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PETITIONER:

M/S RAYMOND LIMITED & ANR., ETC. ETC.

Vs.

RESPONDENT:

MADHYA PRADESH ELECTRICITY BOARD & ORS.,ETC.ETC.

DATE OF JUDGMENT: 16/11/2000

BENCH:

B.N.Kirpal, Doraiswamy Raju, K.G.Balakrishna

JUDGMENT:

RAJU, J.

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The above batch of appeals arise out of a common

judgment rendered in a batch of Writ Petitions by a Full

Bench of the Madhya Pradesh High Court, since reported in

AIR 1999 Madhya Pradesh 143 and also the consequential

separate orders passed subsequently by the Division Bench

dismissing the Writ Petitions. The Writ Petitioner -

Industries filed appeals against that portion of the opinion

of the Full Bench confining the declaration of law made for

prospective application only and the dismissal of the Writ

Petitions, whereas, the Electricity Board had filed appeals

against that portion of the opinion of the Full Bench

declaring the position of law that whenever the contracted

supply falls short of 40% of the contract load then the

Board shall be entitled to charge only for the reduced

energy actually supplied and not for 40% of the contract

load as minimum charges and thereby overruling an earlier

decision of a Division Bench of the said High Court reported

in M/s Gwalior Steels Private Ltd. vs M.P. Electricity

Board (AIR 1993 M.P. 118). For the purpose of appreciating

the points raised, we would advert to the facts in one of

these appeals, particularly those in M/s Raymond Ltd. in

C.A. Nos. 4218-4219 of 1998.

The appellant M/s Raymond Ltd., a company registered

under the Companies Act, 1956 and having its cement

manufacturing division within the State of Madhya Pradesh,

entered into an agreement with the Madhya Pradesh

Electricity Board on 27.3.1979 renewed periodically for

supply and purchase of high tension electric energy for use

in the manufacture of cement. The minimum contractual

demand was for 33 MW (38,822 KVA) per day and clause 19

provided for the Tariff, while clause 21 stipulated the term

relating to minimum guarantee in the following terms:

21(a) The consumer shall from the date of utilisation

of electrical energy, or from the date of expiry of the

three months notice mentioned in clause 2 hereof guarantee

such minimum consumption as when calculated at the tariff

(excluding charges due to fuel adjustment clause, meter rent

and miscellaneous charges) will yield an annual revenue of

Rs.5,40,000/- (Rupees Five Lakhs Forty Thousand Only) or pay

this sum as a minimum. The deficit, if any, between the

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guaranteed minimum charges and the actual charges shall be

payable by the Consumer.

(b) The minimum guarantee specified in Clause 21(a)

above shall at all times be without prejudice to realisation

by the Board of the minimum prescribed under the tariff

referred to in Clause 19 hereof.

(c) It hereby agreed further that the Board shall be

entitled to fix and charge enhanced amount of annual revenue

if the Board, on completion of all works for supply to the

Consumer, finds it has incurred higher expenditure than the

pre- estimated cost and in that case the Consumer shall pay

to the Board the enhanced annual revenue so fixed by the

Board without any objection and will not raise any dispute

regarding the same.

Clause 19 of the agreement read as follows:

The Consumer shall pay to the Board every month,

charges for the electrical energy supplied to the Consumer

during the preceding month, at the Boards tariff applicable

to the class of service and in force from time to time. A

copy of the current H.T. tariff No.1-A of notification

No.5/GA/147-A dated 11.03.1976 as amended applicable to the

Consumer is set out in the Schedule attached to this

Agreement.

Under the notification issued for High Tension for 132

KV/220 KV supply, the minimum tariff prescribed for cement

factories is said to be as hereunder:

The consumer will guarantee a minimum monthly

consumption (KWH) equivalent to 40% load factor of the

contract demand. The consumer will be required to pay the

energy charges on the said minimum monthly consumption plus

the demand charges on the billing demand for the month as

minimum monthly payment irrespective of whether any energy

is consumed or not during the month. An average power

factor of 0.9 will be applied for the calculation of

corresponding unit of 40% load factor on contractual

demand.

The Senior Account Officer concerned of the

Electricity Board issued a bill dated 18.10.1995 raising a

demand of Rs.2,83,18.581/- for the consumption period from

15.9.1995 to 15.10.1995. While recording the actual

consumption in units of the electrical energy and the

charges therefor, the ultimate bill and demand came to be

raised on the basis of the minimum guarantee charges

equivalent to 40% load factor of contract demand. This,

according to the appellant, resulted in a demand of

Rs.87,45,685/- in addition to the charges really due on the

actual consumption of energy during the period in question.

Challenging the same, Writ Petition No. 3616 of 1995 came

to be filed, claiming either for refund or adjustment of the

said excess amount against future demands, the said sum

being for electrical energy not really consumed by them.

During the pendency of the said Writ Petition, another bill

dated 18.10.96 for the consumption period from 1.12.95 to

15.12.95 was said to have been issued for Rs.10,24,867/-

towards minimum guarantee charges equivalent to 40% load

factor of contract demand. As against this, Writ Petition

No. 4711 of 1996 came to be filed challenging the demand

and seeking for either refund of the same or for adjustment

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thereof against future demands. The Electricity Board

contested the claim of the appellants and others contending

that as per the terms of the agreement entered into

governing the supply of electrical energy, the sum demanded

is quite, in accordance with law, justified and cannot be

avoided by any of the appellants, and the details of their

defence will be adverted to hereinafter, at the appropriate

stage.

The batch of Writ Petitions initially came up before a

Division Bench and keeping in view the earlier decision of a

Division Bench reported in AIR 1993 M.P. 118 (Supra), by an

order dated 11.9.97, the matter was placed before a Full

Bench with the following observations:

After reviewing all these cases on the subject we are

impressed with the arguments that the matter requires

consideration by the larger Bench because notwithstanding

the fact that as per the terms of the agreement, an

obligation has been cast on the consumer 40% load factor of

the contract demand and pay for the same every month. But

there is no corresponding obligation on the Electricity

Board to supply 40% load factor of the contract demand.

When there is no corresponding duty on the part of the

Electricity Board to supply minimum 40% of the contract

demand load every month still the consumer is under an

obligation to 40% of the contract demand load. This

prima-facie sound in equitable. Therefore, we think it

proper that since this is a larger issue which involve

serious interpretation of the aforesaid tariff clause of the

Electricity Board as much, yet the matter may be referred to

a Larger Bench so that the matter can be placed beyond the

pale of any further controversy in the matter. Papers maybe

placed before the Chief Justice for constituting a Larger

Bench.

The Full Bench, which heard the matter, by its opinion

dated 5.3.98 held as follows:@@

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25. After considering all aspects of the matter, we

are of the opinion that the view taken by the learned

Division bench of this Court in the case of M/s Gwalior

Steels Private Limited v M.P.Electricity Board, AIR 1993

Madh Pra 118, does not lay down a correct law and we hold

with reference to Clause 23(b) of the Agreement read with

Tariff, that whenever contracted supply falls short of 40%

of the contract load, then the Board shall be entitled to

charge for the reduced energy (actually supplied) and will

not be entitled to charge 40% of the contract load. This

interpretation which appears to us to be more equitable,

just and reasonable shall be applicable only prospectively

that is from the date of the order and will not have any

retrospective operation. This is being done keeping in view

that the Division Bench judgment of this Court has held the

field since 1993 and the Board has been billing the

consumers in the State on that basis and now since we are

taking a different view from that of the Division Bench of

this Court and we are interpreting the provision contrary to

the view taken by the Division Bench in the above case of

M/s Gwalior Steel Private Limited it would be more just and

equitable to give this interpretation a prospective effect

and not retrospective. Similar course of action was adopted

by the Hon. Supreme Court in the case of L.Chandra Kumar v.

Union of India, AIR 1997 SC 1125. Therefore, we hold that

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the present interpretation will be prospective in nature and

not retrospective.

Thereupon, the Writ Petitions came to be posted before

the Division Bench, and apparently on account of the

prospective declaration of law, no relief as prayed for in

respect of particular demands for the earlier period could

be granted and the Writ Petitions came to be dismissed.

Hence, the appeals by the Writ Petitioners before the High

Court. So far as the Electricity Board is concerned, they

filed appeals, felt aggrieved by the judgment of the Full

Bench insofar as it overruled the earlier judgment reported

in AIR 1993 M.P. 118 (Supra). This Court, while granting

leave in the Special Leave Petitions filed, on 24.8.98

directed the appeals to be placed before a Bench of three

judges in view of the decision of this Court in Orissa State

Electricity Board & Another vs IPI Steel Ltd. & Others

reported in 1995 (4) SCC 320.

Heard the learned counsel appearing on either side.

Shri C.S. Vaidyanathan, learned senior counsel for the

Electricity Board, took us at length through the various

clauses in the agreements and contended that the minimum

charges expressly guaranteed in favour of the Board is not

subject to either actual supply by the Board or consumption

by the consumer and the payment of such minimum guarantee at

a rate equivalent to 40% load factor of the contract demand

is in substance a partial return for various investments in

the various installations and to meet recurring expenses for

maintenance and the consumers, having specifically

undertaken to do so with no provision for any reduction or

deduction in the contract as such for such reasons or

grounds, cannot go back upon the solemn commitments and

undertaking under clause 19. In reinforcing the said stand

it is further contended that whenever the State Government

pass orders under Section 22 B imposing power

cuts/reduction/staggering in supply both parties are obliged

to carry out the same and it would be futile for the

consumers to read into the word consumption, the element

of supply too. The load factor envisaged is said to be a

measure of liability for minimum guarantee and not to cast

any obligation on the Board to effect supply of energy to

that extent so as to make it a condition precedent for

casting liability on the consumer to pay the minimum

guaranteed charges. It is further contended that the

minimum guarantee has been fixed for various industries such

as cement, steel etc. depending upon the different minimum

load factors having regard to the investments on

establishments and recurring maintenance expenditure and it

is never considered to be part of the tariff but really

relate to the realm of mechanics of price fixation,

exclusively within the discretion of the Board and

consequently the High Court could not have interfered with

the same.

On behalf of the consumer industries Shri G.L.Sanghi,

learned senior Advocate, made the leading arguments followed

by Sarvashri A.K. Chitale, Bhimrao Naik, Ravindra

Srivastava, Senior Advocates, and S.Ganesh, U.A.Rana,

A.K.Sanghi and others. Adverting to clauses 1(a), 3(a),

(b), 8, 11, 12, 18, 19, 21 and 23, it was strenuously

contended that the contract must be construed as a whole in

the context of the object underlying the same and the basic

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contract being for supply continuously 33 KV electrical

energy on day to day basis, it should really be meaningful

and really useful and possible of consumption for the

purposes of the industries concerned. It is further stated

that the quality, the quantity and manner of supply has also

to be taken into account in assessing the usefulness of the

energy for industrial purposes and if it is shown that the

supply actually made did not conform to these vital aspects

of supply then the undertaking to pay the minimum guaranteed

amount should itself have to go and any other construction

would result in grave injustice besides being also

inequitable and unconscionable. The further plea is that

the Board during the period in dispute did not supply even

the bare minimum quality of energy required to run the

essential machineries to keep the manufacturing process

going and continuous and the supply actually made was of

poor quality, not really useful, erratic and non-

continuous, fluctuating and accentuated with frequent

trippings and in effect not only dislocating the normal

working of the industries but also damaging the machineries

and retarding production and therefore, no exception could

be taken to the manner of construction placed on the clauses

in the contract as well as the conclusions arrived at in

respect of the statutory and other liabilities of the

consumers, by the High Court. The learned counsel appearing

also endeavoured to highlight some of the individual factual

details pertaining to their cases and also invited our

attention to some of the correspondence exchanged between

parties regarding their grievances about the quality as well

as the quantity of supply made to them. We may make it

clear even at this stage that we do not propose to undertake

an enquiry into or adjudication of such factual claims in

these proceedings, particularly in the teeth of the manner

of disposal given by the Division Bench after the opinion of

the Full Bench and the desire of the learned counsel

themselves to relegate to the High Court the matters, if

need be, for determination of such claims.

Though there was an attempt for the consumers to

contend that any shortfall in the supply of the total

quantity of contract demand agreed to be made would relieve

them of all liabilities from payment of the minimum

guaranteed sum undertaken, we are unable to countenance any

such claim, particularly in view of the very question that

was actually referred to and decided by the Full Bench of

the High Court and which on the face of it merely pertained

to the liability or otherwise of the consumer industries to

pay the minimum guaranteed charges even when the minimum 40%

of the contract demand energy is not supplied during the

relevant period by the Board. As a matter of fact, we find,

in the light of the decision in AIR 1993 M.P. 118 (Supra)

the correctness of which was taken up for consideration by

the Full Bench, the question referred to the Full Bench

itself is as to whether the consumer is required to pay

minimum tariff of 40% of the contract load irrespective of

the fact that even 40% of the contract load energy has been

supplied or not to the consumer. Therefore, it is not

permissible for the consumer industries in these appeals to

invite a decision as to the liability or otherwise of the

consumers to pay the minimum guaranteed charges undertaken,

notwithstanding the factual position that the supply made

was actually 40% or even more though not of the extent of

total contract demand agreed to between the parties under

the respective contracts. That apart, countenancing such

claims to be agitated in proceedings under Article 226 of

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the Constitution would amount to the extraordinary

jurisdiction being permitted to be availed to rewrite the

contract and read just contractual liabilities and thereby

undertaking an adjudication of rights of parties flowing

under a contract - a function normally assigned to the

ordinary civil courts of the land.

Apart from making such submissions on the merits of

their claim, on the basis of the very decision of the High

Court and drawing sustenance to substantiate such claims,

the consumer industries also attacked that portion of the

judgment which purported to confine the declaration of law

made for future application only by applying the principle

of prospective overruling, contending that such principles

cannot be invoked by the High Courts exercising jurisdiction

under Article 226 of the Constitution of India and that the

High Court, in any event, committed an error in not

affording an opportunity to them to make their submissions

on the applicability or otherwise of the principle of

prospective overruling to the cases on hand.

Claims similar to the one sought to be now asserted,

have come up for consideration before this Court, though in

somewhat different background of facts and pattern of

contracts between consumers and Electricity Boards, and

either of the parties before us tried to lay their hands on

some or the other of the observations made in those cases,

to justify their respective stand. In M/s Northern India

Iron and Steel Co. vs. State of Haryana & Anr. (1976 (2)

SCC 877) the dispute arose between the parties as to whether

in a situation where there were substantial power cuts and

the Board was not able to supply the energy required by the

consumer in terms of the contract entered into, the Board

was entitled to get any demand charge and if so, to what

extent and whether the State could demand any duty on such

demand charge. This Court adverted to the existence of two

well-known systems of tariff - one the flat rate system in

which a flat rate on units of energy consumed and the other

known as the two-part tariff system, meant for big consumers

of electricity comprising of (i) what is known as `demand

charges to cover investment, installation and the standing

charges to some extent and (ii) energy charges for the

actual amount of energy consumed. The Court ultimately

decided the question on the basis of the specific

stipulation contained in clause 4(f) of the contract

therein, which entitled the consumer to a proportionate

reduction of demand charges/minimum charges, if the

consumer was not able to consume any part of the electrical

energy due to any circumstance beyond its control and for

that purpose the circumstance of power cut which disabled

the Board to give the full supply to the consumer because of

the government order made under Section 22 B of the

Electricity Act, 1910, was considered to be a circumstance

which disabled the consumer from consuming electricity as

per the contract.

In Bihar State Electricity Board & Anr. vs M/s

Dhanawat Rice & Oil Mills (1989 (1) SCC 452), this Court

while applying the decision in 1976 (2) SCC 877 (supra)

construed clause 13 of the contract between parties in that

case which specifically provided for the proportionate

reduction of the annual minimum guarantee bills, as merely

entitling the consumer to a proportionate reduction only and

not completely avoid payment of annual minimum guarantee

bills, even in cases where there was failure on the part of

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the Board to supply electrical energy as per demand of the

consumer under the contract. In Bihar State Electricity

Board, Patna & Others vs M/s Green Rubber Industries &

Others (1990 (1) SCC 731, this Court, while repelling a

challenge to the clause in the agreement which provided for

payment of minimum guaranteed charges irrespective of

whether energy was consumed or not, observed that the same

was reasonable and valid for the reason that the supply of

electricity to a consumer involves incurring of overhead

installation expenses by the Board which do not vary with

the quantity of electricity consumed and also for the reason

that those installations have to be continued and must be

maintained until the agreement itself comes to an end. Such

a stipulation was also considered to be not by way of

penalty for not consuming the specified quantity of energy

but more for the obligation of the Board to keep the energy

available to the consumer at his end. Again in Andhra Steel

Corporation Ltd. & Others vs Andhra Pradesh State

Electricity Board & Others (1991 (3) SCC 263) this Court

held that the purpose of prescribing minimum charges is to

ensure that no undue loss is caused to the Electricity Board

due to the tendency of the consumer to have connection for

inflated requirement and the Boards agreement to meet such

requirement and the readiness to maintain the supply up to

that requirement, even if no or very little energy is

consumed. The decision of the State Government under

Section 78 A of the Supply Act, 1948, to fix concessional

tariff was also held not sufficient to absolve the consumer

from the liability undertaken to pay the minimum guaranteed

charges. In coming to such a conclusion, reliance has also

been placed upon the decisions reported in 1990 (1) SCC 731

(Supra) and The Amalgamated Electricity Company Ltd. vs The

Jalgaon Borough Municipality (1975 (2) SCC 508) wherein this

Court observed as follows:

9. Moreover it is obvious that if the plaintiff

company was to give bulk supply of electricity at a

concessional rate 0.5 anna per unit it had to lay down lines

and to keep the power ready for being supplied as and when

required. The consumers could put their switches on

whenever they liked and therefore the plaintiff had to keep

everything ready so that power is supplied the moment the

switch was put on. In these circumstances it was absolutely

essential that the plaintiff should have been ensured the

payment of the minimum charges for the supply of electrical

energy whether consumed or not so that it may be able to

meet the bare maintenance expenses.

In Orissa State Electricity Board & Another vs IPI

Steel Ltd. & Others (1995 (4) SCC 320) this Court had an

occasion once again to deal with these issues in the light

of the earlier case law on the subject. This Court

explained therein the meaning of the expressions maximum

demand charges, consumption charges and dealt with the

role as well as purpose of installing two meters - the

normal meter meant for recording the total quantity of

energy consumed over a given period, in variably a month and

trivector meter meant for recording the highest level/

load at which the energy is drawn over any thirty minute

period in a month. While explaining the two part tariff

system meant for big/bulk consumers of electricity, this

Court has emphasised and reiterated the justification and

reasonableness of the same, observing the following:

Normally speaking, a factory utilises energy at a

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broadly constant level. May be, on certain occasions,

whether on account of breakdowns, strikes or shutdowns or

for other reasons, the factory may not utilise energy at the

requisite level over certain periods, but these are

exceptions. Every factory expects to work normally. So

does the Electricity Board expect - and accordingly produces

energy required by the factory and keeps it in readiness for

that factory - keeping it ready on tap, so to speak. As

already emphasised, electricity once generated cannot be

stored for future use. This is the reason and the

justification for the demand charges and the manner of

charging for it. There is yet another justification for

this type of levy and it is this: demand charges and

consumption charges are intended to defray different items.

Broadly speaking, while demand charges are meant to defray

the capital costs, consumption charges are supposed to meet

the running charges. Every Electricity Board requires

machinery, plant, equipment, sub-stations, transmission

lines and so on, all of which require a huge capital outlay.

The Board like any other corporation has to raise funds for

the purpose which means it has to obtain loans. The loans

have to be repaid, and with interest. Provision has to be

made for depreciation of machinery, equipment and buildings.

Plants, machines, stations and transmission lines have to be

maintained, all of which require a huge staff. It is to

meet the capital outlay that demand charges are levied and

collected whereas the consumption charges are levied and

collected to meet the running charges.

Adverting to the actual grievance of the consumer in

that case that where the cut in supply, be it even for the

reason of an order passed by the Government under Section 22

B of the 1910 Act, is only to the extent of half of the

contract demand, it was held that during such periods of

restricted supply the consumer had to pay the energy charges

for the actual consumption plus maximum demand charges for

the maximum demand availed of by him at the rate prescribed

in the agreement. As in the cases before us, it seems to

have been projected there also that even during the periods

of restricted supply there were frequent cuts and break

downs as well as irregular supply and the Board cannot levy

full demand charges merely because in any thirty minute

period in a given month, the power is availed at the maximum

demand level, and that except the actual consumption charges

nothing further, particularly the full demand charges could

be collected. After referring to the decisions reported in

1990 (1) SCC 731 (Supra), and the other decisions which were

quoted with approval therein such as AIR 1936 Cal.265 (Saila

Bala Roy vs Chairman, Darjeeling Municipality and 1969 (1)

Madras Law Journal 69 (M.G.Natesa Chettiar vs Mad. SEB)

which were quoted with approval earlier by this Court, the

challenge by the consumer came to be rejected. It was also

observed that breakdowns and trippings etc. which are not

confined to periods of restricted supply alone but may occur

during normal times also does not affect the liability of

the consumer and only if there is no supply at all for

considerable periods, the situation would be different,

whether it happens during the period of normal supply or

restricted supply, though on facts the case considered by

the Court was not found to be one such.

We have carefully considered the submissions of the

learned counsel appearing on either side, in the light of

the provisions of the 1910 Act and 1948 Act, the contract

entered into between the parties, the general conditions for

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supply and the tariff rates prescribed as well as the

governing principles as laid down by this Court. The terms

and conditions of supply, as envisaged in the contract and

the statutory provisions and general conditions have been

standardised for uniform application among consumers with

variations merely necessitated by the different class or

categories of consumers and there is no scope otherwise for

expecting any scope for individual or free bargaining right

in this regard by each consumer with the Board. Therefore,

it is futile for a consumer to contend that the Board was at

the dictating end and the parties were not equally

positioned in settling the terms of the contract. The

further attempt made to contend that the failure on the part

of the Board to effect supply up to the contract demand

level relieved the consumers from the obligation undertaken

to pay a minimum guaranteed sum per month, as though the

contract demand is the minimum guaranteed for supply, not

only lack any basis in law or on the terms of the contract

governing the supply but also directly runs counter to the

terms in the contract which makes different stipulations

relating to contract demand and the minimum guarantee in the

form of a portion or percentage of the contract demand,

only. The question of exonerating the consumer from the

liability undertaken to pay minimum guaranteed charges for a

month and billing only for the actual consumption of energy

or allowing a consumer to pay the rates on the actual

consumption of electricity measured in units will and can

arise and has also been considered for determination only in

case the supply by the Board itself fell short of the

minimum of energy, the consumption of which go to make up

the minimum guaranteed sum. It is well settled and there

could be no controversy over the position that if only the

supply was available for consumption but the consumer did

not consume so much of energy up to the extent of the

obligation cast upon him to pay the minimum charge, there is

no escape from the payment of the minimum guaranteed

charges, except in very exceptional cases envisaged under

clause 23 of the contract, and that too subject to the

stipulations and restrictions contained therein.

In the light of the serious controversies raised as to

the duration, quantity, manner and quality of supply of

electrical energy expected to be made by the Board, it

becomes inevitably necessary to decide first the question

relating to the unit or standard of measurement, which

invariably must have relevance, in our view, only to the

billing cycle envisaged in the contract and the tariff which

is only a month. The payment by the consumer is to be on

the electrical energy supplied during the preceding month.

The parties have also agreed that the maximum demand of the

supply is to be measured with reference to the month at the

point of supply of the consumer and will be determined on

the basis of the supply during any consecutive thirty

minutes in that month as recorded by the trivector meter.

The power factor, according to the statutory conditions of

supply which form part and parcel of the supply of energy to

a consumer, is also to be determined with reference to the

supply of energy to a consumer, and that factor is also to

be determined with reference to the supply of electrical

energy made during a month. The minimum consumption of

energy guaranteed, as per the tariff notification, is also

in terms of a monthly minimum. While that be the position,

it is futile for the consumers to contend that they will not

be liable to abide by the minimum guaranteed charges

undertaken, unless on every day of the month/year and during

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the twenty four hours or round the clock the load factor and

power supply agreed to be made, at one and is the same level

without any shortfall, tripping or low voltage. The

provisions of Section 56 of the Contract Act, 1872 sought to

be relied upon have no relevance or application to the cases

on hand. Countenancing of such claims would not only defeat

the very purpose, object and aim of providing for a minimum

charges guarantee clause but would ultimately result in

mutilation of the very fabric of tariff structure rendering

thereby the schemes of generation and supply of power at the

agreed concessional rates uneconomical and non-viable for

the Board. This would also result in the re-writing of many

of the clauses in the contract and rendering nugatory the

tariff pattern and system itself throwing into disarray and

disharmony the efficient execution of the power supply

schemes.

The further claim asserted on behalf of the consumers

that since what was agreed to between the parties was to

make the supply available continuously except during

situations envisaged in clause 11 of the contract, the

failure to effect such supply by the Board renders the very

contract relating to the payment of minimum guaranteed

charges unenforceable against them, does not merit

acceptance in our hands. It cannot legitimately be

contended that the word continuously has one definite

meaning only to convey uninterruptedness in time sequence or

essence and on the other hand the very word would also mean

`recurring at repeated intervals so as to be of repeated

occurrence`. That apart, used as an adjective it draws

colour from the context too, and in the light of the texture

of clause 11 as well as clause 12 and clause 23 (b) and also

Section 22 B of the 1948 Act and orders passed therein which

are binding with equal force upon both the consumer and the

Board, the word is incapable of being construed in such

absolute terms as endeavoured by the learned counsel for the

consumers.

The High Court was of the view that it would be more

just, equitable and reasonable to hold whenever the

contracted supply fell short of 40% of the contract load

which alone accounts for the minimum guaranteed sum, then

the Board shall be entitled to charge for the reduced energy

actually supplied and not the minimum of 40% of the contract

demand. As noticed supra, on behalf of the consumers, not

only inspiration is drawn to support their claim in this

regard but an extreme stand is also sought to be taken by

contending that in such cases as also in cases where the

supply is not of the contracted load and to the extent of

the agreed load factor without interruptions so as to cause

any disturbance or dislocation of the smooth functioning of

their industry concerned, the obligation under the clause in

the agreement providing for the payment of the minimum

guaranteed charges to the tune of 40% of the contract load

also would automatically stand snapped and not only that the

consumers will be relieved of their liability but they can

be made answerable only to the extent of energy actually

supplied and which has been consumed. There is no

justification for countenancing this extreme stand either

under any of the provisions of the Act or the regulations

made thereunder or under the provisions of the contract

entered into between the parties and tariff schedule

notified and made binding upon the consumers. This would,

if accepted, give credence to the plea vaguely and

indirectly projected as though the contract demand is the

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minimum supply undertaken to be made by the Board, whereas

in contrast clause 23 of the general conditions for supply

of electrical energy by the Board applicable to all

consumers in unmistakable terms stipulate that the maximum

demand agreed to be supplied and taken under the agreement

shall be the consumers contract demand and that if as a

matter of fact in any given case the consumption exceeds

this level, then only the contract provides for additional

charges to be paid by the consumers.

As a matter of general principle, any stipulation for

payment of minimum guarantee charges is unexceptionable, in

a contract of this nature wherein, the Board which

undertakes generation, transmission and supply of electrical

energy has to, in order to fulfil its obligation lay down

lines and install the required equipment and gadgets and

constantly keep them in a state of good repair and condition

to render it possible for the consumer to draw the supply

required at any and all times. These commitments are

irrespective of the capacity of the Board to generate at a

given point of time or during a relevant period the total

quantum required for the consumption of all consumers of

various categories or even during the days of breakdown

envisaged or staggering necessitated on account of orders of

Government regulating the distribution and consumption of

energy as well as during periods when for reasons personal

or peculiar to the consumers or even beyond their control

the consumption is not and could not be of the mutually

agreed extent. The Board undertakes to generate and supply

energy, in public interest also at concessional rates of

varying nature and it cannot be stated that the rates so

fixed invariably are to meet the expenditure incurred by the

Board for generation and supply of energy, to the last pie.

Consequently, if either in the general conditions and terms

of supply or the contract or the tariff rates as the case

may there be any stipulation, in clear and unmistakable

terms that the liability relating to the payment of

guaranteed minimum charge could or will be enforced

irrespective of the actual consumption rate of the consumer

or even dehors the capacity or otherwise of the Board to

supply even the minimum of the contract demanded energy,

there could be no valid objection in law for any such

stipulation being made and the consumer will be bound to

honour such commitment. The contract for the supply of

electrical energy cannot be treated on par with any other

contacts of mutual rights and obligations, having regard to

the peculiar problems involved in the generation,

transmission and supply which invariably depend upon the

vagaries of monsoon as well short supply to them of the

required coal and oil in time and similar other problems

over which the Board cannot have any absolute control. The

recurring commitments relating to constant and periodical

maintenance of supply lines and other installations cannot

be anytheless even during such times and such onerous

liabilities cannot be left to fall exclusively upon the

Board and it is only keeping in view all these aspects,

payment of minimum guaranteed charges is necessarily in

built in the tariff system of the Board and the

reasonableness or legality of the same cannot be considered

either in the abstract or in isolation of all these aspects.

It is for this reason that all over and the consumer is also

made to share the constraints on Boards economy even during

such periods. In fact the tariff inclusive of such a

provision for payment of a minimum guaranteed sum

irrespective of the supply/consumption factor appears to be

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the consideration for the commitments undertaken by the

Board as a package deal and it is not possible or

permissible to allow the consumer to wriggle out of such

commitments merely on the ground that the Board is not able

to supply at any point of time or period the required or

agreed quantum of supply or even supply up to the level of

the minimum guaranteed rate of charges. Tinkering with

portions of contracts for any such reasons, merely on

considerations of equity or reasonableness pleaded for and

vis-a-vis one party alone will amount to mutilation of the

whole scheme underlying the contract and render thereby the

very generation and supply of electrical energy economically

unviable for the Board. Consumers, who enter into such

commitments openly and knowing fully well all these hazards

involved in the generation, transmission and supply, will be

estopped from going behind the solemn commitment and

undertaking on their/its part under the contract. The High

Court does not seem to have properly appreciated the ratio

of the several decisions noticed except merely referring to

them in extenso, and yet ultimately just, arrived at a

conclusion merely for the reason that the court considered

it to be `more equitable, just and reasonable to do so.

So far as the cases under consideration and the

liability of the consumers relating to minimum guarantee are

concerned, the relevant clause relating to minimum guarantee

charges as well as the tariff notification relied upon,

would go to show that what was guaranteed was not the

payment of a flat sum or amount of money to be calculated

with reference to a particular number or percentage of

units, dehors the quantum of electrical energy distributed

and supplied by the Board. In other words, the guarantee

was of such minimum consumption as when calculated at the

tariff.. will yield a particular monthly/annual sum to the

Board. Even going by the tariff notification which

prescribes also a minimum entitling the Board to collect it

[vide clause 21 (b)] it merely casts liability on the

consumer to guarantee a minimum monthly consumption

equivalent to 40% load factor of the contract demand.

Consequently, for the consumer to honour his/its commitment

so undertaken to give a minimum consumption there should

essentially be corresponding supply by the Board at least to

that extent, without which the consumption of the agreed

minimum is rendered impossible by the very lapse of the

Board. The minimum guarantee, thus, appears to be not in

terms of any fixed or stipulated amount but in terms of

merely the energy to be consumed. The right, therefore, of

the Board to demand the minimum guaranteed charges, by the

very terms of the language in the contract as well as the

one used in the tariff notification is made enforceable

depending upon a corresponding duty, impliedly undertaken to

supply electrical energy at least to that extent, and not

otherwise. It is for this and only reason we find that the

ultimate conclusion arrived at by the Full Bench of the High

Court does not call for any interference in these appeals.

Shri C. S. Vaidyanathan, learned senior counsel for

the Board, further contended that the High Court committed

an error in overlooking the facts placed on record in the

form of statements showing the units which were made

available to the consumers during the periods in question

and the units determined on which the minimum charges became

payable and that those statements sufficiently substantiated

the position that the units made available were more than

sufficient to cover the payment of minimum charges and the

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contentions to the contrary that the Board had not been able

to supply even 40% of the contract demand to insist upon the

payment of minimum guaranteed charges has no basis or merit

of acceptance. In this connection, our attention has been

drawn by the counsel on either side to those materials and

particulars placed along with the counter affidavits/Return

of the Board filed before the High Court, the annexures

thereto and some of the correspondence between the officers

of the Board and the consumers concerned. Unfortunately,

even the Division Bench, before which the matters were

posted for further hearing and disposal pursuant to the

opinion given by the Division Bench, did not undertake to

adjudicate this vital aspect of the issues involved which,

in our view, became very much relevant and essential in the

light of the opinion of the Full Bench. Apparently, on

account of the fact that the Full Bench confined the

operation of its decision for future application only, and

the liability for the periods under challenge therefore

stood governed by the position of law as declared by the

decision in AIR 1993 MP 118 (supra) which held the field,

the Division Bench might have thought such an exercise to be

superfluous. But, in the light of our conclusion that, as

the matter stands, on the basis of the existing clauses in

the contract as well as the Tariff notification the minimum

guarantee assured was of the monthly consumption equivalent

to 40% load factor of the contract demand which obligated

the Board also to ensure supply at least to that extent to

insist upon the payment of the minimum charges, it becomes

necessary to undertake an exercise, to decide in individual

cases, the question of actual supply said to have been made

in order to find out whether the units of energy to the

extent of minimum of 40% of the contract demand has been

made available for consumption. For this purpose, these

cases have to be necessarily and are hereby remitted to the

High Court, for being restored to their original number to

find out the actual position about claim/dispute relating to

the supply of energy equivalent to 40% load factor of the

contract demand. Wherever the High Court finds this fact in

favour of the Board, the consumer has to pay the minimum

guaranteed consumption charges as claimed, without any

further challenge to the said liability. Both parties shall

be at liberty to substantiate their respective stand in the

light of the materials already on record or that may be

produced further before the High Court in the relegated

proceedings.

So far as the challenge made to the judgment of the

Full Bench of the High Court, in confining its operation and

applicability only for future period, Shri G.L. Sanghi,

learned counsel, followed by the others have strongly

contended that the High Court as such cannot apply the

principle of prospective over ruling. Reliance in this

regard has been placed upon the decision reported in State

of H.P. & Others vs Nurpur Private Bus Operators Union &

Others [1999 (9) SCC 559] to which one of us (B.N.Kirpal,

J.) was a party. Passing reference has been made to the

decision in Golak Nath vs State of Punjab (AIR 1967 SC 1643)

and the observation contained therein that the doctrine of

prospective overruling can be invoked only in matters

arising under the Constitution and that it can be applied by

the Supreme Court of India. The decision in Golak Naths

case as such was subsequently overruled by the decision

reported in Kesavananda Bharati vs State of Kerala (AIR 1973

SC 1461) though not specifically on this point. Reliance

has also been placed upon the decision reported in M/s

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K.S.Venkataraman & Co. vs State of Madras (AIR 1966 SC

1089) even to contend that if the High Court had no such

power, this Court while hearing an appeal from such judgment

of the High Court, will equally cannot exercise such powers.

This submission of the learned counsel overlooks the vital

fact in that case that not only the High Court was found to

exercise under Section 66 of the Income Tax Act, 1922, a

special advisory jurisdiction the scope of which stood

limited by the section conferring such jurisdiction but even

the appeal to the Supreme Court having been made only under

Section 66 A (2) of the said Act was noticed to hold that

the jurisdiction of this Court also does not get enlarged

and that the Supreme Court can also only do what the High

Court could do. Apart from the fact that the writ

jurisdiction conferred upon High Courts under Article 226 of

the Constitution does not carry any restriction in the

quality and content of such the powers, this Court could

always have recourse to the said doctrine or principle or

even dehors the necessity to fall back upon the said

principle pass such orders under powers which are inherent

in its being the highest court in the country whose

dictates, declaration and mandate runs throughout the

country and binds all Courts and every authority or persons

therein and having regard to Articles 141 and 142 of the

Constitution of India. The Appellate powers under Article

136 of the Constitution itself would also be sufficient to

pass any such orders. This Court has been from time to time

exercising such powers whenever found to be necessary in

balancing the rights of parties and in the interests of

justice. [vide: Union of India vs Mohd. Ramzan Khan 1991

(1) SCC 588; Managing Director ECIL vs B. Karunakar &

Others 1993 (4) SCC 727; India Cement Ltd. vs State of

Tamil Nadu AIR 1990 S.C.85.] The decision reported in

1999(9) SCC 559 (Supra) at any rate is no authority for any

contra position to deny such powers to this Court.

The peculiar facts and circumstances of these cases

and the interests of justice, in our view, necessitate the

application of the Law declared therein only prospectively.

The electricity Board is a public authority of the State

engaged in the generation and supply of electrical energy at

concessional rates to different class and category of

consumers in the State. The construction placed by us is

likely to have serious and adverse impact upon the finances

and the economic viability of the scheme underlying tariff

and minimum guarantee charges already determined. It is

impossible for the Board, at this point of time to make up

or change the pattern of tariff retrospectively to retrieve

itself in this regard for the past period. The construction

and execution of various developmental schemes and works are

likely to suffer thereby a serious set back also. Keeping

in view all these aspects we will be justified in declaring

that the law declared in these cases shall be for future

application only and not for the earlier period.

For all the reasons stated above, the appeals are

disposed of in the light of the directions and observations

contained herein and the High Court shall restore the

proceedings to its original file and dispose of the same in

accordance with the directions contained in this judgment.

The parties will bear their respective costs.