(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The appeal is filed by the original defendants calling in question judgement and decree dated 28.09.2001 passed by the learned 3rd Joint Civil Judge, Navsari. By the said judgement and decree, learned Judge was pleased to decree the suit of the present respondent-original plaintiff. Consequently, the defendants were directed to pay sum of Rs. 7,18,769.00 with interest @ 24% per annum to the plaintiff from the date of filing of the suit till realization of the amount.
2. The respondent-Gujarat Electricity Board, had initially filed a suit against the present appellants-original defendants for recovery of a sum of Rs. 24,16,864.39. The plaintiff also prayed that such amount be paid with delayed payment charges and interest @ 24% per annum. Such suit was filed on 16.10.1995.
3. In the suit, the plaintiff-Electricity Board averred that the defendants were the consumers of an electricity connection granted by the Board being Consumer No. I-372-A for authorized load of 148 H.P. Since the power consumption of the consumer was found low, a surprise check was carried out, during which, it was found that the meter was tampered, the seal of the meter were broken on the electric box as well as in the body of the meter. In short, the case of the Electricity Board in the suit was that the defendants had tampered with the meter and committed theft of electricity. As per the plaintiff-Board, the defendants had installed machinery and consumed electricity of 175 H.P. On basis of such power theft case, the Board issued a bill by calculating the amount payable by the defendants as per the formula contained in the conditions and miscellaneous charges for supply of electric energy (hereinafter to be referred to as the 'Conditions'). As per such formula, the Electricity Board raised a bill of Rs. 19,99,275/- towards unpaid use of electricity. Adding 10% for electricity duty and 3.5% for sales tax, the Electricity Board raised a demand of Rs. 22,69,177/- from the defendants since the defendants failed to pay such amount, above mentioned suit was filed.
4. During the pendency of the said suit, the consumer- original defendants approached the appellant authority in terms of Condition No. 34 of the said conditions. For the above purpose, the consumers had also agreed to withdraw their suit being Special Civil Suit No. 58 of 1994 filed before the competent civil court.
5. The appellate authority rendered its decision on such appeal on 06.06.2000 granting partial relief. For certain days when there was staggering, reduction was made. The chargeable period was revised reducing the same by 15 days from 176 previously calculated by the court. The load factor which was previously adopted as 1 was also reduced to 0.5. Accordingly, G.E.B. was required to revise the bill of the consumers.
6. G.E.B. Has not challenged such appellate order and thus accepted the same. Giving effect to such appellate order, the Electricity Board amended its suit and reduced its principal demand to Rs. 7,18,769/- which comprised of a sum of Rs. 5,71,103/- towards the supplementary bill calculated as per the order passed by the appellate authority and Rs. 1,47,666/- towards the committed charges for the period between July 1994 to January 1995, when the electricity connection of the consumers came to be disconnected permanently. GEB accordingly amended the suit and sought recovery of Rs. 7,18,769/- with delayed payment charges/interest @ 24% per annum. Learned Civil Judge raised following issues:
“1. Whether the plaintiff/G.E.B. Proves that, the defendant No. 1 Firm, is its consumer, and electric connection No. 372-A has been given to it?
2. Whether the plaintiff proves that, the defendant firm has committed power theft and, has broken the seals of meters and terminal cover?
3. Whether the plaintiff proves that, the defendant firm has received illegally 175 H.P. electric load though 148 H.P. connection is given to it?
4. Whether the plaintiff/ G.E.B. proves that, its Rs. 22,69,177.12 ps remains outstanding against the defendants?
5. Whether the plaintiff/G.E.B. is entitled to recover interest, if yes, at what rate?
6. Whether the plaintiff is entitled to get reliefs as prayed for?
7. What order & decree?”
7. The findings of the learned Judge were as follows:
1. In the Affirmative.
2. In the Affirmative.
3. In the Affirmative.
4. Outstanding Amount Rs. 7,18,769.90/-
5. Yes, at the rate of 24% interest p.a.
6. As per final order passed below.
7. As per final order passed below.
8. Eventually, the learned Judge was pleased to pass decree in favour of the plaintiff, as noted above, for a sum of Rs. 7,18,769.90 ps. @ 24% p.a. from the date of the suit till realization.
9. In the impugned judgement and decree, the learned Judge rejected the contention of the G.E.B. with regard to the binding effect of the decision of the Appellate Authority on the defendants. The contention of G.E.B. before the Court was that the Appellate Authority having rendered a particular decision in the appeal filed by the defendants, and the defendants not having challenged such a decision of the Appellate Authority, the Court had to pass a decree in terms of such order of the Appellate Authority. Learned Civil Judge, however, was of the opinion that the Appellate Authority is not a court within the meaning of the Civil Procedure Code. Principle of res- judicata, therefore, would not apply. The learned Jude was, therefore, of the opinion that the entire issue was required to be examined afresh and the G.E.B. had to prove the case put forth in the suit before the civil court.
10. On the merits, however, the learned Judge took into account the evidence produced by the plaintiff-Electricity Board, in particular, deposition of the plaintiff's witness Shri B.B.Patel at Exh. 93, in which, the details of the raid carried out on the premises of the defendants for meter checking were given. The learned Judge found that the defendants had tampered with the meter. That, there was thus a case of theft of electricity. The learned Judge based his conclusions on the oral as well as documentary evidence produced by G.E.B. The learned Judge placed heavy reliance on the Rojkam of the raiding party to hold that it was a clear case of tampering of the meter.
11. The learned Judge, on the basis of evidence produced by the G.E.B. also believed that the defendants had installed machines and utilized 175 H.P. load from electricity line provided by the G.E.B.
12. On the basis of such findings, the court below found that the G.E.B. having applied the A+B+C+D formula provided under the said conditions, prayer for recovery of sum of Rs. 7,18,769.90 was just and reasonable. The learned Judge, therefore, passed the decree accordingly.
13. We have heard learned counsel for the parties.
14. Learned counsel, Mr. J.R.Shah for the appellants submitted that the trial Court rightly held that the order of the Appellate Authority would not be binding on the appellants-original defendants since the Appellate Authority cannot be equated with the Court envisaged under Section 11 of the Civil Procedure Code. Principle of res-judicata would not apply.
14.1 With respect to the findings of theft of electricity, counsel submitted that the authorities had previously checked the meter and found it in order. No case of tampering with the meter was established. The Trial Court, therefore, committed an error in believing that the appellants had committed theft of electricity by tampering with the meter.
14.2 Counsel further submitted that in any case, the trial court erred in granting interest @ 24% per annum on the principal sum decreed from the date of suit till realization. Referring to Section 34 of Code of Civil Procedure, he submitted that the Court has discretion to grant reasonable interest.
15. On the other hand, learned counsel, Ms. Bhaya appearing for the Electricity Board vehemently contended that the Appellate Authority having decided the appeal of the consumers, the Board as well as the consumers would be bound by the decision of the Appellate Authority. In absence of any challenge by the consumers, such appellate order, the demand as per such order having been crystallized, the consumers could not have questioned such demand before the Civil Court by raising independent issues.
16. Counsel submitted that there was voluminous evidence to establish theft of electricity. The Civil Court having appreciated the evidence on record and having come to just conclusion, no interference is called for.
17. With respect to rate of interest, counsel submitted that the conditions permit recovery of the principal sum with delayed payment charges @ 24% from the date of consumption till actual realization.
18. Counsel relied following decisions in support of her contention:
1. In case of Hyderabad Vanaspathi Ltd. Vs. A.P.State Electricity Board and ors. reported in (1998) 4 SCC page 470, wherein the Apex Court held and observed that the terms and conditions for supply of electricity notified by the Board in exercise of power under Section 49 of the Electricity (Supply) Act, 1948 are statutory in character. It was further observed that merely because written agreement was entered into by the Board with each consumer, will not make the terms and conditions purely contractual.
2. In case of The Adoni Ginning Factory and ors. Vs. The Secretary, Andhra Pradesh Electricity Board, Hyderabad and ors. reported in AIR 1979 SC 1511, wherein the Apex Court finding that the Electricity Board of State of Andhra Pradesh, in the condition for supply of electricity, had provided for levy of unpaid amount @ 1% for every month of delay, held that such rate of levy was indication that levy was not penalty but provision for interest by way of compensation of delayed payment.
3. In case of Bihar State Electricity Board, Patna and ors. vs. M/s. Green Rubber Industries and ors. reported in (1990) 1 SCC 731, wherein the Apex Court observed that the agreement (for supply of Electricity) though in a standard form of contract and was founded on statutory basis of the relationship between the parties, would as well be contractual in nature.
19. Having thus heard learned counsel for the parties and having perused the materials on record, we would like to first deal with the question of binding effect of the appellate authority's order in case of the present appellants-original defendants.
20. To recall, against the demand of Rs. 24,16,864/- raised by the Electricity Board. The consumers approached the appellate authority in terms of Condition No. 34 of the said conditions. The Appellate Authority, by its judgement dated 06.06.2000 produced at Exh. 99 before the civil court, substantially allowed the appeal of the consumers. Though exact quantification as per such appellate order was not made in the order itself, it is not in dispute that the Electricity Board while giving effect to such an order, quantify the revised demand from the consumers at Rs. 7,18,769/-. It is not in dispute that the consumers did not challenge such order of the appellate authority before any forum.
21. Condition No. 34 of the said conditions pertains to payment of energy dishonestly used or abstracted or maliciously wasted or diverted. Such Condition inter alia provides that when a consumer on a first occasion is found wasting directly using/abstracting/consuming energy dishonestly or maliciously, and is aggrieved by the assessment by the Board in respect of quantum of energy deemed to have been consumed, he shall pay amount equivalent to 30% of the value of the energy so assessed. Such consumer can then represent his case, if he so desires within 30 days from the receipt of the assessment order or from the date of reconnection of power supply whichever is later, before the Appellate Authority appointed by the Board. Such authority after, giving an opportunity to the consumer of being heard and producing all written and oral evidence in support of his representation will decide the appeal and the decision of the Appellate Authority in the appeal shall be final and binding on the consumer. He shall then pay the balance amount within 30 days from the date of communication of the order of the Appellate Authority, failing which the supply of electricity would be liable to be disconnected.
22. Above Clause 34 of the conditions clearly provides for an avenue for redressing the grievance of the consumer who has been visited with the supplementary bill on the premise that he is found to be involved in wasting, using, abstracting or consuming energy dishonestly or maliciously.
23. As held by the Apex Court in case of Hyderabad (supra), such conditions for supply of electricity framed under Section 49 of the Electricity (Supply) Act, 1948 have a statutory character. The Apex Court observed that:
“20. We have already seen that Section 49 of the Supply Act empowers the Board to prescribe such terms and conditions as it thinks fit for supplying electricity to any person other than a licensee. The section empowers the Board also to frame uniform tariffs for such supply. Under Section 79(j) the Board could have made regulation therefore but admittedly no regulation has so far been made by the Board. The Terms and Conditions of Supply were notified in H.P. Ms. No. 690 dated 17.9.1975 in exercise of the powers conferred by Section 49 of the Supply Act. They came into effect from 20.10.1975. They were made applicable to all consumers availing supply of Electricity from the Board. The section in the Act does not require the Board to enter into a contract with individual consumer. Even in the absence of an individual contract, the Terms and Conditions of Supply notified by the Board will be applicable to the consumer and he will be bound by them. Probably in order to avoid any possible plea by the consumer that he had no knowledge of the Terms and Conditions of Supply, agreements in writing are entered with each consumer. That will not make the terms purely contractual. The Board in performance of a statutory duty supplied energy on certain specific terms and conditions framed in exercise of a statutory power. Undoubtedly the terms and conditions are statutory in character and they cannot be said to be purely contractual.
24. The appeal provided under said conditions thus would be also in the nature of statutory remedy for redressal of the grievance of the consumers. It is not in dispute that outcome of such appeal is binding on the electricity board of course subject to challenge in accordance with law. As per the Condition No. 34 itself such order of the appellate authority is meant to be final and binding upon the consumer. He is required to pay the balance amount within 30 days from the date of connection of the order of the appellate authority failing which the supply is liable to be disconnected without any further notice.
25. It may be that despite such clause giving finality to the order of the appellate authority, it may be open for a consumer to challenge such a decision of the appellate authority before the competent civil court. However, this is quite different from suggesting that the appellate order loses its statutory character. In that view of the matter, and in view of the clear binding effect given to such an order of the appellate authority in the Condition No. 34 itself, in absence of any challenge by the consumer to the order passed by the appellate authority, the decision recorded there in would bind the appellant consumer as well.
26. Had this been a remedy provided by way of the departmental dispute redressal mechanism not having any statutory force and only by way of a machinery providing for redressal of a grievance, in form of conciliation or departmental representation, the issue may stand on a different footing. However, condition No.
34 clearly provides for an appellate forum before which the consumer could approach for redressal of the grievances. The decision of the Appellate Authority would be binding to the board. In absence of any challenge by the consumer, such decision would also be binding to the consumer.
27. In that view of the matter, we are unable to uphold the view of the civil court that despite the order of the appellate authority, the consumers could before the civil court re-agitate the very same question all over again.
It is true that the appellate authority is not a court and therefore, strict principle of res-judicata would not apply. However, the decision of the appellate authority would bind the appellant in absence of any challenge.
28. Even otherwise independently also we have examined the evidence on record. The Electricity Board examined one B.B.Patel at Exh. 93. He was the Deputy Engineer of G.E.B. at the relevant time. He gave details of the case of theft of electricity against the consumers. He stated that a surprise check was conducted on the premise of the consumers on 26.07.1994. He was one of the members of the said checking squad. Checking was done in his presence and in presence of one Sanjay who represented the consumers. The seal on the meter box was found broken. Upon opening the meter box, it was found that the seals on the terminal cover and the meter pad both were found tampered. They were broken and reconnected. Against the authorized load of 148 H.P, the consumer had connected equipments drawing 175 H.P of electricity. The witness produced the Rojkam and the report prepared on the basis of such Rojkam at Exh. 88 and 89 respectively. He stated that the meter was sent for laboratory test, during which a hole was found in the body seal of the meter. He produced the report of the laboratory.
29. In the cross examination, he did agree that in the month of June, last meter reading was taken. He, however, clarified that, at that time, the seals of the meter were not checked nor was it minutely examined whether any of the seals have been tampered.
30. The Electricity Board also examined one Vinodbhai at Exh.
120 he was Deputy Engineer (In-charge) of area in question at the relevant time. He was also part of the checking squad, which had raided the premises of the consumers. He also gave similar account.
31. From the above evidence, it can be seen that the officers of the Electricity Board had raided the premises of the consumers for checking purpose. During such surprise check, the meter was found tampered, seals were broken, the inside seals of the meter box were found broken and reconnected. Such meter was collected after drawing panchnama and sent for laboratory testing. Laboratory report also supported the case of tampering of the meter. On the basis of such evidence, the trial court found that the case of electricity theft was established. Nothing contrary was pointed out to us to take a different view. Officers of the electricity board, who were members of the checking squad, deposed before the Court the manner, in which the raid was carried out and meter was found tampered. This was corroborated by the laboratory report which confirm such facts.
32. The fact that while taking meter reading such tampering was not noticed would not in any manner mean that the factum of tampering of the meter was not established. In a given case, the tampering may be done cleverly and minutely. Simply because the meter reader did not notice such tampering would not mean that the evidence produced by the officials of the Board who formed part of the raiding party should be discarded. Particularly, when such evidence is corroborated by the laboratory report, we have no hesitation in confirming view of the trial court.
33. On both accounts, therefore, we find that the stand of the Electricity Board was correct. Firstly, on the issue that the Appellate Authority having allowed the appeal of the consumers in-part, to the extent such appeal was not accepted, the consumers not having challenged the appellate order, there would be no further scope for disputing the same before the civil court. Independently also we find that the Electricity Board had made out a case of theft of electricity by the consumers, the decree was correctly drawn by the civil court.
34. This brings us to the last surviving question of appropriate rate of interest that the trial court should or could have awarded.
35. Counsel for the appellant submitted that the Civil Court gravely erred in awarding the interest at the rate of 24% per annum on the principal sum. He submitted that in view of Section 34 of the Code of Civil Procedure, grant of interest pending the suit and post-decree was wholly within the discretion of the trial court. The learned Judge, therefore, committed error in awarding interest at such high rate. He submitted that such contractual rate of interest was not binding to the trial court.
In support of his contention, the counsel relied on following decisions:
1. In case of Central Bank of India Vs. Ravindra and ors. Reported in 2002 (1) SCC, 367 wherein the Apex Court has observed as under:
“55. During the course of hearing it was brought to our notice that in view of several Usury Laws and Debt Relief Laws in force in several States private money lending has almost come to an end and needy borrowers by and large depend on banking institutions for financial facilities. Several unhealthy practices having slowly penetrated into prevalence were pointed out. Banking is an organised institution and most of the banks press into service long running documents wherein the borrowers fill in the blanks, at times without caring to read what has been provided therein, and bind themselves by the stipulations articulated by best of legal brains. Borrowers other than those belonging to corporate sector, find themselves having unwittingly fallen into a trap and rendered themselves liable and obliged to pay interest the quantum whereof may at the end prove to be ruinous. At times the interest charged and capitalised is manifold than the amount actually advanced. Rule of damdupat does not apply. Penal interest, service charges and other over-heads are debited in the account of the borrower and capitalised of which debits the borrower may not even be aware. If the practice of charging interest on quarterly rests is upheld and given a judicial recognition, unscrupulous banks may resort to charging interest even on monthly rests and capitalising the same. Statements of Accounts supplied by banks to borrowers many a times do not contain particulars or details of debit entries and when written in hand are worse than medical prescriptions putting to test the eyes and wits of the borrowers. Instances of unscrupulous, unfair and unhealthy dealings can be multiplied though they cannot be generalised. Suffice it to observe that such issues shall have to be left open to be adjudicated upon in appropriate cases as and when actually arising for decision and we cannot venture into laying down law on such issues as do not arise for determination before us. However, we propose to place on record a few incidental observations, without which, we feel, our answer will not be complete and that we do as under ”
2. In case of Punjab and Sind Bank Vs. Allied Beverage Company Pvt. Ltd. and ors reported in 2010 (10) SCC 640;
3. In case of Kerala State Electricity Board Vs. E.M.Jose reported in (1996) 1 SCC 597. It was however a case where revision of tariff of the electricity charges payable by a company had been struck down by High Court. The Supreme Court reversed the decision of High Court. Electricity company demanded delayed payment charges on such unpaid dues. The Apex Court observed that though the consumer was not a defaulter, on the principle of restitution, was liable to pay reasonable interest. Rate of interest of 18% was upheld.
36. On the other hand, learned counsel Ms. Lilu K. Bhaya submitted that 24 per cent interest is provided in Conditions for supply of electricity. Such conditions were framed by the Board in exercise of the powers under Section 49 of the Electricity Act and have thus statutory force. She, therefore, submitted that the trial court could not have varied such rate of interest which was statutorily provided. In support of her contention, she relied on the following decisions:
1. In case of M/s. Nava Bharat Ferro Alloys Ltd. Vs. Transmission Corporation of A.P. Ltd. and anr. Reported in AIR 2011 SC 538.
2. In case of Ferro Alloys Corporation Ltd. Vs.
A.P. State Electricity Board and anr reported in AIR 1993 SC 2005, wherein validity of Section 49 of the Electricity (Supply) Act came to be upheld.
37. Section 34 of the CPC provides as under:
“34. Interest- (1) Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, [with further interest at such rate not exceeding six per cent, per annum, as the Court deems reasonable on such principal sum] from the date of the decree to the date of payment, or to such earlier date as the Court thinks fit:
[Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions.
Explanation I- In this sub-section,”nationalized bank” means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970).
Explanation II- For the purpose of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.] 2. Where such a decree is silent with respect to the payment of further interest [on such principal sum] from the date of decree to the date of payment or other earlier date, the Court shall be deemed to have refused such interest, and a separate suit therefor shall not lie.”
38. Section 34 of the CPC thus undoubtedly gives discretion to the Court to award interest on the principal sum adjudged from the date of the suit to the date of the decree and thereafter from the date of decree to the date of payment or to such earlier date as the court thinks fit.
39. Proviso to Sub Section (1) of Section 34 provides that where liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed 6% per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions.
40. Thus, in case where the sum adjudged arising out of commercial transaction, the ceiling of awarding interest not exceeding 6% would not apply. In such a case, the Court would have discretion to award higher interest so that rate of such further interest shall not exceed the contractual rate of interest and in case there is no contract with respect to the rate of interest, rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions.
41. The fact that the present case involves commercial transaction is not in dispute. The Court, therefore, had discretion to award interest even beyond 6%, but not higher than the contractual rate of interest.
42. Provision of Section 34 came up for consideration before the Apex Court In case of Central Bank of India Vs. Ravindra (supra). Five Judge Bench of the Apex Court considered the term principal sum adjudged used in Section 34(1) of the CPC and opined that the principal sum actual advanced interest so capitalized would be the principal sum adjudged under Section 34(1) of the Act as a sum on the date of the suit. On such principal sum so adjudged the interest pendente ilte and future interest under Section 34 of CPC can be awarded at such rate and for such period which the court thinks fit. In this respect, in para 55 of the decision the Apex Court made certain observations. The relevant portion reads as under:
“55 (8):- Award of interest pedente lite and post- decree is discretionary with the court as it is essentially governed by Section 34 CPC dehors the contract between the parties. In a given case, if the court finds that in the principal sum adjudged on the date of the suit the component of interest is disproportionate with the component of the principal sum actually advanced the court may exercise its discretion in awarding interest pendente lite and post-decree interest at a lower rate or may even decline awarding such interest. The discretion shall be exercised fairly, judiciously and for reasons and not in an arbitrary or fanciful manner.”
43. In case of Punjab and Sind Bank (supra), the Apex Court upheld the decision of the High court which had awarded interest less than the contractual rate of interest between the bank and its borrower to give workable solution. In the said case, the Debt Recovery Tribunal had awarded interest pendente lite and future interest at the rate of 18% with monthly rests. The High Court had reduced such rate to 14% with simple interest looking to the financial position of the company. It was this decision of the High Court which the Apex Court upheld relying on and referring to the decision in case of Central Bank of India Vs. Ravindra (2002) 1 SCC 367 (supra).
44. It is thus undoubtedly true that while charging interest pendente lite and future interest under sub-section (1) of Section 34 of CPC, the Court has discretion even in commercial transactions to award interest lesser than the contractual rate of interest.
45. However, we may notice that such awarding of interest at a rate lesser than the contractual rate of interest is considered only in exceptional cases. As a norms or as a rule, Court would normally desist from reducing the interest from that which the parties have agreed.
46. In case of Central Bank of India, Kutch Vs. M/s. P.R.Garments Industries Pvt. Ltd., Surendranagr and ors. reported in AIR 1986 Gujarat 113, the Division Bench of this Court opined that when the liability arising out of commercial transaction, particularly by public financial institutions, the contractual rate of interest should be the rule and departure a rare exception.
47. This was reiterated subsequently in case of Union Bank of India, Bhavnagar Vs. M/s. Narendra Plastics, Bhavnagar and ors reported in AIR 1991 Gujarat page 67. It was observed that in commercial transactions, ordinarily, contractual rate of interest should be the rule and departure a rare exception. This is so because ordinarily the court cannot and would not vary the terms of contract arrived at between parties.
48. In case of Syndicate Bank Vs. M/s. West Bengal Cements Ltd. and ors. reported in AIR 1989 Delhi 107, the learned Single Judge of Delhi High Court observed that the grant of interest at a rate lesser than the contractual rate as a matter of rule, will amount to giving premium to those who trade upon the money of others. The defaulting borrower cannot be given the benefit of reduced rate of interest as a matter of rule.
49. In case of State Bank of Travancore, Tirupur Branch Vs. K.Vinayachandran and anr. reported in AIR 1989 Kerala 302 it is observed that the discretion under proviso to Section 34 must be exercised on sound judicial principles. Ordinarily, future interest at the contractual rate should not be refused except for sufficient reasons. In other words, refusal to award future interest at contractual rate is only the exception and not the rule.
50. The question in present appeal however is not so much as the whether civil court had discretion to reduce the contractual rate of interest. In the present case, the plaintiff electricity board had laid down the conditions for supply of electricity. Such conditions have been framed in exercise of powers under Section 49 of the Electricity Act. Such conditions are treated as statutory in nature. It is of course true that the consumer at the time of being provided electricity connection also signs such terms and conditions and therefore, such terms also are often times treated as contractual in nature.
51. The Apex Court in case of Bihar State Electricity Board, Patna and ors Vs. M/s. Green Rubber Industries and Ors. (supra) observed that though the agreement was in a standard form of contract, the standard clauses of the contract have been settled over years and have been widely adopted because experience shows that they facilitate the supply of electricity energy. Relations were seen to be contractual in nature.
52. In the case of M/s. Hyderabad Vanaspati Ltd. Vs. Andhrapradesh State Electricity Board (supra) the Apex Court had occasion to consider the nature of terms and conditions for supply of electricity to consumers notified by the A P State Electricity Board in exercise of power under Section 49 of the Electricity (Supply) Act 1948. In this Context, the Apex Court opined that Section 49 of the Act does not require the Board to enter into the contract with individual consumer. Even in absence of an individual contract, the Terms and Conditions of Supply notified by the Board will be applicable to the consumer and he will be bound by them. The Court concluded that such terms and conditions are statutory in character and they cannot be said to be purely contractual.
53. The Apex Court held and observed as under:
“20. We have already seen that Section 49 of the Supply Act empowers the Board to prescribe such terms and conditions as it thinks fit for supplying electricity to any person other than a licensee. The section empowers the Board also to frame uniform tariffs for such supply. Under Section 79(j) the Board could have made regulation therefore but admittedly no regulation has so far been made by the Board. The Terms and Conditions of Supply were notified in H.P.Ms. No. 690 dated 17.9.1975 in exercise of the powers conferred by Section 49 of the Supply Act. They came into effect from 20.10.1975. They were made applicable to all consumers availing supply of Electricity from the Board. The section in the Act does not require the Board to enter into a contract with individual consumer. Even in the absence of an individual contract, the Terms and Conditions of Supply notified by the Board will be applicable to the consumer and he will be bound by them. Probably in order to avoid any possible plea by the consumer that he had no knowledge of the Terms and Conditions of Supply, agreements in writing are entered with each consumer. That will not make the terms purely contractual. The Board in performance of a statutory duty supplied energy on certain specific terms and conditions framed in exercise of a statutory power. Undoubtedly the terms and conditions are statutory in character and they cannot be said to be purely contractual.
25. We are unable to uphold the view expressed by the Full Bench in the judgment under appeal that the terms and conditions of supply are purely contractual. In our opinion the Terms and Conditions of Supply are statutory in character.”
54. We may also refer to the decision of the Apex Court in case of M/s. Nava Bharat Ferro Alloys (supra). It was the case wherein the electricity board had raised demand for additional charges. The consumer had approached the High Court and obtained interim stay against an enforcement of the revised tariff and demand of additional charges arising out of such tariff. However, subsequently, in the final adjudication the High Court upheld the demand of additional charges. It was in this background the Apex Court held that the consumer cannot avoid payment by taking shelter of an interim order passed by the Court. The Apex Court also upheld that the demand of the electricity board to recover such payment with cost at the rate of 18% per annum in terms of the stipulation contained in tariffs/agreement executed between the board and the consumer.
55. From the decision of the Apex Court, it can be thus gathered that the terms and conditions for supply of electricity are seen to be having dual character. Insofar as the individual consumers are concerned, when they sign terms and conditions in from of an agreement with the board, they are treated to be having contractual character. However, since such terms and conditions are framed under Section 49 of the Electricity Act and as held and observed by the Apex Court in case of Hydrabad Vanaspathi Ltd. Vs. A.P.State Electricity Board and ors.
(supra) even in absence of such individual contracts, the conditions would be enforceable and such conditions are treated as statutory in nature.
56. Under the circumstances, it can be seen that the stipulation of delayed payment charges/interest contained in terms and conditions for supply of electricity are not purely contractual in nature. When the conditions are treated as statutory in character, the resultant effect would be that specification of interest to be charged on delayed payment would also assume statutory character. Thus the prescription of interest/delayed payment charges is not merely contractual but statutory in nature. That being the position, it would not be open to vary the rate of interest in exercise of power under 34 of CPC. Had the prescription of interest being purely contractual under Section 34 of the Code, Civil Court would have the discretion to grant interest even lesser than the contractual rate of interest.
57. In the result, with respect to the rate of interest also we do not see any reason to interfere. In the result, appeal is dismissed.
[AKIL KURESHI, J.]
[C.L.SONI, J.]
JYOTI