJ.] Contract – State, a party to the contract must abide by Article 14 – Reasonable period to consider an application – Application made by the appellant for reduction to 10000 Kilovolt-Ampere (KVA) – No steps effectuating such request were taken despite repeated follow ups by the appellant – Action of the respondents in taking considerable time from when the said application was made, to when the revised agreement was entered into, if arbitrary and unreasonable – Held: Yes – State action irrespective of being in the contractual realm must abide by Article 14 – Appellant was unjustifiably asked to furnish costs for unutilized electricity which should not have extended beyond six months (considering ‘reasonable period’ to consider an application, to be so), for a period much larger thereto, rendering such action unreasonable and arbitrary – On facts, it is not open for the respondents to contend that the petitioner is not liable for the refund of the amount deposited under protest towards the bills so generated taking the maximum load to be 23000 KVA – Particularly, when at no point in time, the appellant neither sought for nor consumed the electricity more than the maximum demand of 10000 KVA – Acknowledging the financial health of the appellant, in the 1999 agreement, the respondent ought to have taken a decision on the appellant request with a reasonable dispatch and terms which ought to have been within a period latest by six months and not two and a half years as was eventually done – Judgment passed by High Court set aside – Respondent to return the amount paid by the appellant for 13000 KVA, in excess to its request of maximum sanctioned demand of 10000 KVA – Constitution of India – Article 14 – Doctrines/Principles – Sick Industrial Companies Act, 1985 – s.3(1)(O). Doctrines/Principles – Principle of reasonable time – Discussed – Contract. [2023] 10 S.C.R. 742 : 2023 INSC 607 742 A B C D E F G H 743 Allowing the appeals, the Court HELD: 1.1 It is a matter of record that a fresh agreement with the reduced maximum demand of 10000 KVA was entered into between the parties in July, 2004. Undisputedly, such fresh agreement was inked more than two and a half years after the application was made on 24th December, 2001. The Appellant in pursuance of the reduction of maximum demand made its application and followed up repeatedly with the authorities. Save and except two letters on behalf of the Board one, acknowledging the said application and stating that same has been put up before the authorities for consideration: and two, rejecting the date of such reduction being effectuated and listing down certain conditions upon which the same would be granted, no other communication on part of the board forms the record. [Paras 23, 26][752-H; 753-A, E] 1.2 No reason whatsoever is forthcoming as to why this particular application required such a vast length of time to be acted upon. In the mean while the Appellant has been faced with the threat of disconnection, and has had to pay, due to such inaction, large amounts of money for electricity which it has not utilized. It is true that the agreement states that the consumer, (Appellant herein) is bound to pay such maximum demand amount irrespective of utilization and also that such an agreement will be in effect for a period of five years but in the considered view of this Court, the Board cannot be allowed to take refuge of these clauses while the company on the other side is saddled with heavy cost in the interregnum of such decision. More so in view of the communication dated 11th August 1994. [Paras 27 and 28][753- F-H] 1.3 The Writ Court had observed that in the other instances cited by the Appellant herein, the reduction sought was a small amount of KVA as opposed to the 13000 KVA reduction sought vide the instant application. While that may be true, it does not supply reason to the act of keeping an application pending for such a long period of time. [Para 29][754-A-B] 1.4 State action irrespective of being in the contractual realm must abide by Article 14, and that a) after passage of a considerable THE MADRAS ALUMINIUM CO. LTD. v. THE TAMIL NADU ELECTRICITY BOARD AND ANR. A B C D E F G H 744 SUPREME COURT REPORTS [2023] 10 S.C.R. period of ti
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