Jindas Oil Mill & Ors. v. Godhra Electricity Co. Ltd.

Judgment

The Judgment of the Court was delivered by Hegde, J. Common questions of law arise for decision in these appeals, by cei:ificate. The suits fro~ which these appeals arise have been considered together and decided by common judgmems both in the High Court as well as in the courts below. It is convemient to do so in this Court as well. The smls in questions are representative suits. The plaintiffsappellants who are consumers of electricity in the Godhra area sued the respondent-company on behalf of all the consumers in that area ;ecking to restrain the respondent from enforcing the enhanced charges sought to be collected from the consumers of power used for lights and fans as well as of motive power. The facts leading to these appeals may now be stated.

On November 19, 1922, the then Government of Bombay granted a licence under the Indian Eleclricity Act, 1910 to a concern called Lady Sulochna Chinubhai & Co. authorising it to generate and supply electricity to the consumers in Godhra area. Clause 10 of the licence prescribed the maximum charges that the licensee could levy for the power supplied. The respondent is the successor of the said licensee. After the Electricity (Supply) Act, 1948 (to be hereinafter referred to as the Supply Act) came into force, a rating committee was constituted under s. 57(2) of the Supply Act at the request of the respondent on January !9, 1950. On the recommendation of that committee, the Government fixed wirh effect from February I, 1952, the following charges for the power supplied : (i)

0-7-9 pies per unit for th~ electricity supplied for lights and fans with a minimum of Rs, 3/- per month per installation and (ii1 for motive power at 4 annas per unit with a minimum of Rs, 4-8-0 per month per installation, The Supply Act was amended in 1956, The respondent incre."Lsed the charges for motive power from January 1, 1963 to 35 NP, per unit with a minimum of Rs, 7 /- per month for every installation, On June 22, 1963, the rates for lights and fans were increased with effect from July I, 1963 to 70 NP. per unit with a minimum of Rs, 5/- per month for every installation, The contention of the appellants is that the respondent was not competent to enhance the charges in question without the matter having been considered by a rating committee, Their suits to restrain the respondent from levying the proposed increased charges were decreased by the trial court Those decrees were affirmed by the first appellate court as well as by a single judge of the Gujarat High Court in second appeals but the appetlate bench of the Gujarat High Court reversed those decrees and dismissed the suits holding that under the Supply Act' as amended-in 1956 the respondent has a unilateral right to enhance the charges subject to the conditions prescribed in the VI ScheduJe to that Act It is j n JINDAS OIL MILL v. GODHRA ELECT. co.

(Hegde, /.) 8 39 as agail15t those decisions these appeals have been brought. Civil Appeal No. 15 of 1969 relates to the enhancement of charges for electricity power for lights and fans and Civil Appeal No. 16 of 1969 relates to the enhancement of charges for the motive power. The only question that ·arises for decision in these appeals is whether under the provisions of the Supply Act as amended in 1956, the respondent was competent to unilaterally enhance the charges. In the~e appeals we are not concerned with the provisions of the Electricity Act, 1910. There is no disp11te as regards the charges fixed by the Government with effect from February 1952, under s. 57(2)(c) of the Supply Act on the basis of the r!'COlllmendation made by the rating committee. The appellants admit their liability to pay enhanced charges that may be fixed by the Government on the basis of any recommendation by a freshly appointed rating committee.

They merely challenge the respondent's right to unilaterally enhance the charges. According to the appellants they have a vested right to be governed by the charges fixed in 1952 until the same is revised by the Government on the basis of the recommendation of a rating committee. It was urged on their behalf that the amendments made in 1956 do not affect the charges fixed in 1952 and they continue to rule till altered by the Government in accordance with law. The respondent repudiates those contentions. It denies that the appellants have any vested right in the charges fixed. It was urged on its behalf that the amendments made to the Supply Act in 1956 have substantially altered the scheme as regards levying charges; it is now open to a licensee to alter the charges fixed by the Govermnent ·unilaterally subject to the conditions prescribed in s. 57(A) and in Sch. VI of the Supply Act.

We may mention at this stage that even according to the appellants the charges that may be fixed by the Government now on the basis of the recommen~ation of a rating co.mmittee can be unilaterally altered by the licensee after the penod fixed in the Government order in accordance with cl. {e) of s. 57(A){l), expires. In on;ier t~ ctecide the point in controversy, we have to take mto cons1derallon t;he relevan! provi.sions of the Supply Act as it stands now and as 1! stood pnor to tis amendment in 1956. For the s.~e of convenience we shall set out side by side the relevant proV1S10ns. The Supply Act u ii llood before 1956. S, 57. Llcenace·s charges to consumen. The Supply Act as amended in 1956 S. 57. The Provisions of tho Slxtlt Schedule and the Seventh Scbodul<> (I)

The provisions of the Sixth Schedule and the Table •P- pended to the Seventh Schodule shall be deemed to be incorporated in the licence of evtrf licensee, not being a local authority, from the dale of the commencement of the lcense-e's next mcceeding year of account. and from such date the licensee shall comply therewith accordingly and any provisions of such licence or ot the Indian Electricity Act, 1910 (LX of 1910), or any other law, agreement or inatrurnent applicable to the licengee ~iall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of thiS section and the said Schedule and Table. (2) Where the provisions of the Sixth Schedule and the Table appended to the Seventh Schedule are under sub-section ( 1) deemed to be incorporated in the licence of any licensee. 1he following provisions shall ilavc effect in relation to the said licensee, namely :- (a)

The Board or where no Board is constituted under this Act, the Provincial Government, may, if it iS satisfied that the liceneee bas failed to comply with any provisions of the Sixth Schedule and shall when requested so to do by the licensee. constitute a rating com· mittee to examine the licensee's charges for the supply of electricity and to recommend thereon to the Provincial Government;

Prol'ided t.'iat no rating com .. mittee shall be constituted in respect of a licensee within three shall be deemed to be incorporated in the licence of every licensee. not being a local authority :- ( •) in the case of a licence granted beore the commencement of. this Ac~ from the date of the commencement of the Jicea. .. see's next succeeding year of account; and ( b) in the case of a Ucencee graated after the commencemeat of this Act, from tho date Ill the commencement of suJ)l'ly, and as from the said date, the licensee shall comply with tho provisions of the said Schedules accordingly, and aay provisions of the Indiaa Electricity Ac~ 1910, and tbe the licence granted to hi• thereunder and of any other Jaw, agreement or instrumCllt applicable to the licensee Shill, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of section S7 A and the said Schedules. S. 57(A)

(!): wh•retheprovisions of the Sixth Schedale and the Seventh Schedule are under section S7 deemed to be incorporated in the licence of any licensee, the following provision~ shall have effect in relation to. the said licenaec namely:- (•) the Board or where no Board is constituted under this Act. the State Government- (i) may, if satisfied that tbe licensee has failed to comply with any of the provisions of the Sixth Schedule, and (ii) shali when so requoated by the liceruec in writing conttitute a rating committee to examine the licensee's charges for the supply of electricity and JINDAS OIL MILL v. GODHRA ELECT. co. (Hegde, I.) years trom the date on which such a committee has reported in respect of that licensee, unless the Provincial Government declares that in its opinion circumstances bavo arisen readoring the orders passed on the recommendation of the previ,om: rating committee unfair to the licensee or any of his consumers. ( b)

The rating committee shall after giving the licensee a reasonable opportunity of being heard and after taking into consideration the efficiency of operation and management and the potentialities of his undertaking report to the Provincial Government making recommendations (and giving reasons therefore) regarding the charges for electricity which the licencee may make to any clas~ or classes ot consumers so however that the recommendations arc not likely to prevent Lie licensee from earning clear profits sufficient when taken with the sums available in the Tariffs and Dividends Control Reserve to afford him a reasonable return during his next succeeding three year!: of account if the potentialities of the undertaking of the 1icensee, with efficient operation and management, so perm.it. (c)

Within one month after the receipt of the report under clause (b) the Provincial Government shall cause the repart to be published in tho official Gazette. and may at the same time make an order in accordance therewith fixing the licen- ~ee's charges for the supply to make reeommenda. tions in that behalf to the State Government : Provided that where it is pro· pooed to constitute a rating com· mittee under this section on account of. the failure of the licensee to coinply with any provisions of the Sixth Schedule. such committee shall not be constituted unlei:s the licensee has been given a notice in writing of thirty clear days (which period. if the circumstances so warrant may be extended from time to time) to show cauSe against the action proposed to be taken :

Provided further that no such rating committee shall be constitu. ted if the alleged failure of the Iicen*e to comply with any pro-. visions of the Sixth Schedule raises any dispute or difference as to the interpretation of the said provisions or any matter arising therefrom and such difference or dispute has been referred by the licensee to the arbitration of the Authority under paragraph XVI of that Schedule before the notice referred to in the preceding proviso was given or i~ so referred within the period of the said notice : Provided further that no rating committee shall be constituted in respect of a licensee within three years from the date on which such a committee has reported in res))Cct of that licensee. unless the State Government declares that in its opinion circum!.1ances have arisen rendering the orders passed on the recommendations of the previouo; rating committee unfair to the licensee or any of the consumers :

( b) a rating committee under clause (a) shall,- J i) where such committee is to he constituted under sub· clause (i) of that clause. be constituted not later than three months after the of electricity with effect from such date, not earlier than two months after the date of publication of the report, as may be fi'(>ecified in the order; and the licensee shall forthwith . give effect to such order : Provided that nothing in this clause shall be deemed to prevent a licensee from reducing at any time any charges. so fixed. THE SIXTH SCHEDULE 1. The Licensee shall so adjust his rates for the &"ale of' electricity by periodical revision that his clear profit in any year shall not as far as possible exceed the amount of reasonable return :

Provided that the licensee shall not be considered to have failed so to adjust his rates if the clear profit in any year of account has not exceeded the a1nount of tbe reasonable return by more than thirty per centum of the amount of the reasonable return. II. (I) If the clear profit of a licensee in any year of account is in excess of the amount of reasonable return one-third of such excess. not exceeding 7 1/2 per cent of the amount of reasonable return shall b;e at the disposal of the undertaking.

Of the balance of the excess. one half r,'hall be appropriated to reserve which shall be called the Tariffs and Dividends Control Reserve and the remaining half shall either be distributed in the form of a proportionabte rebate on the amounts coHected from the sale of electricity and meter rentals or carried forward in the accounts of the licensee for distribution to the consumer!t in future, in expiry of the notice referred to in the first proviso to tha~ clause : tii) where such committee is to be constituted at the request of the licensee, be constituted within three months of the date of such request;

(c) a rating committee shall, after giving the licensee a reasonable opportunity of being heard and after taking into con!tideration the efficiency of operation and management and the potentialities of his undertaking, report to the State Government within three months from the date of its constitution, making recommendations wit!l reasons therefor, regarding the charges for electricity which the licensee may make to any class or classes of conr,'umers so, however. that the recommen. dations are not likely to pre. vent the licensee from earning clear profit, sufficient when taken with the sums available in the Tariffs and Dividends Control Reserve to afford him a reasonable return as define;d in the S~th Schedule during his next succeeding three years of account: Provided that the State Govern~ rnent may, if it ~o deems nece~ary, extend the said period of three months by a further period not exceeding three monthS' within which the report of the rating committee may be submitted to it;

(d) within one month after the receipt of the report under clause (c), the State Government shall cause the report to be published in the Official Gazette, and may at the same time make an order in accord .. ance therewith fixine; the licensee's charges for tbc i JINDAS OIL MILL v. GODHRA ELECT. co. (Hegdc, /.) such manner as the Provincial Government may direct (2) The Tariffs and Dividends Control Reserve shall be available for disposal by the licensee only to the extent by which the clear profit is less than the reasonable return in any year of account. ( 3)

On the purchage of the undertaking under the terms of its licence any balance remaining in the Tariff:t and Dividends Control Reserve shall be handed over to the purchaser and maintained as such Tariffs and Dividends Control Reserve. supply of electricity with ~ffect from such date, not earlier than two months or later than three months, after the date of publication of the report as may be specified in the order and the licensee shall forthwith give effect to such order; ( e} the charges for the supply of electricity fixed under clause ( d) shall be in operation for such period not exceeding three years as the State Oov~ ernment may specify in the order : Provided that nothing 1n this clause shall be deemed to prevent a licensee from reducing at any time any charges 00 fixed. THE SIXTH SCHEDULE I. Notwithstanding anything con~ tained in the Indian Electricity Act.

1910 except sub-aection (2) of section 9 of 1910, 22A. and the provisions in the licence of a licensee. the licensee shall so adjust his (charges) for the sale of electricity whether by enw hancing or reducing them that his clear profit in any year or account shall not, as far as possible, exceed ·the amount of reasonable return : Provided that such (charges) snau not be enhanced more thaa once in any year of account : Provided further that the licensee shall not be deemed to have failed so to adjust his (charges) if the clear profit in any year or account has not exceeded the amount of reasonable return by (twenty) per centum of the amount of reasonable return ~ Provided further that the licmlset '1lall not enhance the ( charces) for the supply of electricity nntil after the expiry of a notice in wtiting of not 1.,. than sixty I SUPIU!MB COURT IU!PORTS [J 969] 3 S.C.R. clear days of his intention to so enhanc:e the (charges) given by him to the State Government and and to the Board :

Provided further th at i( the (charges) of supply fixed m pursuance of the recommendations of a rating committee. constituted under sec. S7 A are lower than those notified by the licensee under and in accordance with the preceding proviso, the licensee shall refund to the consumers the excess amount recovered by him from them : Provided aJso that nothing in this Schedule shall be deemed to prevent a licensee from levying. with the previous approval of the State Govt. minimum charges for supply of electricity t'or any purpose. IA. The notice referred to in the third proviso to paragraph I shall be accompanied by such financial and technical data in rupport of the proposed enhancement of charges as the State Government_ may, by general _or special order, specify, II. (!)

If the clear profit of licensee in any year of account is in excess of the amount of reasonable return. one-third of such excess, not exceeding (five per cent) of the amount of reasonable return, shall be at the dh;- posal of the undertaking, Of the balance of the exccis, one-half shall be appropriated to a res~rve which shall be called the Tariffs and Dividends Control Reserve and the remaining half shall either be distributed in the form of proportional rebate on the amounts collected from the sale of electricity and meter rentals or carried forward in the accounts of the licensee for digtribution to the consumers in future, in such manner as the State Government may direct. (2) The Tariffs and Dividends Contrdt Reserve shall be available for disposal by the 1iccnsee only to the ~xtent hy which the clear JINDAS OIL MILL v. GODHRA ELECT. co. (Hegde, J.) profit is less than the reasonable return in any year of account. (3)

On the purcha~ of the undertaking under the terms of its licence any balance remaining in the Tariffs and Dividends Control Roserve shall be handed over to tho purchaser and maintained aa such Tariffs and Dividends Control Reserve: Provided that where the undertaking is purcbasod bY the Board or the State Government the amount of the Reserve may be ded\lcted from the prico payable to the licensee. From an examination of these provisions it would be seen that under the Supply Act prior to its amendment in 1956, the charges fixed by tile Govt. under s. 57(2)(c) remained in force unless reduced by the licensee in the meantime till the same were altered by a subsequent order made by the Govt. after getting a fresh recommendation from the rating committee but under the law as it now stands the rate fixed by the Government under s. 57 (A)(l)(d) would be in operation only for such period not exceeding three years as the State Govt. may specify in the order.

Thereafter it can be enhanced by the licensee in accordance with the provisions contained in Sch. VI. It was urged on behalf of the appellants that the present s. 57(A(l )(e) can only govern the charges fixed under s. 57(A)(l)(d) and it has not impact on an order made under the old s. 57(2)(c). According to the appellants the charges so fixed can only be modifi,,d by the Government aftec getting a report from the rating committee. Mr. Chagla, learned Counsel for the appellants contended that the consumers who get power from the respondent have a vested right in the charges fixed in 1952 and that vested right cannot be considered to have been taken away by the provisions of the Amending Act. He argued that the provisions of the Amending Act are not retrospective in character nor is there any inconsistency between those provisions and the present provisions as the two operate on different fields; hence in view of s.

6 of the General Clauses Act, 1897, we must hold that the charges fixed by the Government in 1952 continue to be in operation. In this connection he relied on certain observations made by this Court in Stare nf Punjab v. illohar Singh(') and Deep Chand v. State of U.P. & Ors.( 2 ). On the other hand it was contended hy the learned Counsel for the respondent that the rights and liabilities of the respondents at present are exclusively regulated by the provisions of the Supply (I) [195'] S.C.R. 89.1. (2) [1950] c S•mr. S C.R. ~. Act as it stands now; the terms of licence as they originally stood or as they stood on the coming into force of the Supply Act in 1948 are of no consequence now; they cannot be looked into for finding out the rights or duties of the licensee as at present; for that purpo;e we must look into those terms as modified by the provisions of the Supply Act as it is now.

It was also urged on its behalf that there is no 4uestion of vested rights in these cases; herein we are only concerned with the procednre to be ·adopted in modifying the charges fixed in 1952. In Mohar Singh's case(') this Court laid down that the provisions of s. 6 ( c), ( d) and ( e) of the General Clauses Act, 1897 relating to the consequences of the repeal of a law are applicable not only when an Act or Regulation is repealed simpliciter but also to a case of repeal and simultaneous enactment re-enacting all the provisions of the repealed law. In the course of its judgment this Court observed that when the repeal is followed by a fresh legislation on the same subject, the Court has undoubtedly to look into the provisions of the new Act but that only for the purpose of determining whether they indicate a different intention. The line of inquiry would be, not whether the new Act keeps alive the old rights and liabilities but whether it manifests any intention to destroy them.

In Deep Chand's case(') this Court was considerin7 the effect of repugnancy between a State Act and a Central Act. The observations made in that context, we think, have no bearing on the point in issue in this case. It is true that when an existing Statute or Regulation is repealed and the same is replaced by fresh Statute or Regulation unless the new Statute or Regulation specifically or by necessary implication affects rights created under the old law those rights must be held to continue in force even after the new Statute or Regulation comes into force. But in the cases before us there is no question of affecting any vested right. There is no dispute that the charges fixed can be altered. The controversy relates to the procedure to be adopted in altering them. That controversy does not touch any vested right. The procedure in question must necessarily be regulated by the law in force at the time of the alteration of the charges.

Section 57 of the Supply Act as it stands now lays down that the provisions of Sch. VI shall be deemed to be incorporated in the licence of every licensee not being a local authority, in the case of a licence granted before the commencement of the Act from the date of the commencement of the licensee's next succeeding year of account Admittedly the licence with which we are concerned in these cases was granted even before the Supply Act was enacted. Therefore quite clearly the licence in. question is governed by the present s. 57. Hence we have·to read into that licence the provisions contained in Sch. VI. If any of the earlier (I) [19551 S.C.R. 893. (2) [1959] 2 Supp. S.C.R. 8. JINDAS OIL MILL v. GODHR.A ELECT. CD. (Hegde, J.) 8 47 provisions in the licence either as they stood when the licence was originally granted or as they stood modified as per the provisions of the Supply Act prior to its amendment in 1956 are inconsistent with the provisions of Sch. VI or s.

57(A) as they are now they must be held to be void and of no effect. In other words we must read into the licence the provisions of Sch. VI and strike out therefrom such terms as are inconsistent with those provisions and thereafter give effect to Ihe same. For determining the rights and duties of the licensee as at present we have only to look into the terms of the licence as modified by Sch. VI. We cannot go behind them. That much is clear from the language of the Supply Act. The intention of the legislature is clear and unambiguous. Therefore there is no need to call into aid any rule of statutory construction or any legal presumption. Further no reason was advanced before us, nor can we conceive of any why those who obtained licenses prior to the amendment of Supply Act in 1956 should be in a more disadvantageous position than those who got their licenses thereafter.

Correspondingly we fail to see why those who are served by licensees who obtained their licences prior to the amendment of the Supply Act in 1956 should be placed in a better position than those served by licensees who obtained their licenses thereafter. After all, every law has some reason behind it. Section 57(A)(2)(e) was intended to meet the changing economic circumstances. The purpose behind the new provisions ·appears to be to permit the licensees to so adjust their charges as to get reasonable profits. But at the same time a machinery has been provided to see whether any excess charges have been levied and if levied, get the same refunded to the con- :;umers. The law declared by the Amending Act does not affect any right or privilege, accrued under the repealed provision. It merely prescribes as to what could or should be done in future. Therefore there is no basis for saying that it affects vested rights.

For finding but the power of the licensee to alter the charges one ~as to look to the terms of the licence in the light of the law as 1t stands, the past history of that law being wholly irrelevant. If the t~rrns of the licence, including the deemed terms permit him to umlaterally alter the charges then he has that right. If we mere~y look at those terms, as we think we ought to, then there ·is no dispute that the respondent was within its rights in enhancing the charges as admittedly it has followed the procedure prescribed by law. We also do not agree with Mr. Chagla in his contention that there is no inconsistency between the present scheme relating to the enhancement of charges vis-a.vis the scheme provided under the Supply Act prior to its amendment in 1956. The two schemes are substantially different.

Under the fonner scheme once the Government fixes the charges the licensee cannot alter it but at present at the end of the period fixed in the Government order the licensee has a unilateral right to enhance the charge,, in accordance with the conditions prescribed in the VI Schedule. Therefore in view of s. 57 the provisions contained in that schedule. have an over-riding effect. In Amalgamated Electricity Co., Ltd. v. N. S. Bhathena mid Anr. (') this Court was called upon to consider the scape of s. 57 (A) and the Sch. VI as it stands now. Therein the ~ontro­ versy was whether the appellant therein was entitled to levy charges more than the maximum charges prescribed in its licence issued in 1932. It may be noted that in that case the notice of enhancement of the charges was given on September 25, 1958.

This Court held that the maximum stipulated in the licence no longer governed the right of the licensee to enham;e the charg~; his rights were exclusively governed by the provisions contained in paragraph I of Sch. VI of the Supply Act. It is true that in that case this Court was considering the right of the licensee under the Supply Act vis-a-vis his right under the licence granted under the Indian Electricity Act, 1910 but th.at difference is not material. What this Court in fact considered was the right of the licens~e under the existing Jaw to enhance the charges. Dealing with the scope ot paragraph I of Sch. VI, Ayyangar, J. who spoke for the majority observed thus : "Para I of Sch. VI both as it originally stood. and as amended, as seen already, empowered the licensee "to adjust his rates, so that his clear' profit in any year shall not, as far as possible, exceed the amount of reasonable return".

We shall reserve for later consideration the meaning 'of the expression "so adjust his rates". But one thing is clear and that is that the adjustment is unilateral and that the licensee has a statutory right to adjust his rates provided he conforms to the requirements of that paragraph viz .• the rate charged does not yield a profit exceeding the amount of reasonable return. The conclusion is therefore irresistible that the maxima prescribed by the State Government which bound the licensee under the Electricity Act of 1910 no longer limited the amount which a licensee could charge after the Supply Act, 1948 came into force since the "clear profit" and "reasonable return" which determined the rate to be charged was to be compul!:d on the basis of very different criteria and factors than what obtained under the Electricity Act." For the reasons above, these appeals fail and they are dismissed with costs. One hearing fee. G.C. Appeals dismiss~d. (I) [1964) 7 S.C.R. 503.