BIHAR STATE ELECTY BOARD & ORS. Vs. M/S. BHOLA RAM STEEL PVT.LTD & ORS.
Supreme Court of India (Division Bench (DB)- Two Judge)
585 of 2016, Judgment Date: Jan 28, 2016
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.585 2016
[Arising out of SLP [C] No.18910 of 2010]
Bihar State Electricity Board & Ors. … Appellants
Vs.
M/s. Bhola Ram Steel Pvt. Ltd. & Ors. … Respondents
J U D G M E N T
ARUN MISHRA, J.
1. Leave granted.
2. The appeal has been preferred aggrieved by the judgment and order
passed by the High Court of Judicature at Patna in the writ petition and
the appeal, thereby quashing the demand raised by the appellant for the
year 1999-2000. M/s. Bhola Ram Steel Pvt. Ltd. filed a writ application
that it was an industrial unit to manufacture iron and steel structure and
section like bar roll, place angle, channel, square, tor and round, general
fabrication and annulling of sheets it applied as HTIS consumer for a
connected load of 500 KVA. The competent authority sanctioned a load of
500 KVA vide letter dated 24.2.1998. The respondent-industry commenced
production w.e.f. 28.3.1998. The appellant averred that on 23.1.1999 the
premises of the respondent were inspected. Connected load was found to be
495 HP. Appellant submitted that as per the Industrial Policy of 1995
announced by the State Government, Resolution dated 3.9.1996 was passed by
the Energy Department of the State Government to grant exemption from
payment of minimum guarantee charges to the industrial unit having
connected load of 500 KVA and accordingly in exercise of power under
section 78 of the Electricity Supply Act, 1948 issued directives to the
Electricity Board for grant of such incentives. The industrial units
commencing production between 1.4.1993 and 31.8.2000 were to be exempted
from payment of minimum guarantee charges for a period of 5 years from the
date of commencement of production.
3. The maximum demand indicator in the Trivector meter had wrongly shown
more than the contracted demand of 500 KVA. The industry also submitted
that the meter stopped functioning in the month of January, 2000. It was
replaced on 9.2.2000, again the meter was found to be faulty and again
replaced on 21.3.2000. Thus the readings of the meter could not be relied
upon.
4. The impugned bill was served on the respondent in May, 2000 which had
been questioned in the writ application filed by the industry.
5. It was contended on behalf of the Electricity Board that an agreement
entered into on 2.3.1988 for a contract demand of 500 KVA. Appellant
installed transformer of 750 KVA. During the financial year 1999-2000 i.e.
from April, 1999 to March, 2000 maximum demand of the respondent has
exceeded the contract demand of 500 KVA in as many as six months. In the
month of March, 2000, maximum demand reached all time high of 621.06 KVA.
Since it was more than 110% of the existing contract demand of 500 KVA the
contract demand as per clause 16.5 of the tariff notification dated
21.6.1993 has been taken to be 621.06 KVA.
6. The maximum demand which is the actual demand of the consumer can
never be more than the connected load when expressed in terms of the KVA.
The industry has increased its connected load without information to the
Board. Thus it has crossed the maximum limit of connected load i.e. 500 KVA
and could not be said to be entitled for exemption from payment of minimum
charges.
7. It was also contended by the Board that on 29.9.1999 meter test was
conducted and it was found to be correct and maximum demand recorded was
found to be 508.20 KVA. It was again checked on 8.12.1999. Maximum demand
in the month of December, 1999 was recorded as 616.20 KVA which was not
disputed by the industry.
8. The Single Bench quashed the demand on the ground that on account of
consumption of electricity in excess of contract demand, connected load
automatically gets altered, has not been established by the Board. The
benefit of exemption from annual minimum guarantee charges could not be
denied to the industry. It was not established by the Board that the
connected load was more than 500 KVA. The Division Bench has affirmed the
order on the ground that greater consumption of power will result in
economic development, generation of employment and income and it is better
for the State of Bihar. If the industry has exceeded the connected load or
has consumed electricity in excess, it could not be deprived of the benefit
of power incentives. It also opined that no evidence on record indicated
that the consumption was beyond the connected load. Aggrieved thereby, the
Bihar State Electricity Board is in appeal before us.
9. It was submitted on behalf of the Electricity Board that maximum
demand indicator has recorded the actual consumption. The High Court has
erred in quashing the demand. Reliance has been placed upon Clause 16.5 of
the notification of 1993 issued under section 49 of the Indian Electricity
Act, 1948. It was submitted on behalf of the industry that there was no
correlation between the connected load and contract demand and the maximum
demand recorded by the indicator. At the time of inspection the connected
load was found to be 495 KVA. Thus as per the industrial policy of 1995
when connected load of 500 KVA has not exceeded at any point of time, the
High Court has rightly quashed the demand which was raised.
10. The fact is not in dispute that the contract demand sanctioned was
500 KVA as is apparent from the agreement entered into between the parties.
11. The basis of claim is notification dated 11.10.1996 issued by the
Bihar State Electricity Board pursuant to Industrial Policy of the State
Government of 1993 and 1995, relevant portion is extracted hereunder:-
“The industrial units which commence production or engage in defined
expansion/diversification in between the period 01.04.1993 to 31.08.2000
and whose connected electricity load is upto 500 KVA will be exempted from
payment of minimum guarantee (minimum base charges) for a period of five
years from the date of connection.”
12. Before dilating further it is appropriate to take note of clause 16.5
of the statutory notification of 21.06.1993 issued under section 49 of the
Indian Electricity (Supply) Act, 1948. Clause 16.5 is extracted hereunder :
“If during any month in a financial year (April to March next year) the
actual maximum demand of a consumer exceeds 110 percent of the contract
demand then the highest demand so recorded shall be treated as the contract
demand for that financial year and the minimum base charges, both in
respect of maximum demand and energy charge shall be payable on that
basis.”
13. The installed load means a sum of the rated inputs of the electrical
apparatus installed on the consumer’s premises. Connected load means that
part of the load of consumer supplied by the Supply Undertaking and
contract demand means demand fixed by the agreement that the consumer may
not exceed except according to the conditions of the tariff.
14. It is not in dispute that the maximum demand indicator meter
hereinafter referred to as MDI meter was installed which is a device to
measure the maximum demand at a particular half an hour cycle of running of
the machinery in the factory; meaning thereby it measures the maximum
demand of the electrical energy in the cycle of half an hour in a month.
The electricity actually consumed is recorded in the MDI meter. The demand
in the instant case has been raised by the Electricity Board on the basis
of reading recorded by the MDI meter. The MDI meter has recorded the
consumption of energy in excess of the contracted load on the basis of
which demand has been raised. There was excess drawal of electrical energy
than the actual permitted load. The MDI meter is also called Trivector
meter. As per the readings recorded by the MDI meter it is apparent that
consumer has availed and drawn electricity in excess of the contracted load
in contravention of the agreement with the Electricity Board. The reading
of MDI meter is indicator of total connected loads, the total load demanded
and availed of during the course of actual consumption of energy. In the
facts of instant case it is apparent that for six months in the year 1999-
2000 the MDI meter has recorded excess load. Thus we find that the High
Court has erred in the facts of the instant case in holding that it has not
been established in the instant case that the connected load was more than
500 KVA.
15. This Court in Orissa State Electricity Board & Anr. v. IPI Steel Ltd.
& Ors. (1995) 4 SCC 320 has noted how a trivector meter works and efficacy
of MDI meters. It has been followed by this Court in Bhilai Rerollers &
Ors. v. M.P. Electricity Board & Ors. (2003) 7 SCC 185. This Court in
Bhilai Rerollers (supra) has referred to MDI meters and the decision of
Orissa State Electricity Board (supra). Relevant portions are extracted
hereunder :
“16. We have carefully considered the submissions on behalf of parties on
either side. This Court, in the decision reported in Orissa SEB case (1995)
4 SCC 320 though in dealing with the rights of the Electricity Board for
enforcing payment of maximum demand charges and minimum monthly charges
noticed about the utility of MDI meter also called “trivector meter” and
observed as hereunder at para 10: (SCC pp. 326-27)
“Every such consumer is provided with two meters. One is called the
‘trivector meter’ and the other is the normal meter which records the total
quantity of energy consumed over a given period — which is ordinarily a
month. The meter which records the total consumption requires no
explanation or elaboration since we are all aware of it. It is the other
meter which requires some explanation. Now every large-scale consumer knows
the amount of energy required by him and requests for it from the Board. If
the Board agrees to supply that or any other particular amount of energy,
it makes necessary arrangements therefor by laying the lines to the extent
necessary and installing other requisite equipment. It is obvious that if a
factory uses energy at a particular level/load and for a particular period,
it consumes a particular quantity of energy. The trivector meter records
the highest level/load at which the energy is drawn over any thirty-minute
period in a month while the other meter records the total consumption of
energy in units in the month. Let us take the case of the respondent to
illustrate the point. The maximum demand in his case is up to but not
exceeding 7778 KVA. That is his requirement. In the normal times, he is
entitled to draw energy at that level/load. That is his maximum demand
under the agreement. But he may not always do so. Say, in a given month, he
draws energy at 6000 KVA level only, even then he has to pay the minimum
charges as stipulated in the agreement. But if he draws and consumes energy
exceeding eighty per cent of the energy, he pays demand and energy charges
for what he utilises. Now, let us notice how the trivector meter i.e. the
meter which records the maximum demand works; the meter is so designed that
it only records the maximum load/level at which energy is drawn over any
thirty-minute period in a month. It only goes forward but never goes back
until it is put back manually. To be more precise, suppose the respondent
has drawn energy at 7770 KVA for a thirty-minute period on the first day of
the month, the meter will record that figure and will stay there even if
the respondent consumes at 7000 or lesser KVA level during the rest of the
month. From this circumstance, however, one cannot jump to the conclusion
that it is an arbitrary way of levying consumption charges.”
17. The provisions contained in sub-section (7) of Section 26 of the Indian
Electricity Act, 1910 envisage the installation of additional meters and
checking apparatus, in addition to the meter for ascertaining the amount of
energy supplied and quantity consumed. By and large it seems to be that the
utility of MDI meter to record effectively and correctly the drawal of
power at a continuous block period of 30 minutes in a month by a consumer
has come to stay as a reasonably safe method with due credibility and
recognition in the field and appears to be in vogue even at the global
level. The question as to whether it can also safely be relied upon as the
basis for investigating and determining the excess quantity of load said to
have been availed of by a consumer over and above the contracted load as
per the agreement is concerned, in our view admits of no doubt and we could
find no reasonable or tenable and valid objection to exist so far as its
relevance, utility and purpose of determination are concerned. If the
reading by such a device installed could provide a sound basis and
yardstick as accepted by this Court in the decision noticed supra for
adjudging liability to pay the maximum demand charges/minimum monthly
charge, it should in our view be considered to be equally efficacious for
the purpose on hand also in adjudging the issue as to whether the consumer
has at any given point of time, in contravention of the agreement with the
Board, availed and drawn electricity in excess of the contracted load.
18. Electrical motors are designed to run up to a stipulated capacity of
horse power. At the same time as disclosed from the communication from
Bhilai Steel Plant (an undertaking of the Steel Authority of India: a
Government of India enterprise) brought on record, so far as the motors
used in rolling mills are concerned, they are said to have an overload
capacity in the range of 2 to 2.5 times their rated capacity and at times
even about 3 times, but only for a very short duration and at any rate such
a situation cannot be sustained like that continuously for a duration of 30
minutes. Hence, it is stated that an MDI meter which measures the demand in
KW and integrating over a period of 30 minutes should/will register a
demand value in KW which is either less than or equal to the motor-rated
KW. Therefore, if in these cases, MDI meter disclosed such higher rate of
demand, it would be futile for the appellants to contend that there was no
overdrawal in excess of the contracted load, since such excess drawal
stands substantiated by the actual overdrawal in excess from the readings
of MDI meter and the motor-rated KW as claimed by the appellants are not
either genuine or correct. The object of the appellant in making reference
to lock rotor test also does not seem to be relevant since the said test
could, it appears, only help to determine the capacity of the motor and not
of the total connected load or the total load demanded and availed of
during the course of actual consumption of energy.”
16. This Court has in Bhilai Rerollers (supra) held that the reading of
the MDI meter could provide a sound basis and yardstick to pay maximum
demand charges and for adjudging the issue as to whether the consumer at
any given point of time of the agreement has availed and drawn excess
electricity. This Court has also indicated that lock rotor test is normally
held to determine the capacity of the meter and not the total connected
load or the total load demanded and availed of during the course of actual
consumption of energy. Merely in an inspection in January, 1999 if the
connected load was found to be of 495 HP when for six months in a
subsequent period of April, 1999 to March, 2000 maximum demand has
increased beyond the contracted load of 500 KVA and it is not disputed that
it was more than 110% of the contract load. Thus as per clause 16.5 of the
notification dated 21.06.1993 issued under the Electricity Supply Act, 1949
in our opinion the Electricity Board was well within its rights to realize
the amount as per tariff notification. We find that the High Court has
erred in holding in the facts of the case that there can be no correlation
with the maximum demand and the connected load. Similarly the High Court
has proceeded on irrelevant consideration while it has observed that
entrepreneur has stepped up production, which will result in economic
development, generation of employment and income and higher consumption is
better for the State of Bihar. This was not a question to be gone into by
the High Court. The High Court was required to consider the reliability of
the MDI meter and frequent violation of contract demand and the tariff
notification dated 21.6.1993. There is material on record indicating that
the connected load has been exceeded as reflected in the meter reading. It
could not be due to wrong recording of meter or short circuit etc. as MDI
meter records excess capacity drawn over a continuous period of 30 minutes’
duration during a month. The MDI meter’s method is well recognized and
widely accepted one. The plea taken that there was defect in the meter and
they were changed in January, 2000 and again in March, 2000 has no legs to
stand. However MDI meter readings for earlier periods too indicated demand
exceeding 500 KVA and in the month of November 1999, the meter was found to
be in order and maximum demand exceeded contract demand. Once maximum load
drawn had exceeded the contracted load, in the fact of the case, it can
safely be held that there is violation of the permissible connected load.
The recording in MDI meter is more credible and reliable than the stand of
the industry that the meter was faulty, set up just to escape from the
liability.
17. In the circumstances we have no hesitation in setting aside the
orders passed by the Single Bench and Division Bench of the High Court. The
impugned demand is held to be legal and valid. Let the outstanding amount
calculated as on today, be paid as per norms of the Board within a period
of six weeks from today. The appeal is allowed. The impugned judgment and
orders are set aside and writ petition is dismissed. Parties to bear their
own costs.
…………………………J.
(M.Y. Eqbal)
New Delhi; ………………………..J.
January 28, 2016. (Arun Mishra)
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