JINDAS OIL MILL & ORS. versus GODHRA ELECTRICITY CO. LTD.

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.

pp. 837–838, margin H

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.

p. 838

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

p. 838, margin H

month per installation and (ii1 for motive power at 4 annas per unit with a minimum of Rs, 4-8-0 per month per installa-

p. 838, margin E

tion, 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 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.

pp. 838–839, margin E

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.

p. 839, margin A

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 1, 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.

p. 839, margin A

The Supply Act u ii llood before The Supply Act as amended in 1956 1956. S, 57. Llcenace·s charges to consu- S. 57. The Provisions of tho Slxtlt men. Schedule and the Seventh The provisions of the shall be deemed be incorporated Schedule and the Table in pended to the Seventh Scho- being a local authority :dule shall be deemed to

pp. 839–840, margin G

( •) in the case of a licence incorporated in the licence evtrf licensee, not being a

p. 840, margin A

this Ac~ from the date of the local authority, from the dale

p. 840, margin A

commencement of the Jicea. of the commencement of

p. 840, margin A

next of lcense-e's next mcceeding year

p. 840, margin B

account;

p. 840, margin B

account. and from such date the licensee shall comply in the case of a graatherewith accordingly and any after the provisions of such licence or of this Act, from tho Ill ot Indian Electricity Act,

p. 840, margin B

of or any and as from the said date, other law, agreement or licensee shall comply with tho

p. 840, margin C

inatrurnent applicable to the ~iall,

p. 840, margin C

Electricity Ac~ and effect in so far they are inconsistent the provi- the licence hi• sions of section and the said Schedule and Table.

p. 840, margin C

applicable to the licensee Shill, Where the provisions of the Sixth Schedule and the Table and of no in so far

p. 840, margin D

inconsistent

p. 840, margin D

the of A

p. 840, margin D

in and the said Schedules. the licence of any licensee.

p. 840, margin D

S. (!): wh•rethepro- 1he said licensee, namely :- and the Seventh Schedule are The Board or where no of any

p. 840, margin E

provision~ if

p. 840, margin F

licenaec satisfied that the licen-

p. 840, margin F

namely:-

p. 840, margin F

(•) the Board or where no Board the Sixth Schedule and

p. 840, margin F

may, if satisfied that tbe a com·

p. 840, margin F

Schedule, and to recommend thereon shali when requoated

p. 840, margin G

by the liceruec in writing

p. 840, margin G

ment;

p. 840, margin H

Prol'ided no rating com mittee shall be constituted in respect of a licensee within three v.

pp. 840–841, margin H

which cumstances bavo arisen readorrecommendation of the preconsumers.

p. 841, margin A

into consideration the ciency of operation and ing the charges for electri-

p. 841, margin C

clas~ ot him a if

p. 841, margin D

with so perm.it. clause the

p. 841, margin A

to may the make ~ee's

p. 841, margin A

tha~ THE SIXTH SCHEDULE

p. 842

if licensee any (I) If

p. 842

S~th of 1/2 of i

p. 842

Govern~ ~o nece~ary,

p. 842

period in the the in

p. 842

~ffect account. On

p. 843

Oov~ remaining in the Tariff:t and con~

p. 843

or failed if or amount of reasonable return by

p. 843

of of ~ licmlset in

p. 843

to i(

p. 844, margin A

fixed pursuance of the recommendaby

p. 844, margin A

with preceding proviso, the licensee

p. 844, margin B

to him from them : Provided aJso that nothing in this prevent a licensee from levying. third proviso to paragraph I shall ment of charges as the State

p. 844, margin B

may, by general If

p. 844, margin D

excess one-third of excess, not

p. 844, margin D

cent) of of the exccis, res~rve

p. 844, margin D

Re- ~xtent profit is less the reason-

pp. 844–845, margin D

in account.

p. 845, margin A

purcha~ the

p. 845, margin A

the terms of its licence any balance remaining the Tariffs and Dividends Control serve handed over to tho purchaser and tained aa Tariffs and Dividends Control Reserve:

p. 845, margin A

that the taking is the

p. 845, margin B

the

p. 845, margin B

ded\lcted from the prico payable

p. 845, margin B

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.( 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 c ~. 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.

pp. 845–846, margin B

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.

p. 846, margin B

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 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.

pp. 846–847, margin F

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.

pp. 847–848, margin E

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 :

p. 848, margin A

"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."

p. 848, margin D

For the reasons above, these appeals fail and they are dismissed with costs. One hearing fee. G.C. Appeals dismiss~d.

p. 848, margin F

S.C.R.

p. 848, margin F