Holding

Section 49 is valid, the consumption deposit is a permissible advance, the Boards are not required to pay interest on it, and the denial of interest is neither arbitrary nor unconstitutional.

Summary

The Supreme Court considered multiple writ petitions filed by industrial consumers, including Ferro Alloys Corp., challenging the terms of electricity supply imposed by various State Electricity Boards. The issues revolved around the validity of Section 49 of the Electricity (Supply) Act, 1948, the reasonableness of a three‑month consumption security deposit, the Board’s power to demand additional deposits, and whether the Boards must pay interest on such deposits. The Court held that Section 49 is constitutionally valid, the consumption deposit is an adjustable advance payment aimed at securing prompt payment and is not arbitrary, and there is no statutory or common‑law obligation for the Boards to pay interest on the deposit. Consequently, clauses denying interest are not unconstitutional, and the Boards may demand additional deposits without providing a reason. The Court dismissed the petitions and upheld the High Court’s rulings in favour of the Boards.

Issues considered

Whether Section 49 of the Electricity (Supply) Act, 1948 is unconstitutional for lack of guidelines on terms and conditions of supply
Whether a three‑month consumption security deposit is arbitrary or unreasonable, especially for power‑intensive consumers
Whether the Electricity Boards have the statutory power to demand additional security deposits and adjust tariffs under Section 59
Whether the Boards are liable to pay interest on consumption/security deposits under the Act, Schedule VI, the Interest Act, 1978, or common law/equity
Whether a clause denying payment of interest on the deposit is violative of Article 14 of the Constitution
Whether the Board acts as a trustee in relation to the deposit
Whether an interlocutory order of a three‑judge bench binds a two‑judge bench

Legislation cited

Constitution of Indias. Article 12, s. Article 14
Electricity (Supply) Act, 1948s. 2(b)(v), s. 49, s. 59, s. 79, s. Schedule VI Clause 14
Indian Electricity Act, 1910
Indian Electricity Rules, 1956s. Rule 27
Indian Trust Act, 1882s. 90
Interest Act, 1978s. 4(2)

Subjects

Electricity (Supply) ActSection 49consumption depositsecurity depositinterest liabilitypublic utilityunconstitutionalArticle 14tariff adjustmentadhesion contract

Judgment

FERRO ALLOYS CORPN. LTD. AND ORS. ETC. ETC. A

"·
A.P. STATE ELECTRICITY BOARD AND ORS ETC. ETC.

APRIL 15, 1993
B
[K. JAYACHANDRA REDDY ANDS. MOHAN, JJ.]

Elecricity Supply Act, 1948: Sections 2(b) (v), 49, 59, 79, Schedule
· VI-Clause 14.

Section 49-Whether unconstitutional for want of guidelines for c
terms and conditions of supply of electricity.

Indian Electricity Act, 1910:
Indian Electricity Rules, 1956: Rule 27.
D
Interest Act, 1978: Section 4(2).
Electricity Boards-General terms and conditions of supply of
electricity-Condition of Consumption Deposit-Whether arbitrary-
Whether Board has power to make Regulations to demand security .
deposit-Nature and object ofconsumption deposit-What is Electric- E
ity Board-Whether liable to pay interest on Consumer Deposit-Rate
of Interest on Consumption Deposit-Whether should be same as pai4
by Scheduled Bank-Clause in General Terms and Conditions provid-
ing for 11011 payment of interest on Consumption Deposit-Wflether
unconstitutional and arbitrary-Demand for additional Consumer
Deposit-Reasonableness of-Electricity Board-Whether should give F
reas01is for additional demand.

lndianJfusts Act, 1882: Section 90.

Relationship b.etween Electricity Board.and Consumers-Whether G
of Trustee and Benejtciary•..

Practice and Procedure-Interlocutory orderpassed by a Bench of
.--- 3 Judges-Whether binding on a Bench of 2 Jr.dges.
H
199
200 SUPREME COURT REPORTS (1993] 3 S.C.R.

A Consititution of India, 1950 : Article 12.
Electricity Boards are State.
Words and Phrases:
'Unconscionability'-'Deposit'-'Interest'-Meaning of
B Under the General Terms and Conditions for supply of electric-
ity notified by the Andhra Pradesh State· Electricity Board, under
Section 49(1) of the Electricity (Supply) Act, 1948, the consumers
were obliged to keep with the Electricity Board an amount equivalent
to three month's demand and energy charges as consumption deposit
c on which interest at the rate of 3% per annum was payable by the
Board. In the event of delay in payment of consumption deposit within
the stipulated period not only surcharge was payable by consumer but .
also the supply was liable to be disconnected. Various petitions were
filed before Andhra Pradesh High Court challenging the validity of
terms and conditions con tending that the consumption depositshou Id
D in no event exceed two months average consumption charges and that
in view of the judgment of Supreme Court in Mis. Jagdamba Paper
Industries v. H.S.E.B. Board, [1983] 4 S.C.C. 508, the Board was liable
to pay interest at the same rate as is paid by a Scheduled Bank on fixed
deposit. The High Court dismissed the petitions.
E
In appeals to this Court, it was contended on behalf of the
consumers that: (l) Section 49 of the Electricity (Supply) Act is
~nconstitutional since there are no guidelines for framing the terms
and conditions of supply of electricity; (2) in view of the fact that in
case of power intensive consumers the cost of Electricity is very high, ·
F
the condition requiring 3 months' security deposit is arbitrary and
illegal for power intensive consumers; and (3) there is no power under
the Electricity Supply Act to enable the Board to raise "revenue or to
cover its capital cost etc. except by way of adjustingtaritis as seen from
under Section 59 of the Suppl~· Act, 1948. Therefore, consumption
G deposit cannot be used for the purpose of revenue or raising revenue.

On behalf of the Electricity Board it was contended that: (1) in
view of the fact that the object of consumption deposit (which is in the
nature of advance payment and not a security deposit) is to ensure
H prompt payment of electricity supply, it cannot be contended that 3

.~
FERRO ALLOYS CORPN. v. A.P.S.E.B. 201

month's consumption deposit is arbitrary; (2) the fact that some of the A
consumers pay large amounts by way of electricity charges has
nothing to do with the nature of deposit. Merely because a unit is
power based it cannot be treated separately for the terms of supply
relating to consumer deposit must be uniform.

B
In the case of Rajasthan Electricity Board the General Condi-
tions expressly provided that no interest will be paid by the Electricity
Board on security deposit. Futher, the El~tricity Board· issued
notices requiring the consumers to deposit the enhanced amount of
cash security as well as bank guarantee on the basis of maximum
power consumption. The consumers filed petitions in the Rajasthan c
High Court contending that provision for no interest was bad in law
and that the enhanced security deposit must be calculated not on three
months maximum consumption but on the basis of minimum power
consumption. A Single Judge of the High Court allowed the petitions.
On appeal, the Division Bench held that the clause relating to non·
D
payment of interest was not reasonable. Relying on Section 4 of the
Interest Act as well as on the Model Form of draft conditions
contained in Schedule VI of the 1948 Act, the Division Bench held that
interest was payable on the security deposit.

In appeals to this Court, it was contended on behalf of the E
Rajasthan State Electricity Board that: {l) there is no statutory
provision which casts an obligation on the Board to pay interest on the
security deposit; nor even interest is payable under common law or in
equity; (2) the High Court erred in relying on the Model Form
conditions as well as on the Interest Act; (3) the security deposit for
F
three months is neither unreasonable nor a~bitrary; (4) even if the
contract between the Board a!ld consumer is adhesion contract, it is
not necessarily unconsciable; (5) in Jagdamba Paper Industries case
the right of interest was based on th~ concession of parties and the
Court had no occasion to decide the rate of interest.
G
On behalfoftheconsumersit was contended that: {l)thescheme
of the Electricity Act and Supply Act together with the Rules suggest
the payment of interest; (2) since the money is deposited bu the
consumers with the Board to secure the Board against default in
payment of bills, the Board is in the position of a trustee in respect of H
202 SUPREME COURT REPORTS [1993] 3 S.C.R.

A this money; (3) .even under English Law, interest was payable on ·
security for electricity.

For the intervenor on behalf of the Electricity Board of Orissa,
it was submitted that Regulation 7 of the Orissa State Electricity
Board General Conditions of Supply Regulations 1981 providing that
B
no interest would be payable on security deposit is just and reasonable
and is not arbitrary or violative of Article 14 of the Constitution.

The Uttar Pradesh State Electricity Board was also paying 3%
interest on consumption deposit. The consumers preferred writ ·
C petitions before the Allahabad High Court claiming 12 % interest, but -""'"=
the same were dismissed.

In appeals to this Court it was contended on behalf of the
consumers that in a number of matters this Court has also ordered
D interest at the rate of 12% on security deposit and the same principle
should apply to this case; (2) if interest is not paid, securit)' deposit
cannot be demanded as this will amount to unconscionable bargain;
and (3) the security deposit does not contemplate appropriation.

On behalf of the Electricity Board it was contended that: (I) in
E cases where 12 per cent interest was awarded it was only by way of ad
interim measure. Therfore, orders are not conclusive on this aspect;
(2) under Article 226 of the Constitution, the court is to conduct a
limited scrutiny whether b)· imposing a condition the Board has not
-
acted as a private trader and thereb)· shed off its public utility
F character. If the Court comes to the conclusion that the Board has not·
acted as a private trader and the nature of deposit has a rational
·relationship, the issue will fall outside the scope of judicial puniew.

The Bihar State Electricit)' Board was paying 5% interest on the
G security deposit. The consumers claimed interest at the rate payable
on fixed deposit b)· a nationalised bank and the High Court allowed
the san:ie. The Electricity Board filed petition in this Court contending
that the High Court erred in awarding a higher rate of interest.

On behalf of the consumers it was contended that the increase in
H security deposit "ithout assigning any reason was bad in law.

(
FERRO ALLOYS CORPN. v. A.P.S.E.B. 203

In the connected writ petition, the challenge is to the validity of A
Sections 49 and 79 of the Supply Act.

According to the Punjab State Electricity Board, while the
Electricity Board is required to make colossal advances to generate
electricity and supply to consumers the consumers also use and
B
consume electricity on credit ranging from 2 to 3 months depending
upon the category of consumers. To off-set part of the amount that the
consumer owes to the Board constantly and also to ensure timely
payment of advances b)· the Board to its suppliers an advance
consumption deposit is insisted upon before commencing supply to
the consumer. If this is not so taken the Board will be left with no other c
option than to increase the tariff. Thus advance deposit cannot be
· termed as a fixed deposit as the amount cannot be utilised against non-
pa~·ment of dues from consumers. Besides, the consumers can also ask
for the refund. Therefore, Sections 49(1) and 79 (j) cannot be termed
as arbitrary.
D
It was also contended on behalf of the Punjab State Elecricity
Board that the amendment to clause 23 of abridged conditions of
suppl~· requiring consumers to pa~· advance consumption deposits is
perfect!~· reasonable.
E
For the intervenor on behalf of Calcutta Electricity Supply
Corporation, it was submitted that the deposit though called securit)·
deposit is reall)' an adjustable advance payment of consumption
charges. The amount is revisable from time to time depending upon
the average consumption charges on the basis of actual consumption F
O\'er a period. In short, it is in the nature of a running account. The
securit~· deposit does not remain in tact like a fixed deposit but gets
depleted day after day depending on the extent of consumption. More
often than not. the consumption charges and other dues exceed the
security deposit. That necessitates calling for additional advance to
make up a shortfall. In the absence of any usage or contract or an)' G
proYision of law re<JUiring payment of interest, interest is not payable
for wrongful detention of mone)'· In this case, there is no wrong ful
detention [of eYen.] Section 4(2) of the Interest Act has no application
to this deposit.
H
204 SUPREME COURT REPORTS [1993] 3 S.C.R.

A Disposing the petitions, this Court,

HELD.: 1. Section 49 of the Electricity (Supply) Act, 1948 is
valid. Sub-section (1) of the said section starts with the words "Subject
to the provisions of the Act and all regulations, if any, made in this
behalt". Therefore, the Board has to conform to the various provi-
8 sions of the Act and the regulations. Section 49 contains two powers;
(1) to prescribe terms and conditions of suppl)·; and (2) fix the tariff.
No guidelines are required in this regard. [278A-248CEJ

Hindustan Zinc Lrd. v. A.P.S.E.B.. 1991 (3) S.C.C. 299; Mysore
C Srate Electricitl' Board v. Bang/ore Woollen. Cotton and Silk Mills Ltd.,
A.J.R.1963 S.C. 1128; Jagdamba Paper lndustries P\'f. Ltd. v. Haryana
State Electricity Board, 1983 (4) S.C.C. 508, referred to.
-
Roberts v.. Hopwood. 1925 A.C. 578; Py.r Granite v. Minister of
0 Housing and Local Goremment, 1958 (1) All E.R. 625, cited.

1.1. \Vhere regulations are made under Section 49 read with
Section 79 (j), the validity of the regulations could be examined by the
court, whether they are reasonable or not. [249-D]

E
Soutflem Steel Ltd.. Hyderabad v. The Andl!ra Pradesh State
Electricity Board. A.J.R. 1990 Andhra Pradesh 58, and Mis B.R. Oil
Mills. Bharatpur v. Assis tam Engineer (DJ R.S.E.B., Blwratpur. A.J.R.
1981 Rajasthan 108, referred to.

F 1.2 The terms and conditions notified under Section 49 must
relate to the object and purpose for which the)' are issued. Certainly,
that power cannot he exercised for a collateral purpose. In this view,
Section 49 is valid. [251-C]

G 2. The nature of consumption deposit is to secure prompt
payment and is intended for appropriation. The deposit though called
security deposit is reall)' an adjustable advance pa_yment of consump-
tion charges. The payment is in terms of the agreement interpreting
the conditions of suppl)·· This security deposit is revisable from time
to time on the basis of average consumption charges depending upon -
H the actual consumplion over a period. This is the position under the \
1
FERRO ALLOYS CORPN. v. A.P.S.E.B. 205

terms of supply of energy with reference to all the Boards. (278 A, 252 A
D-Kt

2.1 The cycle of Billing by the Hoard demonstrates that in the
ver)· nature of things, the consumer is supplied energy on credit. The
compulsoQ· deposit in the context of billing cycle is hardly adequate
B
to secure payments to the Board by the time the formal bill b.)' the

--· Board is raised on the consumer. In one sense, the consumption
security deposit represents onl}· a part of the mone:r which is payable
to the Board on the bill being raised against the consumer. Thus, the
Board secures itself by resorting to such deposit to cover part of the
liahilit)·. 1253 F -G) C

2.2 The deposit made cannot he equated to a fixed deposit. In the
rnse of daily suppl)· of electricit}" there is a consequential liability to.
pay for each day's consumption of electricit}·· To ensure that pay-
' ment, the securit}' deposit is furnished. Hence, it cannot he equated to
D
a deposit at all. It is in the nature of a running current account.
[262-A)

2.3 The argument that the deposit does not contemplate appro-
priation is not correct because in the nature of contract it is liable to
be appropriated for th!! satisfaction of any amount liable to be paid b.)· E
the consumer to the Board for violation of any conditions of supply in
the context of wide scale theft of energy, tempering with the meters
and such other methods adopted b)· the consumers. Therefore, the
said consumption security deposit serves not onl)' too secure the
interest of the Board for any such violation but should serve as a F
deterrent on the consumer in discharging his obligations towards the
Board. [264 F-6)

Union of India v. A.L. Rallia Ram, (1964) 3 S.C.R. 164; Ricl!es v.
Westminister Bank Ltd. 1947 Appeal Cases 390, held inapplicable.
G

2.4 While the Electricity Board is required to make colossal
advances to generate electricity and supply to consumers, the con-
sumers use and consume elecricity on credit ranging from 2 to 3
months depending upon the category of consumers. To off-set part of
the amount the consumer owes to the Board continually to ensure H
206 SUPREME COl1RT REPORTS [1993] 3 S.C.R.

A timely payment of bills by the Hoard to its suppliers, the adrnnce
consumption deposit is required to be kept with the Board before
commencing suppl}" to the consumer. The clauses in the contract in
relation to conditions of suppl)' of electric en er~· enable the Board to
adjust the bill against such deposits. Therefore, this is not a case of
mere deposit of money as in commercial transaction. In demanding
B security deposit, it is open to the court to take note of pilferage.
[254 F-H] -
As/lokSoap Factory v. Municipal Co1pomtio11 of Del/1i. J.T. 1993
(l) S.C. 128, referred to.
c
Corpus.lurisSecu11dum. Vol.26A,p.194,Davidsonv. U.S .. C.C.A.
Pa., 292 F. 750, 752, referred to.

2.5Three month's security deposit cannot be characterised ei-
D ther unreasonable or arbitrar)·· [255-F]

.lagdama Paper Industries P. Ltd. i·. Haryana State Electricity
Board. [I 993] 4 S.C.C. 508; K. C. Works v. Secretary A.P.S.E.B.. Vidyut
Soudlta. A.I.R.1979 Andhra Pradesh 291; Municipal C01porationfor
Greater Bombay v. Mis D.M. Industries. A.I.R. 1984 Bombay 242;
E Haryana lee Factory v. Municipal Corporation of Delhi, A.I.R. 1986
Delhi 78, referred to.

Southern Steel Ltd.. Hyderabadv. T/JeA.P. State Electricity Board.
A.LR. 1990 Andhra Pradesh 58, approved.
F
Indian Aluminium Company v. Karnataka Electricity Board. 1992
(3) S.C.C. 580, cited.

2.6Under the regulations framed by the Board in excercise of
G powers of Section 49 read with Section 79 (j) the consumer is onl)'
entitled and the Board has an obligation to suppl)· energy to the
consumer upon such terms and conditions as laid down in the
regulations. If, therefore, the regulations perscribed a security de-
posit that will have to be complied with. In cases where regulations
have not been made Rule 27 of the Rules made under the Electricity
H Act enables the adoption of model form of draft conditions of supply.
FERRO ALLOYS CORPN. v. A.P.S.E.B. 207

Annexure VI in clause 14 states that the licensee may require any A
consumer to deposit security for the payment of his monthly bills for
ener~· supplied and for the value of the meter and other apparatus
installed in his premises. Thus, the Board has the power to make
regulations to demand security from the consumers.
[251F-H, 252A-B]

-- 2.7 Under Section 59 the Board is obligated to carry on its
operation as to ensure that it gene.rates a surplus of 3 per cent o~ as
specified by the State Go\•ernment. The Board is obligated to adjust
B

its tariffs for ensuring such surplus. The condition of supply requiring
a consumption security deposit has a direct bearing on the operations C
of the Board which are to be conducted in such a manner as to ensure
a surplus. The language in Section 59 of the Supply Act is "carry on
its operations under this Act and adjust its tariffs." The language of
the said Section is not by adjusting tariff. Therefore, the argument
that the only manner in which the Board can achieve a surpius is to
D
adjust its tariffs does not flow from the language of Section 59. So read,
in the context of the insistence of a security deposit which has direct
bearing on the operations of the Board is per se reasonable and
constitutional. [266 E-6]

Ker/a State Electricity Board v. S.N. Govinda Prablzu & Bros. & E
Ors. [1986] 4 S.C.C. 198, cited.

..._ 3. There is no liability on the Electricity Board either under the
statute or common law or equity to pay interest on security deposit.
[278-B] F

.3.1 Then~ is no statutory provision which casts an obligation on
tht' Hoard to pa)· interest on securit)' deposit. Model form of draft
conditions of suppl)' (containing Clause 14 relating to interest on
securit)· deposit) as found in Annexure VI. traceable to Rule 27 of
G
Indian Electricity Rules, 1956, is applicable only to a licensee as
defined in Section 2 (4) of the Electricity Act. EYen for a licensee it is
not compulsory to adopt the model condition of si,pply. These is an
option available to adopt the model conditions of supply with such
modifications as the circumstances of each case require. [259 G-H, 260
A-C] H
208 SUPREME COURT REPORTS [1993) 3 S.C.R.

A 3.2 Schedule VI has been framed in exercise of powers under
Sections 57 and 57 A. In defining"clear profit" paragraph (2) of clause.
XVII, Item (v) makes a reference, as interest on securit)' deposits
which isa part of expenditure properly incurred by the licensee. From
this, it is impossible to hold that this Clause imposes an obligation on
the licensee to pay interest on Secwity deposits, All that would when
B is, is, if interest, is paid then it qualifies as an item of expenditure
properl,y incurred. This is the position with regard to licensee. But this
cannot apply to the Board, which is not a licensee. For the same reason
Item Ll (c) of Form IV of the Electricity Rules relating to interest paid
-
and accrued on consumers' securit)' deposits is of no avail because
c that relates to the manner of keeping accounts by the licensee, not
being applicable to a Board. Therefore, there is nothing to indicate
under the scheme of the Electricit)' Act or Schedule VI of the Suppl)'
Act that interest must be paid on thesecurit)' deposit. Accordingly the
Dh·ision Bench of Rajasthan High Court has erred in holding that
Interest Act is applicable. [260 F-H, 261-A-B]
D

3.3 Section 4(2) of the Interest Act, 1978 has no application to a
case where on account of a contractual term or a statutory provision
payment of interest is not permitted. A careful reading of Section 4(2)
wou Id disclose that it me rel)' enlarges the category of cases mentioned
E in Section 4(1). E,·en otherwise, there is nothing to indicate that
Section 4(2) could override other satutory proYisions or a contract
between the parties. No doubt, Section 4(2) contains a non-obstante
clause. But, such a clause is restricted to the prh·isions of Interest Act
and cannot extend to otlrer laws or a contract between the parties.
[261 F-6]
F

Ch'il Special Appeal No. 83of1987, decided on 30th July,
1991 by a Division Bench of the Rajasthan High Court,
overruled.

G 3.4 The word 'interest' would appl)' only to cases where there is
a relationship of debtor and creditor. A lender of money who allows
the borrower to use certain funds deprives himself of the use of those
funds. He does so because he charges interest which may be described
as a kind of rent:for the use of the funds, For example, a bank or a
H lender lending out money on payment of interest. In this case, there
is no relationship of debtor and creditor. Accordingly, the claim for

-
FERRO ALLOYS CORPN. r. A.P.S.E.B. 209

interest cannot be legally founded either on common law or equity. A
[262-G, 265-A]

Halsbury's Vol. 32 para 108: (Discussing cases where interest is
payable under common law) para 109 (Discussing cases where there
is equitable rights to interest), held inapplicable.
B
Bengal Nagpur Railway v. Ruttanji Ramji, A.I.R. 1939 P.C. 67,
referred to.

3.5 The object of the deposit is to secure the payment of consump-
tion charges. These charges may vary depending upon the daily C
consumption, depending on the level of suppl~·· The amount due by
way of consumption charges would also be liable to be appropriated.
Therefore, it is incorrect to state that the Board is a trustee. The
relationship between the Board and consumer is not that of a trustee
and a beneficiary but a depositor and depositee. This. is not even a case D
of a constructive trust under Section 90 of the Indian Trust Act, since
no advantage is gained by the Electricity Board in derogation of the
rights of the consumer. [262 D-F]

4. The clause not providing for interest on security deposit is
neither arbitrary nor palpably unreasonable, nor even unconscio- E
nable for the following reasons:

(a) The consumer madethesecuritydepost in consid-
eration of the performance of his obligation for ob-
taining the senice which is· essential to him. F

(b) The electricity supply is made to the consumers on
credit.

(c) The billing time taken by the Board is to the G
advantage of the consumer.

(d) Public revenues are blocked in generation, trans-
. mission and distribution of electricity for the purpose
of supply. The Board pays interest on the loans
borrowed by the Board. This is in order to perform H
210 SUPREME COURT REPORTS (1993) 3 S.C.R.

A public service. On those payments made by the Board
it gets no interest from the consumers.
'··

(e) The Board needs back its blocked money to carry
out public senice with reasonable recompense~

B
(t) The Board is not essentially a commericial organi-
sation to which the consumer has furnished the secu-
rityto earn interest.thereon.
F-H, 270 A-C]
(269
-
C 4.1 The argument that the Board is monopolistic in character and
therefore, the consumers have no other option buUo enter contract
appears to be misconceived. The consumption security deposit whether
or not it carries interest is a condition precedent for the supply of
electric energy. The scrutiny by the Court in determining the uncon-
D stitutionality of a provision not providing for interest must be tested
on the touchstone whether in imposing such a condition the Board has
acted as a private trader and thereby shed off its public utility
character? In imposing such a conditfon the Board has not acted as a
private trader. The nature of deposit has a rational relationship to the
object which is incorporated a condition of supply. (266 A-D,]
E
Jagdamba Paper Industries (Pvt. ) Ltd. v. Haryana State Electric-
ity Board. [i983] 4 S.C.C. 508, referred to~

4.2 Assuming that the contract Is an adhesion contract, still it is.
F not unconscionable. Conditions and the terms ofsupply providing for
non-payment of interest is not so unconscionable as to shock the
conscience of the Court. (266-H]

Central Inland WaterTransportCorporation v. BrojoNatll Ga11 guly,
G [1986] 3 S.C.C. 156; Bihar State Electricity Board v. Green Rubber
Industries, (1990] 1 S.C.C. 731, referred to.

Farmsworth on Contracts, 2nd Edn. 319. 320, para 4. 27, referred
to.

H Gillespie Brothers Ltd. v. Roy Bowles Ltd. (1973) 1 A.E.R. 193;
FERRO ALLOYS CORPN. i•. A.P.S.E.B. 211

G.B Mahajan and Ors. v. Jalgaon Municipal Council and Ors. [1991] A
3 S.C.C. 91 cited.

4.3 In Jagdamba Papers the question of interest on security was
not raised before the Court. Therefore, the Court had no occasion to
decide this i~ue of interest. That part of the judgment is sub-silentio.
B
[271-E, 272 A-C]

Jagdamba Paper Industries (Pvt.) Ltd. v. Hayana State Electricity
Board, [1983) 4 S.C.C 508, explained and held inapplicable.

c
- 4.4 This Court ne,·er intended to adjudicate upon the rate of
interest or render a decision on that question. Therefore, it cannot be
contendedd that the disposal of the Writ Petition though by a Bench
of 3-.J udges would be binding on a Bench of two.Judges because it was
e:itirely based on interlocutory order. Therefore, this Court is free to·
decide the question on its merits. [273 F -6) D

4.5 The Division Bench of the Rajasthan High Court erred in
striking down condition No. 20 of the General Conditions of the
Rajasthan Electricity Board as violative of Article 14 of the Constitu-
tion of India. (271-D]
E
4.6 The rate of interest on security deposit cannot be equated
with the rate of interest on the fixed deposit. Firstly, ifthe consump-
tion charges are to be appropriated the moneys accrued by way of
deposits cannot be held in fixed deposits. Nor all deposits need carry
interest in every transaction. Secondly, the nature and character of F
the security deposit is essentially different from fixed deposit.
(270 D-E]

S. It ma.y be that the consumers of electricity, wher~ it is raw
material, would be prompt in their payment in their own interest. On
G
that basis, it cannot be contended that they cannot be treated in the
same way as defaulters. The test, in Court's considered opinion, is
whether in the general appiication of law there is any diserimination.
Merely because some of the consumers are prompt those isolated
- cases cannot render the prQvision unconstitutional. (273 H, 274-AJ
H
212 SUPREME COURT REPORTS (199313 S.C.R.

A The Collector of Customs, Madras v. Nat/1ella Sampatlry Cl1etty, __..,.
(1962] 3S.C.R. 786; Vivian Iosep// v. Municipal Co17Joratio11. Bombay.
(1972] 2 S.C.R. 257, Fate//cliand Himmatlal v. State of Ma//arasl11ra.
[1977] 2 S.C.R. 828 !ind; B. Ba11e1jee v. Anita Pam, (1975] 2 S.C.R. 774, .·
referred to.

B 6. No reason need be given for enhancement of additional
secu rit)' deposit. It stands to reason that ifthere is a revision in the rate
of ta riff there must be an upward re\•ision in theco11s .. mption securit)'
deposit since it has direct bearing to the level ~f supply in consllm(>tion
of electricit)" This being a condition of supply, no re~s<_m need be given
c at the time of upward revision. [278-C, 277 A:-.Ct · .

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2117
to 2122 of 1993 etc. etc.

D From the Judgment and Order dated 28.4.1989 of the Andhra
Pradesh High Court in W.P. Nos. 11162/84, 18968/87, 12007/84,
15131/87, 5050/82 and 15746/87.

Altaf Ahmed, Y.R. Reddy, Addl. Solicitor Genral, Narasimha
murthy, K. Parasaran, Anil B. Divan, Barish N. Salve, Solij. Sorabjee,
E G. Ramaswamy, P.P. Rao, Gobind Mukhoty, Dr. Shanker Ghosh,
Shanti Bhushan, G.L. Sanghi, Pa wan Kumar, P.S. Poti, B.~. Patnaik,
Sanjay Parikh, P. Niriop, Kailash Vasdev, S. Khaitan, K.K. Khaitan,
Darshan Sing'1, Sushil Kumar Jain. A.P. Dhamija, S. Atreya, E.C.
Agarwal, A. Y. Palli. Atul Sharma, Ms Reena Aggarwal, A.K. Mehta,
F R.K. Gupta, P.C Kapur, T.Y.S.N Chari, B. Reddy, Ms. Pramila, Anil
K. Sangal, Ajay K. Tayal. Koka Raghava. B. Kanta Rao, Shiv Prakash
Pandey, Ms Rekha Pandey, R.K. Priyokumar Singh, T.V. Rathnam,
K.R. Chowdhary, K. Ram Kumar, Ashok Kr. Gupta, R.B. Misra ,
Pradcep Misra, Mrs. Sheil Mohini Seth, Jain Hansaria & Co. R.P.
Gupta, Ms. Sarla Chandra, Mis Mitter Mitter & Co. Ms Abha Jain,
G
Ranjit Kumar, M.P. Jha, S.K. Jain, Vino~ Bhagat, Surya Kant,
Anmeshwar Gupta, Badridas Sharma, Prabhu Dayal, Sudarshan Lal
·' '
Aneja, R. Venkataramani, Y.P. Rao, D.K Garg, K.C. Agarwals, O.P
Khaitan, P.B. Agarwala, Mohinder Rupal, Mrs. Kamakshi Mehllwal,
Ms Archna Kaul (For Gagrat & Co. ), Vijay Hansaria, R. S. Sodhi ,
H D.A. Dave, Raian Karanjwala, Mrs. Manik Karanjawala, Rajesh
··:mar, Ms. Suruchi Aggarwal, K.J. John, Ms. Deepa Dixit (For
FERRO ALLOYS CORPN. i·. A.P.S.E.B. [MOHAN. J.) 213

Swamp John & Co.), A. T. Patra, S.R. Agarwal,· Ms. Bina Gupta, A
Prashant Bhushan, K. Rajendra Choudhary, Rake sh K. Sharma, Shi vi
Sharma, Anil K. Chopra, Pallav Sisodia, Ravinder Narain (For JBD &
Co. ) Praveen Kumar, Virend~r Kaushal, Bimal Rao iad, Ms Malini
Poduval, K.K. Lahri and
.
S. Sukumaran for the appearing
.
parties.

B
The judgment of the Court was delivered by

MOHAN,J. Leave granted. ·

These civil appeals are directed against the judgment of the
Division Bench of Andhra Pradesh High Court reported in Southern c
Steel Ltd. v. A.P. State Electricty Board, Hydrabad AIR 1990 Andhra
Pradesh 58. The facts briefly are as under:

The Andhra Pradesh State Electricity Board is constituted under
Section 5 of the Electicity Supply Act, 1948 (hereinafter referred to as D
the Act). The said board is engaged in generation, distribution and
supply of electricity in the State of Andhra Pradesh. Electric energy is
supplied for industrial, commercial, agricultural and domestic pur-
poses. To such of thes·e industries, using energy_about a particular
level, it is supplied at a higher voltage. They are classified as high
tension consumers (H.T. consumers). All the appellants herein belong E
to that category.

Section 49 of the Act empowers the Board to notify the terms and
- conditions upon which it will supply electricity to-a person. It is also
empowered to frame uniform tariffs in that behalf. Sub-section 2 F
specifies in fixing the uniform tariff, the Board shall have regard to all
or any or the following factors, namely-

a) the nature of the supply and the purposes for which
it is required;
G

b) the co-ordinated development of the supply and
distribution of electricity within the State in the most
efficient and economical manner, with partic1:1Iar ref-
erence to such development in areas not for the time
H
214 SUPREME COURT REPORTS [1993) 3 S.C.R.

A being served or adequately served by the licensee;

c) the simplification and standardisation of methods
and rates of charges for such supplies;

d) the extension and cheapening of supplies of elec-
B
tricity to sparsely developed areas.

Sub-section 3 empowers the Board to enter into a special agree- -.
ment with any consumer any prescribe different tariffs for him. Under
Section 4, an obligation is cast on the Board not to show undue
C preference to any person while fixing the tarrif and terms and condi-
tions for the supply of electricity. In all these cases, the appellants are
covered by the general terms and conditiions notified under Section 49
( 1) of the Act. The terms and conditions were notified by the Board and
the B.P.M.S. No. 690 dated 17th of September, 1975. It is not
0 neces5ary to refer in detail to the various terms and conditions.
However, what requires to be noticed is the terms and co!lditions
oblige every consumer excuting an agreement in the prescribed form,
undertaking to abide by the terms and conditions prevailing on the date
of agreement and also agreed to be bound by the terms aJ:\d conditions
- as may be notified from time to time. It is important to note under
E Section 25, the Board has unilateral right to vary the term from time
to time under clause 25.1. The terms and conditions for supply of
electricity by special or general proceedings. ·

Condition 32.1. provides "the Board shall as far as possible within
1< 15 days after the expiration of each calendar mon~ cause to be
delivered to every consumer 'a bill of charges stating the amounts
payable by the consumer towards charges for energy supplied and any
other sum in connection with supply of energy by the Board."

G Conditions 32.2.1. obliges the consumers to pay the amount
shown in the bill, within 15 days of the date of the bill in.default
·whereof they are liable to pay "an additional charge of 2% oer month
or part thereof for the period of delay" in paying the bill. Condition 32.3
empowers the Board to disconnect the supply in case of default in
paying the bill, without prejudice to its right to recover the amount due.
H Condition 24. 3 also lays down that the consumer shall pay to the Board --
.
'
FERRO ALLOYS CORPN. l'. A.P.S.E.B. [MOHAN, J.] 215

every month the charges for electrical energy supplied to him during A
the preceding month at the tariff in force from tfme to time. Condition
28 obliges the consumers to deposit an amount equivalent to three
months consumption charges with the Board. It would be appropriate
10 set out condition No. 28 as far as it is necessary for our purposes,
nutting what is not relevant as under:
B
28. Consumption deposits:- 28.1 Initial consumption
deposit. 28.1.1. The consumer shall deposit with the
Board a sum in cash equivalent to estimated three
month's consumption charges. The consumer coming
under the L.T. category 'domestic' shall however pay c
at Rs. 30.00 per Kilowatt or part thereof connected
load.

*"Provided that.the Board may, in the case of indus-
trial consumers, accept by way of consumption de- D
posit a sum equivalent to two months consumption
charges during a period of three years from the date of
first release of supply of electricty".

28.1.2 In the event of the consumerfailingtopaytothe
Board any sum that may become due for payment to E
the Board on the dates fixed for payment thereof, the
Board may, in addition to and without prejudice to the
other rights of the Board, appropriate a part or whole
of such deposit towards the suin due from the con-
sumer. F

- 28.2 Additional Consumption Deposit-All consumers
othei;. than those L. T. Domestic consumers whose ·
monthly bills are less than Rs. 500 for a continuous
period of six months, shall keep with.the Board an
G
amount equiv~lent to charges for three months de-
mand and enargy charges as consu111pµon deposit.
The aduacy of the consumption deposit shall be re-
viewed by the Board usually once in every year and/
or at any time during the year if so warranted dur to
upward revisiOfl of tariffs, enhancement of the con.;. H
216 SUPREME COURT REPORTS [1993] 3 S.C.R. __,_

A tracteddemand by the consumer charges in the pattern
of consumption by the consumer relaxation of power
restrictions or such other factors i\vViich in the opinion
of the Board, warran~ review ofttle adequacy of the
existing consumption deposit. The review shall take

B .
into account the following factors:-

(i) In the c.ase of. consumers where there is no change
in the cohiracted demand, the average consumption
for the prt~eeding twelve months after taking into
consideration the quantum and nature of restrictions
c imposed, .if any, dtiring that period shall be the basis.

(ii) In the case of consumers who were sanctioned
additional demand and availed it during a part of the
period, average recorded consumption for the period
of review shall be from the date of utilisation of
D
· Increased demand to the date of review after taking
into consideration the nature and quantum of restric-
tions imposed, if any during that predod.

(iii) The demand shall be contracted demand of the
E consumer at the time of review.

(iv) The rates, at which the demand or energy charges
shall be calculated, will be tariff rates prevailing as on
the date of review.
F
Based on such review, if the consumption deposit of
the consumer is found inadequate or has fallen short
on account of adjustments made as indicated iµ Clause
28.1.2 hereof, the consumer shall deposit within 30
days of receipt of notice in this regard such additional
G
amount as may be required by the Board or replenish
the required amount as the case may be.

28.3 Interest on consumption.deposit:- Interest shall
be paid by the Board on deposits of more. than Rs. 60
H made in cash at the rate of 3% pt!t annum or such other
FERRO ALLOYS CORPN. v. A:P.S.E.B. [MOHAN, J.] 217

rate as may be fixed by the Board from time to time. A.
Full calender months only shall be taken into account
for the purpose of calculating interest and interest ·
shall be calculated to nearest five paisa. The intrest
accruing to the credit of the consumer shall be ad-
justed every year in the month of April in the Electric-
B
ity Supply bills.

28.4 Disconnection or non-payment of consumption
deposit:- If the consumer does not make payment of
arnount of consumption depsoit or additional con-
sumption deposit or where the deposit is given in c
Government security or National Saving Certificate
Bank guarantee etc., he fails to replace them by
deposit in cash when so demanded by Board within
the notice pariod of 30 days supply of consumer shall
be liable for disconnection.
D

28.5 "The Consumption Deposit so calculated as per
the Clause 28.1 and /or 28.2 above shall not be less
than three times the monthly minimum charges, appli-
cable to the consumer under the category to which he
belongs". •E

28.6 "All consumers shall pay the Consumption De-
posit or additional consumer deposit within thirty
days from the date the demand notice if there be any
delay in payment, the consumer shall pay surcharge F
thereon equal to 1 1/2% per month or such other
percentage to be fixed by the Board from time to time,
of the demanded amount for each month of delay or
part thereof. This will be without prejudice to the
Board's right to disconnected supply of electricity".
G

-
Clause (1) of condition 28 is general in nature. It applies to all
consumers. Cl. (1.2) enables the Board to appropriate a part or whole
of the said deposit towards any amount due to the Board and not paid
within the prescribed period. CI. (2) applies to all consumers, except
those L. T. Domestic consumers whose monthly bills are less than Rs. H
218 SUPREME COURT REPORTS [1993) 3 S.C.R.

A 500 per month for a continuous period of six months. Such consumers
are obliged to keep with the Board an amount equivalent to three
months' demand and energy charges, as consumption deposit. The
deposit is liable to be reviewed by the Board from time to time, having
regard to the factors mentioned in the said clause. Cl. (3) prescribes
interest which the Board has to pay on such deposit. It is 3% per annum.
B Clause (4) empowers the Board to disconnect the supply if consump- -
tion deposit/ fJ<lditional consumption deposit is not made, or is not
replaced whenever called upon to do so. Clause (5) prescribes a certain
'floor' below which consumption deposit shall not go. Clause (6) says
that the consumption deposit or additional deposit shall be paid within
c thirty days of the notice demanding such deposit. In default, not only
interest is payable but the supply also is liable to be disconnected.

The attack before the High Court was that according to Condition
No. 32.1, the bill is served within 15 days of the expiration of0each
calendar month. The amount covered by the bill is payable within 15
0
days of the date of the bill. The period of 15 days for payment is
calculated not from the date of service of the bill but from the date of
the bill. A bill could be served even on the very first day of the
succeding month in which event it will become payable within 15 day
of the date of the bill. In such a situation, it is not correct to say that a
E consumer goes on availing and enjoying energy for a period of three
months without paying for it. Invariably it does not exceed six weeks
or at any rate, two months. In the event of non-payment under J

Condition No. 32.3, supply of energy can be disconnected without
seven days notice as contemplated under Section 24 of the Indian
F Electricity Act, 1910. Therefore:

(1) It was urged that the consumption deposit should in no event
exceed two months everage consumption charges.

(2) The second attack was the payment of 3% interest by the
G Board on such consumption deposit is no longer good law in view of
the judgment of Supreme Court rendered in Mis Jagdamba Paper
.Industries (p)Ltd. v. H.S.E. Board, [1983] 4 SCC 508.,since this Court
had taken the view that the interest on such deposit should be paid at
the same rate as is paid by the schedule bank on fixed deposit.
H
- (

...._
.
I

FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.) 219

It was generally urged that the Electricity Board being a State A
within the meaning of Article 12, it has to act fairly. Any term or
condition will have to answer the test of reasonableness. On the
contrary, if it is arbitrary, it would be violative of Article 14.

The High Court after analysing the object behind Condition No. B
28 relating to the consumption deposit held: The condition requiring
the consumer to pay the charges within 15 days from the date of the bill
and on such failure, a right is conferred on the Board to disconnect the
supply. The condition merely refer .to the power of the Board.
Existence of power is distinct from exercise of power. The Board
cannot blindly act upon Condition 32.3 arid_disconnect the supply the c
moment 15 days time (from the date of the ~ill) expires. It has to take
a realistic view of the situation. After all, these industries are engaged
in production of goods essential to the community. A blind and
mechanical adherence to Condition 32.3 (instant disconnection) may
indeed prove counter-productive in larger sense. It was also not D
possible for the Board to notice the non payment immediately in view
of the large number of consumers and the extensive nature of organi-
sation. Besides, huge sums are required by the Electricity Board as
rotating capital. It borrows large amounts from organisations like
L.I.C. and Banks, on which it pays interest to them. Hence, it is well
entitled to require the consumer to co-operate by paying their bills E
regularly, by furnishing security deposits and by conforming to the
terms and conditions of supply. Under these circumstances, the
requirement of three months deposit could not be said to be unreason-
able and unjustified.
F
As regards, the payment of 3% interest, the High Court was of the
view that the decision of this Court in Jagdamba Paper Industries (P)
Ltd. (supra) could not be read as a decision of the Supreme Court on
the basis of which it could be declared that the e-ar}.ier Bench decisions
. of the High Court were no longer binding. Accordingly, it dismissed
the writ petitions. G

Aggrieved by this decision, the present S.L.Ps. have come to be
'Jreferred.

Mr. R.N. Narasimhanmurthy, learned counsel for the appellant H
220 SUPREME COURT REPORTS [1993] 3 S.C.R.

A after drawing our a~ention to clauses 28 and 32 would submit that if
there is any laxity on the part of the Board in preparing the bill that
cannot be a ground to make a consumer to pay three months deposit.

The tariffs of 1974 provided for the payment of bills within 14
days from the date of the bill while the quantum of deposit is three
B months consumption charges. Originally, the time for payment was 30
days from the date of the bill. That has been reduced to 15 days which
is a drastic change. The security deposit is a provision for continued
default of the consumer. The quantum of such a deposit is reckoned on
the _basis of the lapse of time between the consumption charges that
C become due after expiry oftime required for reading of meter, billing,
delivery_ of the bill to the consumer; grace time allowed and the
reasonable time requir~d for disconnecting the consumer's service·
connection. The reduction to 15 days has great relevance on the
quantum of deposit as the deposit is intended to cover the. defaulted
D amount by the time of disconnection. However, considering that the
bills of power intensive industries are preapared within 3 days of meter
reading and also considering the close monitoring that is feasible in
verification of payments of bills of these consumers and the small
number of these consumers destributed among the several Circle
Offices o~the Board, any default is detectable within 20 days of the bill
E for appropriate action to be taken immediately. The purpose of
consumption deposit is only to safeguard the actual consumption
charges that become payable by the time penal action could be intiated.
Even the judgment of the High Court indicates that a time lapse of37
days from the date of the meter reading without considering the 7 days
F notice prescribed.under Section 24 of the Indian Electricity Act. The
balance ti me of 23 days to make up for 90 days is provided for the laxity
in the Board administrative system whichjustificably cannot be passed
on to the consumer by way of consumption deposit.

In view of the high stakes involved in the case of power intensive
G consumers, the Board should evolve a suitable system of payments and
must keep the security deposit to the minimum instead of three mont!1s.

It is further submitted that the security deposit could be in the foqn
of bank guarantee. There is no justification to require cash deposit. As
H a matter of fact, as noted in Mis Harya11a Ice Factory v. Municipal
-f--

FERRO'i\LLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.] 221

- Corporation of Delhi and Another AIR 1986 Delhi 78, the security in
the form of Government Bond is permissible.
A

In Jagdamba Paper lndustries Case (supra), paragraph 11 of the
judgment deals with rate of interest. That is a case where 8% was
increase.d to 10% by consent. If really, it is in the nature of a deposit,
B
there is no Justification as to why bank rate should not be awarded. It
it seen from The Chairman Kamataka Electricity Board aizd Others v.
Gadag Mining Co. & Ors. etc. AIR 1986 Karnataka 252, 10% interest
had been awarded.

Mr. Anil B. Divan. -learned counsel for the appllant in S.L.P. (c) c
No. 2564/92 would submit as under: ....

Power intensive units like the appellant's form a distinct class of
consumers. The Ferro Silicon plant of petitioner No. 1 is a power
ntensive one where the cost of electricity constitutes about 55% of the D
price of the ferro silicon produced. Electricity. thus is .the basic raw
material for this industry. On an average, the appellant is consuming
electricity worth Rs. 1.6 crores per month. If t:here was full: supply of
electricity (without there being a power cut). the monthly bill would be
approximately Rs. 4 crores at a present tariff.
E
· The power intensive plant of the appellant maintains a very high
load factorof0.9%. Ordinary H.T. consumers work at a load factor of
only 60% and the units consµmed at only 50 per KV A demand. The
HT~III tariff for power intensive consumers requires a minimum
consumption of 403.3 units per KV A demand.This means more than F
8 times that of H. T. consumers. The Electricity Board has always
classified power intensive units as a separate category. At present,
there is a special tariff called HT-III tariff with a list of power intensive
industries specified in the tariff notification.

G
The appellant No. 1 had deposited Rs. 1.07 crores in cash towards
the security deposit. A bank guarantee for Rs. 53.64 Iacs had also been
furnished. A further demand of Rs. 96.5 lacs prompted the filing of the
writ petition in the High Court. As per the orders of this-Court in S.L.P.
No. 12077/84 it was directed on 6. 2.1987 that a sum of Rs. 1 crore be
paid by the 3rd of every month and the balance within 7 days of the B
222 SUPREME COURT REPORTS (1993) 3 S.C.R.

A presentation of the bill. This order came to be modified that Rs. 1 crore --
was to be paid on the 30th of the month and the balance within one week
of the receipt of the bill. The said arrangement has been working
satisfactorily. There has not been any default in payment of electricity
bills. Therefore,the entire dispute is a theoretical one as to what the
quantum of the security deposit can, or ought to be. A deposit in cash
B of an amount equal to three months average bills at full supply at the
present tariff without any power cut will amount to Rs. 12 cores on the
basis of tariff revised in October 1992. With ever increasing tariffs, the
deposit demanded will also keep increasing. Under these circum-
stances, the condition requiring three months security deposit is
. c arbitrary and illegal for power intensive consumers. The paid up share
capital of apellant No. 1 is Rs. 3.8 crores. The gross value of the plant
and machinery of the power intensive unit is Rs. 7.94 crores. The total
advances made by the consortium of bankers for working capital is Rs.
4.25 crores. The total net worth of all the dilisions of appellant No. 1
that is Merine products, Sugar & Engineering, Machine Building and
D the power intensive Ferro Silicon Plant is Rs. 14.6crores. The security
already furnished namely Rs. 5.7 crores is crippling the Ferro Silicon
Plant division. A demand of three months cash deposit would be in the
range of Rs. 12 crores. It is arbitrary and unjustifiable to require
appellant No. 1 to deposit several times its share capital by way of
E security. If this demand is enforced strictly, the plant of the appellant
will become sick and ultimately, will have to be wound up. In other
States, the provision is not so harsh. ·

If the security deposit is 'consumption deposit' and it is for
F meeting the cost of supply in advance, then the Electricity Board
cannot charge penal interest at 2 % per month for non-payment of bills
within the stipulated period. The deposit, first must be appropriated
against the dues and the interest charged only if there is balance due.
The Stand of the Electricity Board is perverse and illegal. Equally,
there can be no question of 'supply_ on credit' if deposit is adjusted
G against consumption all ~e time.

The consumer has got a right to negotiate. In 171e Indian Alumi-
nium Co. v. Karnataka Electricity Board [ 1992] 3 SCC 580, this Court
directed the Electricity Board to adopt a realistic policy. Here also
H Condition No. 28 must be altered.
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN. J.] 223

.,- There is no power under the Electricity Supply Act to enable the
Board to raise revenue or to cover its capital cost etc. except by way
A

of adjusting tariffs as seen from under Section 59 of the Supply Act,
1948. Therefore, consumption deposit cannot be used for the purpose
of revenue or raising revenue. In this case, the Electricity Board had
not placed any material to give interest only at 3%.
B
Mr. K. Parasaran, learned counsel appearing in S.L.P. No. 13004/
89 after referring to the passage occurring at page 66 of Haryana Ice
Factory case (supra) submits that the security deposit cannot go tO
build up the capital or fixation or tariff. Under Sections 49 and 59 of
the Supply Act, finance is required to be. adjusted including the c
payment of interest. Demand of three months consumption deposit
cannot be resorted to. In support of his submission, reliance is placed
:t on Hindustan Zinc Ltd. etc. e:tc. v. Andllra Pradesh State Electricity
Board & Ors. (1991] 3 SCC 299.
D
Mr. Kailash Vasudev. learned counsel for appellant in S.L.P.
13004/89 submits that under Section 49 of the Supply Act, it is
enjoined upon the Board to adjust its tariffs by keeping the factors
detailed in the said Supply Act. Therefore, the Board cannot have
recourse methods not provided under the said Act. The demand for a
deposit to ensure the due payment of the bills for electrical energy E
consumed amounts to framing an additional tariff. The Board cannot
do indirectly what it cannot do directly.

The Board being 'a state monopoly' has to ~t reasonably and not
arbitrarily. The terms and conditions of supply cannot be unfair an.d F
oppressiv~.

Mr. R. Venkataramani, learned counsel in his written submis-
sions in Writ Petition Nos. 1293/89 & 1353/89 and S.L.P. (c) Nos.
,.- 4791-92/90 & 4793-94/90 would urge that Section 49 of the Supply
G
Act is unconstitutional since there are no guidelines for framing the
terms and conditions of supply of electricity. The said Section does not
specifically spell out fairness of action. Clause 28 of the terms and
conditions of supply is a clear illustration of arbitrariness and subor-
dinate legislation.
H
224 SUPRE~1E COL.RT REPORTS · [1993] 3 S.C.R.

A The words 'as the Board thinks fit' ought to be interpreted so as to
be consistent with the fairness of State action. They are to be construed r
as "reasonably thinks fit" as held in Roberts v. Hopwood, 1925 AC 578
and Pyx Granite v. Minister of Housing and Local Govemmem, (1958)
1 All ER 625.

B
Clause 28 of the terms and conditions of supply relation to fixation
of 3% interest and additional charges are vitiated due to non-applica-
tion of mind. Under clause 28.6 of the terms and conditions, in the
event of dalay in payment of consumption deposit or additional
consumpion deposit within the stipulated period, the consume.r is
C obliged to pay surcharge at 18%. The obligation to pay surcharge and
the power of the Board to vary the percentage from time to time would
constitute draconian provision.

Money, wherever it is held in deposit could only be used to earn
D some interest. Therefore, paying 3% interest on the consumer deposit
is not at all justified. A public institution cannot be allowed to get
excessive interest.

In meeting these arguments, the learned Additional Solicitor
General submits that under Electricity Supply Act, the finances of the
E Board are controlled to the minutest detail.

Originally, prior to 1978, Section 59 required the Board as far as
practiable and after taking credit for any subvention from the State
Government not to carry on its operation on loss. For this purpose, it
F was empowered to adjust its charges accordingly from time to time.
Section 59 was amended by Act 23 of 1978. After the amendment, the
Board after taking credit for any subvention from the State Govern-
ment was required to carry on its operations and to adjust its tariffs so .
as to ensure that the total revenues in any year after meeting of the
expenses left such surplus as state government may specify from time
G
to time. This Court has taken the view in KeralaState Electricity Board
v. S.N. Gov inda Prabhu & Bros. & Ors [ 1986) 4 SCC 198 that even if
the Government had not prescribed surplus, the Electricity Board
could generate surplus.

H After the amendment by Act 16 of 1983 which came into force on
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN. J.] 225

1.4.1985, the Boar:d was to create a minimum surplus of 3% or such A
higher percentage as the State Government would specify in this·
behalf. It is in this background., the matter will have to adjuged.

The reason why three months security deposit is demanded is, for
two months, the consumer gets free electricity. For supply of such
electricity, the Board has to borrow and make payment of interest. If
there are no consumer deposits, the tariff shall have to be increased.
That will effect all the consumers. Interest at 2% is charged in case of
default only in order to ensure proper payment. It is penal in character.
In the judgment under appeal, the High Court held that the burden
relating to interest can be reflected either in the tariff or could be set C
off by calling upon the consumer to make deposit. In fact, this Court
has upheld the tariff revision effected by Andhra Pradesh Electricity
Board as seen from Hindustan Zink Ltd. Etc. Etc. v. Andltra Pradesh
State Electrici1y Board & Others [1991] 3 SCC 299. It cannot be
contended that the three months consumptions deposit is arbitrary.
D
This argument ignores the following important factors:

i) This is not a security deposit but a consumption deposit.

ii) It in the nature of an advance payment.
E
iii) In the event of failure to pay, it could be proceeded against as
seen from clause 28.1.2.

(iv) Consumption deposit is variable as per clause 28.2 (iv)
F
If therefore, the object of consumption deposit is to ensure proper
payment with reference to electricity supply, there is nothing arbitrary
or unjustifiable. The fact that some of the appellants pay large amounts
by way of electricity charges will have nothing to do with the nature
of deposit. Merely because it is a power based unit, it cannot be treated G
saparately. Nor can the appellant make a virtue out of necessity. The

- terms of supply relating to consumer deposit must be uniform, there-
fore, it is not correct to contend that the power based unit must be
tr~ated separately .

• As regards payment of interest at 3%, elecricity supply is made on H
226 SUPREME COURT REPORTS [1993] 3 S.C.R.

A credit basis. Therefore, it is a matter of adjustment of Board finances.
Strictly speaking, the consumer deposit is in the nature of fidelity
guarantee to ensure proper payment by consumer. The consumer may
not be entitled to interest. at all. However, where the Board has so
adjusted finances and pay 3% interest, the Board ca.nnot be defaulted.

B
Jagdamba Paper lnduntries case (supra) cannot be said to be a
decision as to the rate of interest payable by the Electricity Board.
Upon reading paragraph 11 of the judgment, it will be clear that it
proceeded on the concent of the counsel.

c RAJASTHAN
The writ petitioners applied to appellant Board for the supply of
high te'ntion power for their factories. After the execution of the
necessary agreement and furnishing ·of security deposit, power con-
nections were given. Subsequently, the Board issued notice requiring
D the consumers to deposit the enhanced amount of cash security as well
as the bank guarantee on the basis of maximum power consumption of . ·
three months.

With regard to security deposit, Pait II of the General Conditions
E of Supply and Scale of Miscellaneous Charges in Note-II stated that no
intrest will be paid by the :goar~ on the security deposit. Two
contentions were raised in the petitions, (i) Note II providing for no
interest was bad in law, (ii) the enhanced security must be calculated
not on three months maximum consumption but on t'he b~~s of
minimum power consumption. These two contentions found favour
F with the learned Single Judge. The Rajasthan Electricity Board filed
special appeals while the consumers filed cross appeals. The Division
Bench held as under:

i) The Board has power to demand additional security but the
G average consumption of three months should be taken as the basis for
calculating the amount of such security.

ii) The clause relating to non-payment of interest was not reason-
able. Interest must be allowed on the entire amount of cash security
H from the date of the writ petition. The appeals by the Board were
1

disrllissed while cross-appeals by the consumers w ere idlowed. Ag- ·-
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.} 227

grieved by this judgment, the present S.L.Ps. have come to be preferred · A
by the Rajsthan Electricity Supply Board.·

Mr.. Soli J .. Sorabjee, learned counsel appearing for the appellant
argued as follows:

B
There is no legal obligation to pay interest on a deposit made by
the consumer with the Board in teffilS of Clause 20 (a) & (c) of the
General Conditions of Supply. Nor even interest is payable under
common law or in equity. In this connection, the learned counsel draws
our attention to Hals bury' s 4th Edition, volume 32 pages 54-55. There
is no legal or equitable obligation to pay interest for detention of c
monies. In support of this argument, learned counsel relies on Bengal
Nagpur Railway company Ltd. v. Ruttanji Ramji, ( 1937) L.R. 65 I.A. 66
and Union of India v. A.L. Rallia Ram (1964] 3 SCR 164, pages 187,
189-190.
D
There is no contract or agreement which provides for payment of
interest. On the contrary, Clause 9· (b) (ii) of the General Conditions
expressly provides that no interest will be paid by the Board on security
deposit. There is no statutory provision which casts an obligation on
the Board to pay interest on the security deposit. The High Court erred
in relying on the model form of draft conditions of supply because the E
said model form is applicable to only licensee as defined under Section
2 (h) of Electricity Act. It is not applicable to a Board which is not a
licencee. Further, it is not necessary on the part of the Board to adopt
,model form. Schedule VI of 1948 Act again cannot be pressed into
service as the Board is not a licencee clause 2 (b) (v) of Schedule VI F
merely specifies interest on security deposit as properly incurred item
of expenditure for the purpose of determining the 'clear profit' of the
_ ....... licencee. The said clause does not and cannot by itself impose an
' obligation on the licencee to pay interest on security deposit. Should
interest be paid, then it quilifies as an item of expenditure 12roperly
incurred. G

The High Court also erred in relying on Section 4 (2) of the
Interest Act, 1978. Section 4 (2) has no application where on account
of coptractual term or a statutory provision, payment of interest is not
permitted. Section 4 (2) of the Interest Act, 1978 merely enlarges the H
228 SUPREME COURT REPORTS [1993] 3 S.C.R.

A categories of cases mentioned under Section 4 (1). The said Section
cannot override other statutory provisions or a contract between the
1. parties. The non-obstante clause under Section 4 (2) is restricted .only

to the provisions of Interest Act, 1948. It is submitted that under the
billing practice prevalent with the Rajasthan Electricity Board the
consumer has free ,use of electricity during the period between
B consumption of ele~tricity and expiry of period after notice. During
• f • • • .

this period which v~esfroin 2 to 2 1/2 months, the consumer in effect
enjoys a qedit faciljty Therefore, if security depoit is demanded for
three months, it ~ nei~er unreasonable. nor arbitrary, A.s a matter of
fact, the security demanded by the appellant Board is in the form of
c cash for one month and bank or insurarice guarantee for two months.
Therefore, it is a~ tlie more reasonable. In support of this, reliance is
placed on Kistna Cemeht Works Tadepalli v. Tile Secretary APSEB,
Vidyut Soudlza AIR 1979 A.P. 291, B.R. Oil Mills. Bharatpur v.
As~istaflt Engineer(D) R.S.E.B.. Blzaratpur, AIR 1981Rajasthan108;
Municipal Corporation for Greater Bombay v. Mis Devidayal Metal
D Industries, AIR 1984 Bombay 242, Haryana Ice Factory v. Municipal
Corporation ofDelhi, AIR 1986 Delhi 78 and Southern Steel Ltd. v _Tiie
A.P. State Electricity Board, Hyderabad, AIR 1990 A.P. 58.

On the question of the constitutiona1ity of the provisions regard-
E ing non-payment of interest and whether it is violative of Article 14,
it is submitted:

i) Article 14 does not mandatt> ""'~thematical exactitude or scien-
tific precision;
F
ii)The mode .and perioq ot sec\Jrit}' should be reiated to the billing
practice prevailing in Rajastl\an Electricity Board.

iii) The co"R~fimer with open eyes has entered into the agreement
and has solemnly uf\dertaken to abide by the condition regarding non-
G payment of interest. He C3JlnOt resile from that condition. There is
nothing inherently Qbjectionable, nor is the condition illegal or void as
opposed to public policy. Even assuming, the contract between the
consumer and the Board is an adhesion contract it is not necessarily
unconscionable. In this connection, reference is invited to Black's Law
H Dictional)', 6th Edition, page 40. That passege has been cited with
1-""ERRO ALLOYS COilPN. "· A.P.S.E.B. [MOHAN. J.} 229

approval in Cemral Inland Water Transport Corpn. v. Brojo Nath I
Ganguly [1986] 3 SCC 156. In such matters, relief is given to the party
only ifthe contract is so unreasonable as to be unconscionable. In this
connection reliance is placed on Gillespie Brothers Ltd. v. Roy Bowles
Ltd. [1973] 1 A.E.R. 193 at 200 (g), Farmsworth on Contracts. 2nd
Edition, 319 & 320 para 4.27. The rate of interest on security deposit
cannot be equated with the rate of interest payable on fixed deposit B
because the nature and character of a security deposit is basically
different from fixed deposit. This is clearly brought out by the
Companies (Acceptance of Deposits) Rules, 1975. The said Rules
expressly exempt security deposit in definition of Rule 2, clause ( v) &
(vi), Inlagdambapaper/11dustriescase (supra), the rate ofinterest was c
based on a concession by the parties. The Court had no occasion to
decide the rate of interest. That part of the judgment proceeds sub
silentio.

The argument based on surcharge levied for delayed payment is
D
a non sequitur. If the provision for non-payment of interest is valid and
not arbitrary, it does not become arbitrary and unconstitutional be-
cause surcharge is levied at 2% per month. In fact, surcharge has not
been challenged. Surcharge is attracted only if the bill is not paid
within the due date. The submissions based on Sections 57 & 59 of the
Supply Act in relation to security deposit proceed on a misconception E
of the nature and character of payment as a security deposit. The object
of security deposit is to secure prompt payment of electricity bills.
They are not intended to finance the Board's transaction. Section 57
read with sixth Schedule is meant to ensure a reasonable return. The
expression 'charges' in the Sixth Schedule clearly shows that security
F
deposits are not included within the expression 'charges'. There is no
mutual exclulsivity between increase of tariffs and earning interest on
security deposits.

It is also incorrect to contend that prompt payees of electricity
bills are treated on par with the defaulters and thus anequals are treated G
alike. The real test is, whether in the general application of law there
is any discrimination. In support of this submission, the learned
counsel plac~d his reliance on:

Tiie Collector of Customs, Madras v. Nathella Sampatlm Clzetl)' H
230 SUPREME COURT REPORTS [1993) 3 S.C.R. ~

A [1962] 3 SCR 786, Vivian Josepf1 Ferreira v. Municipal Co1poratio11
of Greater Bombay [ 1992] 2 SCR 257. B. Ba11e1jee v. Anita Pan f 1975]
2 774 and Fateflcfwnd Himmat/al v. State of Me/wrastflra [ 1977] 2
SCR 828.

The last submission of the learned counsel is that a statutory
B
provision may be struck down as unconstitutional only if it b palpably
arbitrary and irrationality is writ large. Merely because the Court
considers a particular provision to be unwise or undesirable, it is never
struck down. The learned counsel fairly concedes that the enhanced
security deposit could be calculated only on the average consumption
C of three months of the previous years .

. Mr. Altaf Ahmad, learned counsel supporting the argumunts of
~MP. Joli J. Sorabjee would urge:
• • _.P "

D In this case, the consumers are those who use H.T. and E. H. T.
lines. Section 49 (3) gives the clue that each Board can have its own
scheme. Section 79 of the Supply Act speeks of the power to make
regulation. Clauses (i) and G> are relevant because they talk of
principles governing the making of arrangements with licensees under
Section 47 and other then licensees under Section 4•J_
E
The industrial consumers constitute the majority user of the
electricity amounting to 49.51 per cent. The transmission losses for
1992-93.alone are 22 per cent. Besides, the Board is also purchasing
power from other corporations and States. Therefore, the demand for
F security deposit is fully justified and there is nothing arbitrary in not
providing for interest. That is what is provided under clause 21 (a) of
the agreement in relation to high tension supply. The consumption
deposit cannot be equated to the deposit in a bank and interest could be
demanded as of right.

G
Mr. Kapil Sibal, learned counsel appearing for the Haryana Board
which Board has now withdrawn payment of interest, has filed
intervention application since the present day position of the Haryana
Board is on a par with Rajasthan.

H Mr. R. K. Mehta, learned counsel for. the intervenor on behaff of
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN. J.) 231

the Orissa Electricity Board through his written submissions urges that A
it may be that the regulations in the case of Andhra ·Pradesh, Utter
a
Pradesh and Bihar Provide for payment of interest at certain rate on
the security deposit. However, the Rajsthan and Orissa regulations
provide that no interest shall be payable on the securities 1tirnished by
the Board. In the impugned judgmentthe Di vision Be_nch has not given
any cogent or valid reason for striking down Condition no. 20 of the B
General Conditions of the Rajasthan Electricity Board. The High
Court had failed to appreciate the following factors while quashing the
impugned clause of the regulations. Electricity is an item which cannot
be sold and supplied immediately after generation. For the sale of
electricity one has to take meter reading meant for the said purpose c
and, therefore, the Board sends the bill for particular duration. It is
obvious that the reading of the meter could not be taken at every point
of time but only for duration/period. In the process 2-l/2·'.months
elapse. The Board does not charge any intrest at least for 2-l/2 month
from its consumers. At the same time, the Board needs finance for
production, supply and other charges necessary for supply of electric- D
ity. The Board is thus obliged to take loans from various financial
institutions. The consumers who are utilising electricity for 2-112
months without making any payment will be unjustifiably enriched at
the cost of gereral public in the absence of security deposit. Further
taking of advance money without interest for Providing other serv1Ces E
in the market is a general practice. Therefore, a similar provision in the
general conditions for supply of the Board cannot be treated as. -. -
arbitrary or unreasonable.

A consumer is not entitled to claim interest on his secudty deposit
F
having regard to the following considerations. -

1. The security deposit is furnished in consideration of the
performance of the consumer's obligation for obtaining the service
· essential to the life and the well-being of community.
G
2. The electricity supply is made to that consumer on credit
without requiring him to make.instantpayment.

3. The billing time taken by. the Board is for the benefit and
convenience of the consumer as he saves additional expenditure on ff
...
232 SUPREME COURT REPORTS [199313 S.C.R. i
A account of instant or shorter billing time, possibly through electronic
devices which will be included in the tariffs.

4. 1l1e public revenues are blocked in the generation, transmis-
sion and distribution of electricity for the performance of supply on
which the Board pays itlterest in so far as they fonn part of the loans
B
borrowed by th!! Board for performing the public service. On the return
of the blocked moneys the ~oard gets no i merest from the consumers.

5. The Board needs back its blocked money to carry out service
with a reasonable recompense.
c
6. The Board is not essentially a commercial organisation to
which the consumer furnishes the security deposit to earn interest. -
Having entered into a contract with open eyes it is not open to the
o consumer to say that interest should be paid. The basis of supply of
electricity and the conditions on which it is supplied being statutory,
the provisions under the conditions of supply that the Board shall not
pay interest on the security deposit has staturory basis and accordingly
cannot be struck down as arbitrary on the basis of a commercial
transaction governing a bank deposit Therefore, it is submitted that
E regulation 7 of the Orissa State Electricity Board General conditions
of Supply Regulations, 1981 providing that no interest would be
pa)"!tble on security deposit is just and reasonable and is not arbitrary
or violative of Article 14 of the Constitution.

F Mr. Shanti Bhu~an, learned counsel opposing the stand of
Rajasthan Electrieit~·· Board.~ubrnits that the only question in this
sp6.Jtal leave petition is whether Electricity Board is obliged to pay
interest on the cash securi~ deposits as the Board compels industrial
consumers to secure against default in payment of electricity bills.- In
G the fi_rst place, as laid down in Jagdamba Paper Jndusrries (Pvt.) Ltd.
V. Haryana ,Stat1 ./ilectricity Board [1983] 4 sec 508 this Court has
indicated that '-'•- security amount should bear the same interest as
,/.
·admissible on fixed deposit of schedbled banks. The interest rate on 10
per cent was decided not really on the basis of admission but on a
positive finding. Apart from this, this Court has in several other writ
H petitions ordered interest at 12 per cent.
1-""'ERRO ALLOYS CORPN. ''· A.P.S.E.B. [MOHAN, J.) . 233

It is submitted thatthe scheme oflndian Electricity Rules of 1956 A
and the scheme of the Electricity Supply Act also show that the interest
on security deposit is supposed to be payable. The Board is not entitled
to use the deposits to augment its finances. They are meant only to
secure the default in payment of the bills. Section 59ofthe Supply Act
indicates that the only condition in which the Board could raise the
revenue is by adjustment of its tariff. Section 49 of the Act makes B
provsion for the ·sale of electricity by the Board to persons other then
licensees under the terms and conditions as the Board thinks fit.

It can be seen from the definitions of the Sixth SchedtAe to the
Supply Act that the scheme was meant to be applicable to licensees. c
The place of the licensees has been taken over by the Board. That is
why clause 2 (b) (v) of Schedule VI of the definition of "clear profit"
states that the interest on security deposits was to be a part of the
expenditure properly incurred by licensees. Then again, the manner in
which the accounts are to be maintained by the licensees also shows
D
that the licensees have to make a provision for payment of interest on
security deposits.

The High court is right in relying on Section 4 of the Interest Act.

The contract in the i.nstant case is between a consumer, however, E
high he might be and a monopolistic public utility company. It is
clearly an adhesion contract. This Court in Central Inland Water
Transport Co1porario11 v. Brojo Natll Ganguly (1986] 3 SCC 156 has
clearly held that an unreasonable term of an adhesion contract will not
be enforced by the Court. F

Interest on security deposit. .is also admissible under equity or
. common law. Halsbury's 4th Edn. Vol. 32, paragraph 106 at page 53
defines "interest" as the return or compensation forthe use or retention
by one person of a sum of money bdonging to or owing to another.
G

The Board is clearly in the position of a trustee in respect of this
money since the money is deposited by the consumers in trust with the
Board to secure the Board against default in payment of bills. The
deposit of security is like the usufructory mortgage which is provided
for in Section 76 of the Transfer of property Act. Section 76 G & H H
234 SUPREME COURT REPORTS [1993) 3 S.C.R.

A provide that the mortgagee in a usufructory mortgage would have to
keep account of tli.e incomes received from the mortgagee in his use
-and would have to pay compensation for the benefit derived derived by
the user of the mortgaged property. The position here is more or less
similar.

B
It is not correct to state that security is an advance payment. If it
is so, it would amount to Board taking three months advance payment
from the consumers. In such a case, the Board cannot disconnect the
electricity until the period of three months is over. But the rules of the
Board enable it to disconnect even if the consumer.fails to pay his bills
C on the due date. Then again, a penal interests is charged in case of --
default. If it is in the nature of an advance payment there is no scope
for charging 2-112 per cent penal interest.

Lastly, it is submitted that even under English Law interest is
D payable on security· for electricity as seen from Halsbury' s Volume 16
paragraph 129:

"129. Giving of security. Security required under the
Schedule to be Electric Lighting (Clauses) Act 1899 ....
·to be given to an electricity board (See the Electric /...
E Lighting (Clauses) Act 1899, Schedule, ss. 25 (2), 27
(2), (3), and paras. 115, 118, ante.) may be by deposit
or otherwise, and of an amount agreed or, failing
agreement, determined by a magistrates' court, and
that court may deal with the caused of the proceedings
F and its decision is final and binding on all parties,
(bid., Schedule, s. 71; Electricity Act 1947, s. 57 (2),
I Sch 4, Part III) Where security is given by way of
deposit the party to whom it is given must pay interest
at the rate of 4 per annum an every sop for each period
of Six months during which it remains so deposited.
G (Electric Lighting (Clauses) Act 1899, Schedule, s. 71
proviso; DecimalCurrency Act 1969, s. 10 (I)."

, H
UITAR PRADESH STATE ELECIRICITY BOARD

The question raised before the High Court was as to the rate of
---
FERRO ALLOYS CORPN. i·. A.P.S.E.B. [MOHAN, J.] 235

interest. The respondent (U.P.State Electricity Board) amended the A
rate of security deposit as Rs. 2 per K. V.A. On suchdepositit paid only
3 per cent interest whereas on late payment of the bills it charged more
than 24 per cent surcharge from the consumer. The appellants pre-
ferred writ petitions in so far as they were denied 12 per cent interest
on the deposit taken from the consumers. The Division Bench of the
High Court held: B

"These petitions are dismissed with a direction that in
case the Supreme Court decided that the interest at a
rate higher that 3% should be paid on such security and
additional security deposit, the benefit of the same c
judgment shall also be extended to the patitioners
.herein, without the necessity of any further proceed-
ings being taken by the petitioners."

Hence, the special leave petitions.
D

Mr. G. Ramaswami, learned counsel for the appellants would
urge that .lagdamba 's case (supra) has decided that rate of interest.
Therefore, that should govern.

In a numhcr of matters this Court has also ordered interest at 12 E

-- per cent. The same principle should apply to thi!' case as well.

I. Security Deposit is a complulsory levy. The consumer has no
option.
F
2. Even in contractual matters if the Board. which is a State, does
not behave fairly, this Court can always interfere.

3. The Board cannot compel the consumer to make a security
deposit without corresponding obligation to pay interest. G

4. Deposit does not contemplate appropriation.

5. Prior to appropriation, what is the character of the deposit.
requires to be determined. It is not the payment of money by way of
H
236 SUPREME COURT REPORTS [1993] 3 S.C.R.

A advance.

As to the meaning of intrest it could be gathered from the case in
Riches v. West111i11ister Bank Limited. _1947 Appeal Cases 390 at 400.
In Union o.flndia v. A.L. Rallia Ram [ 1964) 3 SCR 164 this Court held
that interest is awardable in equity.
B

A distinction will have to be made hetween unreasonahle and
unconscionable. In Administrative Law mere unreasonableness is
enough to set aside a contract while unconscionable relates to private
law. If interest is not paid security deposit cannot be demanded as this
C will amount to uncunscionahle bargain. As to the meaning of
unconscionability. Black's Law Dictionary (Fifth Edition) at page
1367 can be usefully referred tu_:

"Basic test of "unconscionability" of contract is
D whether under circumstances existing at time of mak-
ing or contract and in light of general commercial
background and conunercial needs of particular trade .-
or case. clauses involved are so one-sided as to
oppress or unfairly surprise party. Dil·ision of Triple T 1
Sen'ice. Inc. v. Mnbil oil Co1p .. 60 Misc. 2d 720. 304
E N.Y.S. 2d 191, 201. Unconscionability is generally

--
recognized to include an absence of meaningful choice
on the part of one of the parties, to a contract together
with contract terms which are unreasonably favourahle
to the other party. Gordon v. Crown Ce11tral Petrn-

F /eum Con1., D.C. Ga .. 423 F. Supp. 58, 61.

Typically the cases in which unconsionablity is found
involve gross overall one-sidedness or gross one-
sidedness of a term disclaiming a warranty. limiting
damages, or granting procedural advantages. In these
G
cases one-sidedness is often coupled with the fact that
the imbalance is buried in small print and often
couched in language unintelligible to even a person of
moderate education. Often the seller deals with a
particularly susceptible clientele. Kugler v. Romain,
H 58, N .J. 522. 279 A. 2d 640."

(
FERRO ALLOYS CORPN. '" A.P.S.E.B. fMOHAN. J.) 237

As to the meaning of reasonableness it is stated in G.B Mahajan A
and Ors: V • .lalgaon Municipal Council _and Ors. [ 1991] 3 sec 91 at
109. Under English Law relating to electricity supply as seen from
Halsbury' s Vol. 16 at paragraph 129 it is clearly stated that interest on
security deposit is payable. Therefore, all the more the reason why here
also it must be held to be payable.
B
Mr. Kapil Sibal, opposing the stand of Mr. G. Ramaswami
argures that there is no orderof this Cm1rt adjudicating the rights of the
Board on the consumer in respect of the validity of consumption
security deposit being condition precedent for the supply of electricity
by the Board as well as the liability of the Board to pay interest to the c
consumer in respect of the consumption security deposit. In the
absence of any such adjudication the question of Board being bound by
the previous orders of this Court. does not arise. In cases where 12 per
cent interest was awarded it was only hy way of ad interini measure.
The other orders are also not conclusive on this aspect. Therefore, the
D
matter will have to.be dedded afresh in the instant cases.

Far from being a compulsory levy, the consumption security
deposit is not only a deposit in cash to safeguard recovery of electricity
dues for the energy supplied to the consumer on credit but also a
security towards payment or satisfaction of any money (For example, E
theft). which may become due and payable to the Board by the
consumer.

The obligation to pay interest to the consumer proceed on the
assumption tha\ the Board is keeping the security deposit and depriving F
the consumer of tht: use of the money which is alleged to be earning
interes.t with the Board. This assumption is not warranted for the
following reasons:

1. The cycle of billing demonstrates that in the very nature of
G
things the consumer is supplied energy on credit. The security deposit
is hardly sufficient to secure the payment to the Board by the time the
formal bill by the Board is raised on the consumer.

2. The consumption security deposit indeed represents only part
of the money which is payable to the Board at the end of the billing H
238 SUPRE!\1E COURT REPORTS [1993] 3 S.C.R.

A cycle: The said amount can be appropriated at any time towards the
payments that are due to the Board and reflected in the formal bill.

3. I~he nature of billing cycle it is the Board which has to receive
interest on the energy supplied to the consumers on credit.

B
4. The concept of interest earned on a fixed deposit is alien to the
issue. The liabilities ~f the consumer increase on a daily basis
dcpanding on the level of supply and consumption. Therefore, the
amounts due are liable to be appropriated forthwith. That is not
possible where moneys are placed either on fixed deposit or a savings
C bank account. -
It is incorrect to contend that the amount is lying in trust with the
Board. The amount lying with the Board could also he appropriated for
satisfaction· of any amount liable to he paid by the consumer for
D violation of any conditions of supply in the context of wide scale theft
of energy and tempering with meters. Therefore. the security deposit
serves not only to secure the interest of the Board but also serves as a
deterrent on the consumer in discharging his obligation towards the
Board. Under section 49 the Board is enabled to supply electricity upon
such terms and conditions. as it thinks fit under Article 226 of the
E constitution. the Court is to conduct a limited scrutiny whether by
imposing such a condition the Board has not acted as a private trader
and thereby shed off its public utility character. Should the Coust come
to the condusion that the Board has not acted as a private trader and
the nature of deposit has a rational relationship. the issue will fall
-
F outside the scope of judicial purview.

Section 49 must be read along with Section 59. The contentionthat
the Board can achieve a surplus by adjusting its credit does not flow
from the language of Section 59. The requirement of consumption
G security deposit is a condition of supply. It has a direct bearing on the
operation of the Board. Hence it is 'per-se · reasonable and constitu-
tional.

If there is a revision in the rate of tariff there has to be an upward
revision of the consumption security deposit since it has a direct
H bearing on the level of supply in consumption of electricity. In October
-
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN. J.) 239

1986, the tariffs in the State of Uttar Pradesh were adjusted upwards. A
The revision in the form of an addtional security deposit with intei:est
at the rate of 3 per cent was made in January 1987. These facts would
suggest the rationale in the imposition of additional security deposit.
This being a condition of supply no reasons need be given at the time
of upward revision. Union ofIndia v. A.LRallia Ram [1964] 3 SCR 164
relates to the award of interest by an Arbitrator. The nature of B
consumption security deposity is such that it represents the moneys of
the Board. There is no relationship of debtor and creditor. There is no
deprivation of property which alone will entail the consequences like
payment of interest.
c
The learned counsel has also filed a tabulated statement to show
that the security deposit made by the appllant is 72.42 lakh for all
industries while the arrears in electricity come to 965. 73 lakh. A
formal chart has been filed based on the figures for August. September
and October 1991 to show that after the third month the consumption
D
charges total to 45.09 lakh. While security that is offered is 15. 95. The
same is the position with reference to other industries as well concern-
ing whom the learned counsel has filed a tabulated statement. This so
to establish how the Electricity Board has supplied electricity on credit
to the various consumers and the security deposit is hardly sufficie~t
even for one month's consumption. E

BIHAR

SLP 1 1799 of 1989

The appellant (Bihar Electricity Board) provided 4 per cent F
interest per annum on security deposit. When this was questioned in
C.W ..J.C. No. 3000 of 1987 in the matter of Dllanbad Flour Mills. a
Division Bench of the High Court was of the view that an interest at
4 per cent appeared to be unreasonable and directed the Board to
examine the question of enhancement of the rate of interest. Similar
directions were issued in another case. The appellant-Board after G
examining the matter issued a Notification on 27th· of May, 1988 and
enhanced the rate of simple interest to 5 per cent per annum. This was
because the amount of security deposit was kept in the savings account
which earned 5 per cent interest which was passed on the consumer.
The said notification was questioned before the High Court by seeking H
240 SUPREME COURT REPORTS [1993) 3 S.C.R.

A a writ of mandamus claiming interest at the rate payable on fixed
deposit by a nationalised bank in view of the decision by this court in
Jagdamba 's case (supra). By the impugned judgment the High Court
directed payment of interest on security deposit at the rate payable on
fixed deposit by nationalised banks. Aggrieved by this judgment the
Bihar State Electricity Board has preferred the special leave petliton.
B
Mr. G.L. Sanghi. Iearned counsel appearing for the Bihar Board
draws our attention to clause 15.3 of the tariff notification and submits
that the consumption security deposit is not only for the supply of
energy on credit but also for satisfaction of any money payable by him.
C If the consumer does not pay the dues in time the arrears of consump-
tion charges will have to be adjusted against the security deposit.
--
Therefore, the security deposit can never be kept in bank under fixed
deposit. This is the reason why the amount is kept in savings bank
account and whatever interest is earned thereon. that is passed on to the
D consumer. Therefore, the High Court was not right in awarding a
higher rate of interest. In other respect, the learned counsel adopts the
argument of the other learned counsel appearing for the various Boards
including the contention that Jagdamba 's case (supra) did not lay down
the rate of interest.

E Normally, in market transaction when any one supplies on credit
to a consumer a guarantee is taken for the payment on dues. Such a
guarantee may be in the shape of a bank guarantee, fixed deposit. .......
Similarly. the Board when it supplies electricity on credit it keeps the
security for the amount of supply of the clectrkity. According to
F Board's standing order No. 433 dated 31.12.74, dues at any time are
not allowed to exceed amount of security deposit and adjustment is to
he made against the security deposit after the disconnection of supply.
Therefore, it is not correct to state that the security is not adjusted
towards the.bilJ and is kept in tact.

G Section 24 of the Electricity Act is the only provision to ensure
payment as indicated in Bi/iar State Electricity Board Patna v. Mis.
Green Rubber Industries and ot//er [1990] l SCC 731.

In meeting these arguments it is submitted by Mr. M.P. Jha,
H
learned counsel for the respondent that the stand of the Board in
FERRO ALLOYS CORPN . .-. A.P.S.E.B. [MOHAN. J.] 241

making payment of interest at 4/5 per cent is clearly arbitrary. The A
security aspect of the Board requirement can easity be satisfied by the
board resorting to liquidation of security deposit. As a matter of fact,
the security deposit was never adjusted by the appllant-Board. As a
result large amounts were kept without investing them in fixed deposit.
Learned counsel for the respondent relies on the orders issued by this
Court and submits that the question of interest is settled by the ruling B
in Jagdamba 's ~ase (supra) . Section 24 is of no help for payment of
a lower percentage of interest.

W.P. No. 578 of 1987
c
In this writ petition, under Article 32 of the Constitution, the
challenge is to the increase of security deposit for L and H power
consumers above 100 B.H.P. It has been increased from Rs. 170 to Rs.
200. No reason whatever has been assigned for such an increase of
security de.posit. That will be bad in law as laid down in Central 111/and
Water Transport C01poracio11 Limited (supra). This is the argument of D
Mr. Gobind Mukhoty. This is countered saying that when there is an
increase in tariff the security deposit also is liable to be increassed.

PUNJAB
W.P. NO. 1317of1990 E

In this writ petition, the challenge i~_to the validity of Sections 49

-
and 79 of the Supply Act. According to the respondent (Punjab State
Electricity Board), the writ petition is not maintainable. A challenge
to the imposition of advance consumption of deposit does not involve F
any fundamental right.

The Punjab State Electricity Board is a licensee of the State of
Punjab. The electrical energy is generated through hydro as well as
thermal plants for ultimate sale to consumers. 50% of powers gener-
G
ated through hydro while the remaining through thermal plants which
consume coal/oil. The coal companies and those major suppliers of
power plants are demanding cost of coal in advance. On these advances
no interest is payable to the Board. Therefore, while the Electricity
Board is required to make colossal advances to generate electricity and
supply to consumers the consumers also use and consume electricity
242 SUPREME COURT REPORTS (19931 3 S:C.R.

A on credit ranging from 2 to 3' months depending upon the category of
consumers. To off-set part of the amount that the consumer owes to the
Board constantly and also to ensure timely payment of advances by the .
Board to its suppliers an advance consumption deposit is insisted upon·
before commencing supply to the consumer. If this is not so taken the
Board will be left with no other option than to increase the tariff. This
8
advance deposit cannot be termed as a fixed deposit as the amount
cannot be utilized against non-payment of dues from consumers.
Pr·~ides, the consumers can also askforthe refund. Sections 49 ( 1) and
79 (j) cannot be termed as arbitrary. In fact, this Court has upheld the
validity of Section 49 (1) in Jagdamba 's case (supra).
-
c
Lastly, it is submitted that the Board is generating electricity and
each unit so generated costs the Board rupee one per unit. The Board
is selling at an average rate of 50 paisa per unit tothe consumer which
includes the agricultural sector. Therefore, the amendment to clause
D · 23 of abridged conditions of supply requiring.to pay advance consump-
tion deposits is perfectly reasonable.

Mr. P.P. Rao, learned counsel appearing as intervenor on behalf
of Calcutta Electricity Supply Corporation supplements the submis-
sions of Mr. Soli J. Sorabjee. The deposit though called security
E deposit is really an adjustable advance payment of consumption
charges. The amount is revisable from time to time depending upon the
average consumption charges on the basis of actual consumption over
a period.

F The true nature of transaction in these cases is one of advance for
consumption of electricity estimated for a period of three months
subject to adjustment I revision, if necessary. Such an advance is liable
to be made good and kept at a stipulated level from month to month.
It is open to the consumer to permit adjustment of the advance in the
G first instance. Thereafter, make good the shortfall in consumption
charges and the security deposit before actual disconnection of supply
which takes at least about three months. In short, it is in the nature of
a running account. The security deposit does not remain in tact like a
fixed deposit but gets depleted day after day depending on the extent
of consumption More often than not, the consumption charges and
H other dues exceed the security deposit. That necessitates ca11ing for
FERRO ALLOYS CORPN. ,._ A.P.S.E.B. [MOHAN, J.] 243

additional advance to make up a shortfall. In the absence of any usage A
.,_
I
or contract or any provision of law requiring payment of interest,
interest is not payable for wrongful detention of money. In this case,
there is no wrongful detention of even. Section 4 (2) of the Interest Act
has no application to this deposit. When electricity supply is duly made
with a consequential liability to pay for each day's consumption, the
B
so-called security deposit is not a deposit in the real sense for the
consumers to claim the benefit of Interest Act.

We will now proceed to consider the correctness of the above
submissions with reference to the following aspects:
c
(i) Whether Section 49 is bad for want of guidelines.

(ii) The-nature of.consumption deposit, irrespective of
the,nomenclature by which it is called.

D
" (iii) (a) The liability of the Electricity Board to pay
interest.

(b) Whether the clause in the terms of supply provid-
ing for non-payment of interest is unconstitutional or
arbitrary. E

(iv) The demand for additional consumer deposit-
Whether valid?

VALIDITY OF SECTION 49 F
The law relating to electricity is principally contained in two
Acts. ·

(i) The Indian Electricity Act of 1910 (hereinafter referred to as
the "Electricity Act"). This provides for grant of licences in relation to
G
supply of electricity and the projects of undertakings. It also provides
for supply of electricity including the protective clauses.

- (ii)The Electricity (Supply) Act of 1948 (hereinafter referred to
as the "Supply Act") provides for constitution of State Electricity
H
Boards, the powers and· duties of such Boards. Certain important

•
244 SliPREME COP RT REPORTS [199313 S.C.R.
-r·
A provisions of the Act may now be seen.

Section 2 is interpretation Section,

Under St:ction 2 (2) the Board means a State Electricity Board
constituted under Section 5.
B

Under Section 2 ( 10) states that regulation means regulations
made by the Board under Section 79.

Sect.ion 5 deals with the constitution and composition of State
C Electricity Board.

Section 49 is the provision for sale of electricity by the Board to
persons other than the licensees. Sub-section (I) of the said Section
conimences with the word~-; "Subject to the provisions of this· Act and
D of Regulations". TI1is means ifthere are any provisions regulating the
Board in the matter of supplying electricity to any persons not being a
licensee then the supply by the Board will be subject to aH those
provisions. It has been so laid down in Mysore State Electricity Board
v. Bmlgalore Woollen. Cotton and Silk Mills Ltd., AIR 1963 SC 1128
E at page I 136:

"The expression "Subject to the provisions of this
Act" merely that if there are any provisions regulating
the Board in the matter of supplying dectricity to any
person not being a licensee, then the supply by the
F Board wiU be subject to those provisions. No provi-
sion has been brought to our notice which regulates
the Board in the matter of the charges which it may fix
for the supply of electricity."

G This Court had occasion to deal with the scope"Ofthe said Section
and Section 59. In Hindustan Zinc 'Ltd. v. A1id'1ra Pradesh State
Electricity Board [I 991] 3 SCC 299 at pages 317"-3 f9 it has been
observed thus:

"Section 49 makes provision for the sale o·f electricity
H by the Board to persons other -than licensees. Sub-
~:
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.} 245

section (1) starts with the words "Subject to the A
~-
provisions of this Act and ofregulations, ifany, made
in this behalf'. this means. that the provision made
therein is subject to other provisions of the Supply Act
and the regulations. It then proceeds to say that the
Board may supply electricity to any person not being
B
a licensee upon 'such terms and conditions as the
Board thinks fit' and may for the purposes of such
---- supply frame 'uniform tariffs'. Sub-section (2) then
enumerates several factors which the Board is re-
quired to 'have regard to' in fixing the uniform tariffs.
The meaning of the expression 'have regard to' is well c
settled, it means that the factors specifically enumer-
ated shall be taken into account while performing the
exercise which in this case is fixation of the uniform
tariffs. Ordinarily, therefore, uniform tariffs are re-
..... quired to be framed by the Board f<;>r making such
supply. Sub-section (3) then proceeds to say that D
nothing in the earlier enacted provisions shall dero-
gate from the power of the Board, "if it considers it
necessary or expedient to fix different tariffs for the
supply of electricity to any person", having regard to
the geographical position of any area, the nature.of the E
supply and purpose for which supply is required and
·any other relevant factors'. Sub-section<4) then says
that in fixing the tariffs and terms and conditions for
;,__ the supply of electricity, 'the Board shall not show
undue preference to any person., In other word, sub-
F
section (4) ·provides against any unreasonable dis-
crimination in fixing the tariffs and terms and condi-
tions for supply of electricity. The power of fixation
---- of tariffs in the Board is provided in this manner by
Section 49 of the Supply Act which requires the
fixation of uniform tariffs ordinarily having regard G
particularly to the specified factors and enables fixa-
ti on of such tariffs for any person having regard to the
factors expressly· stated and any other relevant fac-
tors, providing further that no unreasonable or undue·
preference shall be shown to any "Person by the Board
H
in exercise of.its powers of fixing the tariffs.
246 SUPREME COURT REPORTS [1993) 3 S.C.R. . 7'
A The next important provision is Section 59 of the
Supply Act. For appreciating the argument based on
Section 59, it is f.!ecessary to bear in mind the distinc-
ti on in Section 59 as it stood prior to 1978, as amended
by .Act 23 of 1978 and finally as amended by Act 16
--
of 1983, quoted earlier.
B

~
Prior to 1978, Section 59 required the Board, as
far as .practicable and after taking credit for any
subventions from the State Government under Sec-
. tion 63, not to carry-0n its operations under this Act at
-
c a loss and for this purposs, it was empowered to adjust
its charg~s accordingly from time to time: Under the
provision as it then existed, the µlain thrust was to
avoid the Board incurring any loss and for that pur-
pose, it could adjust its charges accorpingly from time
to time. Section 59 as amended by Act 23 of 1978
D
required the Board, after taking credit for any ~

subventions from the State Government under Sec- \.
ti on 63, to carry on its operations under this Act and to
adjust its tariffs so as to ensure that the total revenues
in any year aftermeeting all expenses properly.charge-
E able to revenue including those specified,left ·such
surplus as the State Government specified from time
to time. The shift was, therefore, towards having a
silrplus as the State Government specified from time
·to time. Sub-section (2) then provided guidelines for.
~

the State Government in specifying the surplus under
F
sub-section (1) and mentioned the factors to which
regard was to be had for this purpose. The effect of the
amendment made in Section 59 by Act 16 of 1983,
which came into effect from April 1, 1985, was to
provide for a minimum surplus. of three per cent or
---
G such higher percentage as the State Government is to
specify in this behalf. In other words, prior to 1978
amendment, the requiremen~ from the Board was
towards ensuring a surplus as specified by the State
qovernment, and after the 1983 amendment the Board
H is required to ensure a surplus of at least three per cent -,
unless the State Government specifies a higher. sur,
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.] 247

plus. This is the scheme of Section 59 and itis Section A
59 as amended by 1978 Act but prior to its amendment
by the 1983 Act, with which we are concerned in the
present case.

It cannot be doubted that Section 59 requiring the
B
Board to adjust its tariffs for the purpose of Board's
finance is to be read along with Section 49 ·which
provides specifically for fixation of tariffs and the
manner in which that exercise has to be performed
while dealing with any question relating the revision
· of tariffs. c
.......... The effect of 1983 amendment, which came
into force from April I, 1985, is that the Board entitled
to adjust its tariffs to ensure generating a surplus of not
less than three per cent even without such specifica- D
tion by ·the State Governrrtent and when ·the State
Government specifies a higher surplus, then the Board ·
must ensure generating the higher specified surplus.
This is, of course, subject to the accepted norm of the
Board acting in consonance with its public utility
character and not entirely with a profit motive like that E
of a private trader. The pre-1978 concept of the
Board's functioning to merely avoid any loss is re-
placed by the shift after 1978 amendment towards the
positive approa<?h of requiring a surplus to be gener-
ated, the quantum of Surplus being specified by the F
State Government; with a minimum of three per cent

-- surplus in the absence of the specification by the
government of a higher surplus, after the 1983 amend-
ment. This construction made of Section 59, as it stood
at different times in Govinda prabhu case [1986] 4
sec 19& indicated earlier cannot be faulted in any
manner. In Govinda Prabhu case the same argument
which is advanced before us was expressly rejected.
We are of the same view."

The next Section is Section 79 which talks of power to make H
248 SUPREME COURT REPORTS [1993} 3 S.C.R.

A .regulations. Clause (j) deals with the principles governing the supply
of electricity by the Board to persons other than the licensees under
Section 49. In accordance with this, each of the Boards has framed
regulations. All consumers are required to execute agreements gov-
erning the supply of energy.

B
. ·.The attack against Section 49 is that it does not contain any norm
orgm)leline with regard to framing of terms and conditions for the
sup_p.l'y Of electricity and in particular, the demand of paym~nt of
interest on the amounts due to the Board. Further, the principle of
fairness of action has not been explicitly set out so as to make it a visible
C guide. The words occurring in the Section "as the Board thinks fit"
must be construed as "reasonably thinks fit". We are unable to
countenance this argument. A careful reading of Section 49 clearly
descloses as was noted in Hindustan Zinc Ltd. v. A.P.S.E.B. [1991} 3
SCC 299 at 317 sub-section (I) of the said section starts with the words
D "Subject to the provisions of the Act and all regulations, if any, made
in this behalf'. Therefore, the Board has to conform to the various
provision.s of the Act and the regulations. Section 49 contains two
powers:

1. To prescribe terms and conditions of supply; and
E
2. fix the tariff.

No guidelines are required in this regard. In Jagdamba Paper
Industries Pvt. Ltd. v. Haryana State Electricity Board [1983} 4 SCC
F 508 at 513-14 it was pointed out as follows:

"We are of the view that the Board has been
conferred statutory power under Section 49 (I) of the
Act to determine the conditions on the basis of which
supply is to be made. This Court in Bisra Stone Lime
G
Company Ltd. v. Orissa State Electricity Board [ 197 6]
2 SCR 307 ,took the view that enhancement of rates by
way of surcharge was well within the power of the
Board to fix or revise the rates of tariff wider the
provisions of the Act. What applied to the tarijfwould
H equally apply to the security, that' being a condition in
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.] 249

the contract of supply. Each of the petitioning con- A
sumers had agreed to furnish security in cash for
payment of energy bills at the time of entering into
their respective supply agreements. There was no
challenge in these writ petitions that the demand of
security at the time of e_ntering into supply agreements
has to be struck down as being without jurisdiction. B
Section 49 (1) of the Act clearly indicates that the
Board may supply electricity to any person upon such
terms and conditions as the Board thinks fit. In exer-
cise of this power the Board had initially introduced
the condition regarding security and each of the c
petitioners had accepted the term."

(Emphasis supplied)

Where, therefore, under Section 49 read with Section 79 (j) D
regulations are made, the validity of the regulations could be examined
by the Court, whether they are reasonable or not.

In Southern Steel Ltd. Hyderabad v. The Andhra Pradesh State
Electricity Board AIR 1990 Andhra Pradesh 58 at 66-67, it was E '
observed:

- "Before we proceed to de_al with the rival conten-
tions, it would be appropriate to notice the scope of
judicial scrutiny by this Court in such matters. Acting
under Art. 226 of the Constitution, this Court does not
F
sit as an appellate authority over the Electricify Board.
Indeed, the Act has not chosen to provide an appeal
against the terms and conditions under S.49. The
jurisdiction exercised by this Court under Art. 226 is
supervisory in nature. It is to ensure the observance of G
fundamental right the rule of law, and to keep the
authorities within their bounds. Undoubtedly, the
Electricity Board is a 'State' within the meaning of
Art. 12, and hence it is subject to Parts III and IV of
the Constitution. The scope of enquiry, therefore,
H
would· be to examine whether the· power conferred
250 SUPREME COURT REPOllTS (1993) 3 S~C.R.

A upon the Board by S.49 of the Act has been .exercised
so unreasonably and· arbitraril'y that interference by
this Court is called for.

For the purpose of this enquir/ it is not necessary for
·. us to go into the question Wh,~ther the tenns and
B.
conditions notified under S.49 are statutory in nature
or not. We shall proceed on the assumption that they
are not statutory. We shall also proceed on the as-
sumption that the tenns and conditions notified under
S. 49 ought to t>e reasonable, in the sense that they
c must be related to the object and purpose for which
they are issued. We are equally aware that the power
under S. 49 cannot be allowed to be used for oblique
purposes, or for purposes unrelated to the one sought
to be achieved by a given condition."
D
In Mis B.R. Oil Mills, Bllaratpurv. Assistant Engineer(D} R.S.E.B.,
Bharatpur AIR 1981Rajasthan108 at 109, it was obersved:

"Where demand for deposit of cash security for one
month's estimated consumption charges and bank
E security equal to two months. estjmated charges as
contemplated by Regulation 20 read with the Sched-
ule thereto was made by the Electricity Board from a
consumer of high tension electricity, the demand
could not be said to be unreasonable and the consumer
would not be entitled to continuation of the energy
--
F
under Sec. 24 of the Electricity Act on his failure to
deposit such security, even if no agreement had been
entered into between the consumer and the Board
after the commencement of high tension supply. Once
the supply for electricity had commenced the con-
G sumer was bound by the tenns and conditions of
supply contained in the Regulations. Further, in such
. a case, merely because the Board did not encash or
could not encash a small portion of the security
..
deposited in the form of National Saving Certificates
before coming into force of the Regulations, it could
-
H
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.] 251

not be said that the demand of cash security in the form A
of Bank guarantee by the Board under the Regulations
was unreasonable. furthermore, the demand of secu-
rity from the consumer which was in accordance with
the Regulations framed by the Board could not be said
to be unreasonable merely because no interest is paid
on the cash security deposited by the consumer." B

In other words, the terms and conditions notified under Section 49
must relate to the object and purpose for .which they are issued.
Certainly, that power cannot be exercised for a collateral purpose. In
this view, we hold Section 49 as valid. C

NATURE OF CONSUMPTION SECURITY DEPOSIT

Each of the Electricity Boards before us is a State within the
mening the meaning of Article·12 the Constitutionoflndia. The Boards D
are differentfrom licensees. (Emphasis supplied) Each of the Board has
framed the terms and conditions of supply. One such condition relates
to security deposits. Such a deposit varies from Board to Board. For
example, under the terms and conditions notified by Andhra Pradesh
Electricity Board under Condition No. 28.1.1 the consumer is required
to deposit with the Board a sum in cash equivalent to estimated three E
months consumption charges. ~n the case or Rajasthan, the security is
in the form of cash for one month and bank or insurance guarantee for
two months.

The legislative Sanction behing the power of the Board to direct F
a consumer to furnish security may be exan\ined. It has already been
seen that the Supply Act is complementary to the Electricity Act, 1910.
Section 26 of the supply Act states that the Board shall have all the
powers and obligations.of a licensee under the Electricity Act. And this
shall be deemed to be a licence of the Board forthe purpose of the Act.
G
Under the regulations framed by the Board in exercise of po.wers of
Section 49 read with Section 79 (j) the consumer is only entitled and
the Board has an obligation to supply energy to the consumerupon such
terms and conditions as laid down in the regulations. If, therefore, the
regulations prescribed a security deposit that will have to be complied
with. It also requires to be noticed under clause (6) of Schedule JI of H
252 SUPREME COURT REPORTS [1993) 3 S.C.R~

A the Electricity Act that the requisition for supply of energy by the
Board is to be made under proviso (a) after a written co~tract is duly
executed with sufficient security. lllis, together with the regulations
stated above, could be enough to clothe it with legal sanction. In cases
--
where regulations have not been made Rule 27 of the Rules made under
the Electricity Act enables the adoption of model form of draft
B conditions of supply. Annexure VI in clause 14 states that the licensee
may require any consumer to deposit security for the payment of his
monthly bills for energy supplied and for the value of the .meter and
other apparatus installed in his premises. Thus, the .Board has the
power to make regulations to demand security from the consumers. ;
c
The next question will be: what is the object in demanding
security? ·

The deposit though called security deposit is really an adjustable
D advance payment of consumption charges. The payment is in terms of
the agreement interpreting the conditions of supply. This security
deposit is revisable from time to time on the basis of avera~e consump-
tion charges depending upon the actual consumption over a period.
lllis is the position under the terms of supply of energy with reference
E to all the Boards.

As a matter of fact, electricity is supplied in anticipation of
payment. In almost every case it takes nearly 2-1/2 months for the
recovery of the amount before action for disconnection could be taken.
F We will give one illustration as is in the c~se of Rajasthan. The
following .is the billing cycle:

(a) Consumption period 30 days

G
(b) Period consumed after taking
the meter readings to issue bills. 10 days

(c) Period allowed for payment 17 days

H (d) _Notice for disconnecting
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.] 253

supply if consumer fails A
to deposit energy bill in 7 days
time.
(e) Period t:alcen in actual
disconnection after
expiry of notice .. todays

---
B
Total: 74 days

In.practice, some time is also taken between the period allowed
for payment and the notice of disconnection. At the same time, there
.. is no obligation that the consumer rriust use only a particular quantum C
of electricity. He could even consume more than the average consump.:.
·ti on. The Board after 2-1/2 months recovers amount for the electricity
1 supplied by it. It could charge late surcharge in case of high tension
tariff after the expiry of ihe said period.
D
Thus, it will be clear that the true nature of the transaction in these
cases is one of advance payment of charges for consumption of
electricity estimated for a period of approximately three months. Such
an advance is liable to be made good and kept at the stipulated level
from month to month. It is open to the consumer to permit adjustment
of the advance in the first instance. Thereafter, he could make good the E
shortfall in consumption charges and the security deposit before actual
disconnection. Actually speaking, it is only after three months the
disconnection takes place. Hence, it is like a running current account. .

· The cycle of billing by the Board demonstrates that in the very F
nature of things, the consumer is supplied energy on credit. The
compulsory deposit in the context of billing cycle is hardly adequate
·to secure payments to the Board by the time the formal bill by the Board
is raised on the consumer. In one sense, the consumption security
deposit represents only a part of the money which is payable to the
Board on the bill being raised againstt the consumer. Thus, the Board G
secures itself by resorting to such deposit to cover part of the liability.

For supply of electricity the Board needs finance for production,
supply and other charges necessary for supply of electricity. For this ·
purpose, it takes loans from various financial instiutions. This is best H

.
254 SUPREME COURT REPORTS [l 993] 3 s.c:R.

A illustrated if one looks at the transactions of Punjab Electricity Board
where electric energy is generated through hydro as well as thermal
plants for ultimate sale to the consumers of the total power generated
about 50 per cent is through hydro plants. The remaining energy is
generated through thermal power plants which are operated on coal/

--
oil. Due to limited hydro resources within the State of Punjab the
B dependency on power on thermal plants is on the increase. The present
requirement for working of thermal plants is more than 52 lakh tonnes
of coal per annum. In addition, 60 thousand kolo litre of fumance oil
is required. The coal companies/Coal India Limited together with
major suppliers of power plant like Mis. BHEL demand cost of coal/
c spares/projects in advance for the supply of material. The Board is also
required to purchase power from Central projects N.T.P.C., N.H.P.C.
in order to meet the demand for power by the consumers:.For purchase
of such power again advance payment are made by the Board. On such
advances the Board is not paid any interest. The effect is, the Board is
obliged to bear the liability of hundreds of crores of rupees per annum.
D It has no option bt:it to pay the charges and deposits in order to keep the
power available at a level to meet with the demand of the consumers.
It is the case of the Board that it has opened letters of credit by mak!ng
advance deposits in favour of National Thermal Power Corporation
and the suppliers. Coal India Limited has also asked the Board to opon
E revolving letters of credit in favour of Coal companies/Coal India
Limited. Despatch of coal is only against the letter of credit.

From the above, it is clear that while the Electricity Board is
required to make colossal advances to generate electricity and supply
-
F to consumers, the consumers use and consume electricity on credit
ranging from 2 to 3 months depending upon the category of consumers.
To off-set part of the amount the consumer owes to the Board
continually to ensure timely payment of bills by the Board t~ its
suppliers, the advance consumption deposit is required to be kept with.
the Board before commencing supply to the consumer. The clauses in
G the contract in relation to conditions of supply of electric energy enable
the Board to adjust the bill against such deposits. Therefore, this is not
a case of mere deposit of money as in commercial transaction. In
demanding security deposit it is open to the Court to take note of
pilferageaslaiddowninAs/10kSoapFactoryv.Mu11icipalCorporation
H of Delhi J.T. (1993) 1 S.C. 128 at page 137:
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN. J.] 255

" ......... The variation in the electricity consumed by A
different consumers indicated that the charge of pil-
ferage of electricity and gross under-utilisation or
consumption of electricity compared to the sanc-
tioned load was not without foundation ........ "

B
The meaning of he term "deposit" is given in Corpus Juris
Secundum, Vol. 26A,P. l94quotedinDavidsonv. U.S., C.C.A.Pa., 292
F. 750, 752 as follows:

"In the sense of an Act. A deposit has been described
_.._
(
as a mere incident of custody, and, in its ordinary c
signification, implies something more than mere pos-
session, negatives all idea ofloan with contemplation
of use for profit, and has been defined as an ac:t by
which a person recieves the property of another,
binding himself to preserve it and return it in kind; the D
act of one person giving to another, with-his consent
the possession of personal property to keep for the use
and benefit of the first or of a third party. It may mean
a permanent disposition of the thing placed or depos-.
ited, or a mere temporary disposition or placing of the
thing." E

In these circumstances, we conclude that the object of security
deposit is to ensure proper payment of bills.

Three months' security deposit cannot ~ characterised either F
unreasonable or arbitrary. This Court had occasion to point out in
Jagdamba Paper industries Pvt. (supra) at paragraph IO which reads
as under:

"We agree~ however, on the facts placed that the stand
G
of the Board that a demand equaLto the energy bill of
two months or a little more is not unreasonable. Once
we reach the conslusion that the Board has the power
to unilaterally revise the conditions of supply, it must
follow that the demand of higher additional security
for payment of energy bills is unassailable, provided H
256 SUPREME COURT REPORTS (1993] 3 S.C.R.

A that the power is not exercised arbitrarily or unreason-
-:_
ably."

Several High Court decisions also had taken this view as seen
from K.C. Works v. Secreatary APSEB. Vidyut Soudlla AIR 1979
Andhra Pradesh 291 at 294:
B

"The reasonableness of such a requirement is ex-
plained by the Board in its counter in W.P. No. 2359/
75 out of which W.A. No. 156 of 1977 arises. In the
counter it was stated as follows:-
c
"The consumer is billed for such month separately.
The consumers electricity consumption during the
month is billed at the end of the succeeding month and
30 days time is given to him for payment of the bill. If
D he does not pay the bill his supply is liable to be
disconnected after giving one week's notice under
Section 24 of the Indian Electricity Act, 1910. Mean-
while he will be consuming the power. So by the time
the supply is disconnected to a defaulting consumer he
would have consumer energy for 3 months. The
E Board's interest requires that there should be some
protection by way of security of advance payment in
respect of the consumption of this three months pe-
riod."

F This is how the Board sought to explain the reason-
ableness of the requirement of security representing
three months average consumption charges. Nobody
can say that this is unreasonable. For three months a
consumer can go on consuming electrical power
without paying any charges. It is therefore, eminently·
G
reasonable for the Board to require the consumer to
furnish security for three months charges. Therefore,
we are satisfied that the requirement of security for
three months consumption charges is reasonable."

H At page 295 it was observed thus:
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.] 257

"As a matter of fact it may be that the writ appellant A
and the writ petitioner before us are prompt in paying
their electrical dues. but the Board alees with lakhs
and lakhs of consumers and it should have a uniform
policy in demanding security. It cannot make a dis-
tinction or discrimination from one consumer to an-
other. That is why a uniform policy has been laid down B
by incorporating it in the conditions aforesaid. For
these reasons we are satisfied that the requirement of
security for three months average consumption charges
by way of cash deposit is reasonable."
c
-r- In Municipal CorporationforGreater Bombay v. Mis D.M. lndus-
' tries AIR 1984 Bombay 242 at 256 it was observed thus:

"This brings us to the last argument advanced by Mr.
Hidayatullah that Clause 12 of the draft agreement is 0
arbitrary and unreasonable. The argument was that
the power to impose conditions cannot be exercised to
impose unreasonable conditions and it must also be
ascertained whether the condition achieves the object
for which it is imposed. On principle, the proposition
is undisputable. Clause 12 which can be described as E
unreasonable and whether this Clause has no nexus
with the object of the Act and the Rules. The argument
appears to be that if the object of security is to secure
payment of bills, then insistence on cash deposits
would be unreasonable because the object could also . F
be served by furnishing of any security and it is said
that the consumer was willing to furnish a bank
_guarantee. In addition, it is ur 0 ed that the period of.
consumption for which the security is required should

- not exceed two months and, therefore, the determina-
tion of three months is arbitrary."

In Haryana Ice Factory v. Municipal Corporation of Delhi AIR
1986 Delhi 78, It was held thus:
G

"Also, the demand of the security was corelated to the H
258 SUPREME COURT REPORTS [1993) 3 S.C.R.

A consumption Pattern of the consumers and to cover
the energy charges from the date of its consumption
till the date of ultimate disconnection as a result of
non-payment of the changes due. The court cannot
enter into mathematical calculations to come to a

B
conclusion that instead of three months, it should be 2- .
1/2 months. The fixing of the period of security equal '
to eriergy consumption of three months is reasonable.
It may be that the Haryana Electricity Board has fixed
the period of security deposit equal to the amount of
energy consumed for a period of two months but that
c would depend upon the billing c'ycle adopted by the
Haryana State Electricity Board." _.,. J
In Southern Steel Lid. Hyderabad v. The A.P. State Electrici~· Board
AIR l 990 Andhra Pradesh 58 at pages 68-69. i~ was observed:

D
"It is also stated by the Board that huge sums are required
by it as rotating capital; that it borrows large amounts from
organisations like L.l.C. and Banlcs; that it pays interest to
them, and that in such circumstances it is well entitled to
require the consumer to co-operate by paying their bills
regularlt, by giving security deposits, and by conforming to
E
the terms and conditions of supply. It is argued that this
consideration was also one of the bases of condition No. 28.
We do not think it necessary to express any opinion on this
question, though the truth of the matter ccµinot be denied.
There are two views upon the matter. The petitioners say
F that the interest burden should be reflected in the tariffs,
wihle the Board says that interest burden can be reflected in
' consumption deposits, and not necessarily in tariffs. All that
can say is that there no hard and fast rule in this behalf. The
interest burden can be reflected either in tariffs,.or can be ·
sought to be set off by calling upon the consumers to make ·
G deposits. In this case, however. It is unnecessary to go into
this aspect, since the requirement of three monf.ll~ deposit,
in our opinion, cannot be said to be unreasonable and
unjustified having regard to the facts mentioned above. It
cannot be said that the said condition is s0 unreasonable and.·
arbitrary as to call for interference by this Court under Art.
H

f
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MJ,HAN, J.) 259

226 of the Constitution. We reiterate that even if this court A
comes to the conclusion that the deposit should not be 3
months, but 2 months 7 days, or 2-1/2 months, it would not
be entitled to interfere in the matter, not being an appellate
authority. It cannot substitute its own opinion for the
opinion of the Board. It can interfere only when the exercise
of power is shown to be arbitrary, and unrelated to the object B
sought to be achieved."

We are in agreement with the above extracts.

The liability of Electricity Board to pa); interest on
. Secu,rity Deposit:
c
.Now, we come to the crucial question as to whether interest is
payable on security deposit o~advance consumption deposit.We ~ill examine
from the following angle:-
D
(a} The scheme of Electricity Acts.
I

(b) ·schedule VI of the Supply Act.
(c) Intet:est Act, 1978

: (d) Equity or Common Law.
I E
(a & b) Scheme of Electricity Acts & Schedule VI of Supply Act:

It is the submission of Mr. Shanti Bhushan, learned counsel appear-
ing for the respondent against Rajasthan Electricity Board that the scheme of
the Electricity Act and Supply Act togther with the rules suggest the payment F .
of interest. The Board is not entitled to utilize the security deposits for
augmenting its finances as they are meant to secure the Board against default
in payment of the bills. The correctness of this argument may now be seen:

There is no statutory provision which casts an obligation on the Board
G
to pay interest on security dep0sit.Uowever, reliance is placed on model fomi
of draft conditions of supply as is found in Annexure VI, tra_ceable to Rµle 27
. · of Indian Electricity Rules, 1956. Clause 14 relating to security deposit of the
said Annexure reads: ·
260. SUPREME COURT REPORTS [1993) 3 S.C.R.

A "..... Interest at the rate of; ..... per cent per annum will be
paid by the licensee on deposits exceeding Rs. 25/-. 1'
(Emphasis supplied)

The model form is applicable ony to a licensee as defined in
B Section 2 (4) of the Electricity Act.

Though Rule 27 prescribes a model form it is not compulsory even
for a lincesee tp adopt the model condition of supply. This is because
Rule 27 itself stipulates.~ .. "the model conditions of supply contained
in Annexure VI, may with such variations as the circU1!1Stances of each
C case require, be adopted by the lencesee." Therefore, there is an option
available to adopt with such modifications. In such a case, the adoption
of the model form becomes permissive. In this connection, Section 26
of the Supply Act, to which we have made a reference earlier, must be
looked at. Though the Board is to have powers and obligations of a
D licensee under the Electricity Act, the second proviso to this Section
assumes importance. It reads: .

"Provided further that the provisions of Clause VI of
the Schedule to that Act shall apply to the Board in
respect of that area only where .distribution mains
E
have been laid by the Board and the supply of energy
through any of them has commenced."

Second proviso of the Supply Act leads us to Schedule VI. This
Schedule has been framed in exercise of powers under Sections· 57 and
F 57A In defining "clear profit" paragraph (2) of clause XVII, Item (v)
makes a reference, as interest of security deposits which is a part of
expenditure properly incurred by the licensee. From this it is impos-
sible to hold tht this clause imposes an abligation on the licensee to pay
interest on security deposits. All that would mean is, if interest is paid
G then it qualifies as an item of expenditure properly incurred. This is the
position with regard to licensee. But this cannot apply to the Board,
whic;hasstatedabove, is not a licensee. Forthesame reasonltemL I (c)
of Forin IV of the Electricity Rules relating to interest paid and accrued
on consumers' security deposits is of no avail because that relates to
the manner of keeping accounts by the licensee, not being applicable to
H aBoard.
FERRO ALLOYS CORPN. v.A.P.S.E.B. [MOHAN, J.] 261

In the above premises, it follows that there is nothing to indicate A
under the scheme of the Electricty Act or Schedule VI of the Supply
Act that interest must be paid on the security deposit.

-
(c) Interest Act: applicability.
B
As regards the applicability of Interest _Act, we find that the
Division Bench of Rajasthan High Court has erred in holding that it is
applicable. Section 4(2) (g) of the Interest Act of 1978 reads as under:

"Notwithstanding the aforesaid and without prejudice

·- to the generelity of the provisions of sub-section (1 ),
the Court shall in each of the following cases allow
c

interest from the dates specified below to the date of
institution of the proceedings at such rate as the Court
may consider reasonable, unless the court is satisfied
that there are special reasons why interest should not D
be allowed namely:

(a) Where money orotherproperty has been deposited
as security for the performance of an obligation
imposed _by law or contract from the date of the
deposit." E

This section has no application to a case where on account of a
contractual term or a statutof5' provision payment of interest is not
permitted.
F
A careful reading of Section 4(2) of the Interest Act would
disclose that it merely enlarges the category of cases mentioned in
Section 4(1). Even otherwise, there is nothing to indicate that section
4(2) could override other statutory provisions or a contract between the
parties:"No doubt, Section 4(2) contains a non-obstante clause. But, G
such a clause is restricted to the provisions of Interest Act and cannot
"· extend to other laws or a contract between the parties.

Accordingly we overrule the judgment of Rajasthan High Court
which holds the Interest Act is applicaple.
• H
262 SUPREME COURT REPORTS (1993] 3.S.C.R.

A l)le deposit 1111de cannot be equated to a fixed deposit. It has ,....
already been seen Afat in the case of daily supply of electricity, there
is a consequential liability to pay .for each day's consumption of
electricity. To ensure that payment, the security deposit is furnished.

B
Hence, it cannot be equated to a deposit at all. It is in the nature of a
running current account.

(d) Position in Equity or Common Law
-
If this be the position, could interest be claimed either on equity

C
or common law? The argument on behalf of the consumers is, if money
belonging to any person is used by someone else he is oblilsed to pay
interest for the period of its user. Halsbury' s Volume 32 (page 53 para
106) defines "interest" as •+the return or compensation for the use or
-
retention by Ohc person of a sum of money belonging or owed to
another". Therefore, it is contended that the Board is clearly in the
0 position of a trustee in respect of this money since the money is
deposited by the consumer in trust with the Board to secure the Board
against defult in pay.ment of interest. The object of the deposit is to
secure the payment of consumption charges. These charges may very
depending upon the daily consumption, depending on the level of
supply. The amount due by way of consumption charge.~ would also tie
E liable to be appropriated. Therefore, it is incorrect to state that the
Board is a trustee. The relationship between the Board and consumer
is not that of a trustee and a beneficiary but a depositor and depositee.
This is not even a case of a constructive trust under Section 90 of the
Indian Trust Act, since no advantage is gained by the Electricity Board
F if 'derogation of the rights of the consumer iff view of what we have
observed above.

Strictly speaking, the· word "interest" would apply only to two
cases where there is a relationship of debtor and creditor. A lender of
money who allows the borrower to use certain funds deprives hililSelf
G of the use of those funds. He does so because he chargt:s interest which
may be described as a kindofrentforthe use of the funds. For example,
a bank ·or a .lender lending out money on payment of interest. In this
case, as already noted, there is no relationship of debtor and creditor.

H We may now refer to Halsbury's Vol. 32 para 108:
FERRO ALLOYS CORPN. '" A.P.S.E.B. [MOHAN. J.] 'l.o:

"108. When interest is payable at common law. At A
common l~w interest is payable (I) where there is an
express agreement to pay interest; (2) where an agree-
ment to pay interest can be implied from the course of
dealing between the parties or from the nature .of the
transaction or a custom or usage of the trade or
profession concerried; (3) in certain cases by way of B
damages for breach of a contract (other than a contract
merely to pay money) where the contract, if per-
formed, would to the knowledge of the parties have
entitled the plaintiff to receive interest.
c
· Except in the cases mentioned, debts do not carry
interest at common law."

Consumption security deposit does not fall under any of tl"
categories mentioned above. Para 109 says: D

"Equitable right to interest. In equity interest may be
recovered in certain cases where a particular relation-
ship exists between the creditor and the debtor, such
a mortgagor and mortagagee, obligor and obligee on
a bond, personal representative and beneficiary, prin- E
cipal and surety, vendor and purchaser, principal and
agent, solidtor and client, trustee and beneficiary, or
where the debtor is in a fiduciary position to the
creditor. Interest is also allowed on pecuniary lega-
cies'llot paid within a certain time, on the dissolution F
of a partnership, on the arrears of an annuity where
there has been misconduct or improper delay in pay-
ment, or in the ca~e of money obtained or retained by
fraud. It may also be allowed where the defendant
ought to have done something which would have
entitled the plai miff to interest at common law, or tias G
Wrongfully prevented the plainti(ffrom doing seme-
thing which have so entitled him."
\

This paragraph is also inapQlicable to the present case.
H
'
264 SUPREME COURT REPORTS (1993) 3 S.C.R.

A Even a case of wrongful detention of money cannot arise. In
Bengal Nagpur Railway v. Ruttanji Ramji AIR 1938 PC 67 the question
arose whether interest was payable on damages on account of wrong-
ful detention of money. It was held:

·'The Interest Act however contains a proviso that
"interest shall be payable in all cases in which it is now
payable by law." This proviso applies to cases in
which the Court of equity exercises jurisdiction to
allow interest.' As observe? by Lord Tomlin in Maine
and New Brunswick Electrical Power Co. Ltd. v. Hart,
c 1929 AC 631:

"In order fo invoke a rule of equity, it is necessary in
the first instance to establish the existence of a state of
circumstances which attracts the equitable jurisdic-
D
tion, as for example, non-performance of a contract of
which equity can give specific performance."

"The present case does not however attract the equi-
table jurisdiction of the Court and cannot come within
the purview of the proviso."
E
The very passage was noted by this Court in Union ofIndia v. A.L.
Rallia Ram [1964) 3 SCR 164 at 188-189.

The argument of Mr. G., Ramaswami, learned counsel, that the
F deposit does not contemplate appropriation is not correct because in
--
the nature of contract it is liable to be appropriated for the satisfaction
of any amount liable to be paid by the consumer to the Board for
violation of any conditions of supply in the context of wide scale theft
of energy, tempering with the meters and such other methods adopted
G by the consumers. Therefore, the said consumption security deposit
serves not only to secure the interest of the Board for any such violation
but should serve as a deterrent on the consumer in discharging his
obligations towards the Board.

Mr. G. Ramaswami would rely on Riches v. Westminister Bank·
H Limited 1947 Appeal Cases 390 at 400.
FERRO ALLOYS CORPN. '" A.P.S.E.B. (MOHAN, J.] 265

That is a case which arose under Income Tax Act. That has no A
application to this case. What came up for consideration in AL. Ra/lia
Ram's case (supra) was the power of the Board to award interest.
Hence, that case has no application. Accordingly, it is held that the
claim for interest cannot be legally founded either on common law or
equity. As is rightly contend.ed by Mr. Kapil Sibal, learned counsel and
the other learned counsel appearing for the various Boards, it is the B
Board which should be entitled to receive interest on energy supplied
to the consumers on credit as the consumers enjoy a credit facility as
noted already. We are also unable to accept the argument advanced on
behalf of consumers that because the Electricity Boards charge interest
on belated payments, interest must be paid on security deposit. Interest c
on belated payments is by way of penalty. That has no bearing.

Clause providi11g.for 11011-payment of interest: Whether 1mrea-
so11able?
'
'
D;
While the terms and conditions of supply of Andhra Pradesh,
Uttar Pradesh and Bihar provide for payment of interest at certain rate,
in the case ofRajasthan and Orissa the Boards have clearly stipulated
that no interest shall be payble on the securities furnished to the Board.
Whether that clause could be considered unconstitutional or arbitrary?
In examining the constitutionality of this provision,. in that it is E
violative of Article 14 of the Constitution of India, the following
factors have to be borne in mind:

1. Article 14 does. not mandate mathematical exactitude or
scientific precision. F

2. The mode and the period of security vis-a-vis the billing
practice must fonn the consideration.

3. The consumer with open eyes has entered into the agreement G
and solemnly undertaken to abide by the i::onditions regarding non-·
payment of interest. He cannot resile from the condition because there
is nothing inherently objectionable about such a condition nor is such
a condition per se i11egal or void as opposed to public policy. It is not
uncommon in commercial transaction, such a provision is entered into.
H
266 SUPREME COURT REPORTS [1993] 3 S.C.R.

A The argument that the Board is monopolistic in character and
therefore, the consumers have no other option but to enter into contract
appears to be misconceived. The Board under Section 49 of the Supply
Act is entitled, apart from fr~n.ling uniform tariff, to insist upon such
terms and conditions as the Board thinks fit. This has also been so
stated in .Tagdamba case (Supra). The consumption security deposit
B whether or not it carries interest is a condition precedent for the supply
of electric energy. We are clearly of the view that the scrutiny by the
•
. Court in determining the unconstitutionality of a provision not provid-
ing for interest must be tested on the following. touchstone:

C In imposing such a condition has the Board acted as a private
trader and thereby shed off its public utility character? By referring to
Hindustan Zinc Ltd. (supra) we have earlier pointed out the inter-
relationship between Sections 49 and :S9 as noted by this Court. We are
therefore, of the view that in imposing such a condition the Board has
not acted as a private trader. The nature of deposit has a rational
0
relationship to the object which is incorporated as a condition of
supply.

Some of the learned counsel appearing for the consumers would
draw our attention to Section 59 of the Supply Act as well. Under the
E said section the Board is obligated to carry on its operation as to ensure
that it generates a surplus of 3 per cent or as specified by the State
. Government. The Board is obligated to adjust its tariffs for ensuring
such surplus. TI1e condition of supply requirii1g a consumption security
deposit has a direct bearing on the operations of the Board which ar~
F to be conducted in such a manner as to ensure a surplus. The language
in Sec~on 59 of the Supply Act is "carry on its operations under this
Act and adjust its traiffs." The language of the said section is not by
adjusting tariff Therefore, the argument that the only manner in which
....
I
I
the Board can achieve a surplus is to adjust its tariffs does not flow from \
the language of Section 59. So read, in the context of the insistence of
G a security deposit which has direct bearing on the operations of the
Board is per se reasonable and constitutional. ·

.
We will assume, .
for a moment, that the contract is an adhesion
contract. But still, it is not unconscionable.
H
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.] 261

In Central Inland Water Transport Corporation v. Brojo Nath A
Ganguly (1986] 3 SCC 156 at 208 "adhesion contract" is defined
quoting Black's Law Dictionary, Fifth Edition, at page 38, as follows:

"Adhesion contract. - Standardized contract form
offered to consumers of goods and sevices on essen-
B
tially 'take it or leave it' basis without affording
consumer realistic' opprotunity to bargain and under
such condition that consumer cannot obtain desired
product or services except by acquiescing in fon'i.t
contract. Distinctive feature of adhesion contract is
that weaker party has no realistic choice as to its C
terms. Not every such contract is unconscionable."

With reference to these contracts the Court offered relief to the
parties against such a clause if it is so unreasonable as to be unconscio-
nable. As a matter of fact at page 211, paragraph 83 of Cemral Inland D
Water Transport C01poration v. Brojo Nath Ganguly {1986] 3 SCC 15
it stated thus:

"Yet another theory which had made its emergance in
recent years iil the sphere of the law of contracts is the
test of reasonableness or fairness· of a clause in a E
contract where there is inequality of bargaining power.
Lord Denning, MR, appears to have been the pro-
pounder, and parhaps the originator at least in En-
gland, of this theory. In Gillespie Brothers & Co. Ltd.
v. Roy Bowled Transport Ltd. [1973] QB 400, 416 F
where the question was whether an indemnity clause
in a contract, on its true construction, relieved the
indemnifier from liability'arising to the indemnified
from his own negligence, Lord Denning said (at pages
415-416):
G
The time may come when this process of •construing'
the contract can be pursued no further. The words are
too clear to permit of it. Are the courts then power-
less? Are they to permit the party to enforce· his
unreasonable clause, even when it is so unreasonable, H
268 SUPREME COURT REPORTS [1993] 3 S.C.R.

A or applied so unreasonably. as to be unconscionable?
When it gets to this point, I would say, as I said many
year ago:.

'there is the vigilance of the common law which,
while allowing freedom of contract, watches to see
B that it is not abused' :·John Lee & Son(Grantllam) Ltd.
v. Railway Executive [1949] 2 All ER 581, 584.

It will not allow a party to exempt himself from his
liability at common law when it would be quite
c unconscionable for him to do so. (emphasis sup~
plied.)"

Farmsworth on Contracts, 2nd Edn. 319. 320 para
4.27 states:
D
"4.27 Precursors of Unconscionability. Courts of eq-
uity did not share the reluctance of common law
courts to police bargains for substantive unfairness.
Though mere "inadequacy of consideration" alone
was not a ground for witholding equitable relief, a
E contract that was "inequitable" or "unconscionable"
--0ne that was so unfair as to "shock the conscience
of the court"-would not be enforced in equity. In one
such case, a man promised to give a 20 percent interest
in all property that he might later acquire in Alaska in
F return for the Promisee' s payment of $1,000 and his
cancellation of an .$11,225 debt of questionable
coBectability. Whe~ the promisor acquired property
worth over$ 750,000, the promisee sought specific
Per onnance. The court refused to grant it. Though the
fairness of the bargain was to be judged as of the time
G
that the bargain was made, in equity as at common
law, here the "inadequacy of consideration" for the
prnmise sought to be enforced was "so gross as to
; / render the contract unconscionable."

·H In dealing with the validity of the agreement containing a clause
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.] 269

relating to minimum guarantee this Court had occasion to observed in A
Bilzar State Electricity Board v. Green Rubber Industries[ 1990] I SCC
731 at page 740 as follows:

."It is true that the agreement is in a standard form of
contract. The standard clauses of this contract have
B
been settled over the years and have been widely
adopted because experience shows that they facilitate
the supply of electric energy. Lord Diplock has ob-
served: "If fairness or reasonableness were relevant to
their enforceability the fact that they are widely used
by parties whose bargaining power is fairly matched c
would arise a strong presumption." That their terms
are fair and reasonable. Schroeder(A.) Mitsic Publish-

- ing Co. Ltd. v. Macaulay [1974] 3 AUER 616, 624. in
such contracts a standard form enables the supplier to
say: "lf you want these goods or services at all, these
are the only terms on which they are available. Take
D
it or leave it."It is a type of contract on which the
conditions are fixed by one of the parties in advance
and are open to acceptance by anyone. The contract,
which frequently contains many conditions is pre-
sented for acceptance and is not open to discussi9n. It E
is settled law that a person who signs a document
which contains contractual terms is normally bound
by them even though he has not read them, even
though he is ignorant of the pricise legal effect."
F
In the light of the above discussion, we hold that the clause. not
==--,. providing for interest i_s neither arbitrary nor palpably unreasonable,
nor even unconscionable. In holding so we have regard to the follow-
ing:

1. The consumer made the security deposit in consideration of the G
performance of his obligation for obtaining the service which is
essential to him.

-- 2. The electricity supply is made to the consumers on credit as has
been noted above. H
270 SUPREME COURT REPORTS [1993) 3 S.C.R.
r'
\.

A 3. The billing time taken by the Board is to the advantage of the
consumer.

4. Public revenues are blocked _in generation, transmission and
distribution of electricity for the purpose of supply. The Board pays
interest on the loans borrowed by the Board. This is in order to perform
B
public service. On those payment made by the Board it gets no interest
from the consumers.

5. The Board needs back its blocked money to carry out public
sevice with reasonable recompense.
c
6. The Board is not essentially a commercial organisation to
which the consumer has furnished the security to earn interest thereon.

We should also observe that the rate of interest on security deposit
D cannot be equated with the rate of interest on the fixed deposit. First
of all, if the consumption charges are to be appropriated the moneys
accrued by way of deposits cannot be held in fixed deposits. Nor all
deposits need carry interest in every transaction. Secondly, the nature
and character of the secur!tY deposit is essentially different from fixed
deposit. It is worthwhile, in this connection, to refer to Companies
E (Acceptance of Deposits) Rules, 1975. In Rule 2 it is stated:-

"2. Definitions. - In these Rules, unless the context
otherwise requires.-

F (a) ............ .

(b) "deposit" means any deposit of money with, and
includes any amount borrowed by, a company, but
does not include-
G
(i) ......... ..

(ii) .......... ..

(iii) .......... ..
H
FERRO ALLOYS CORPN. l'. A.P.S.E.B. [MOHAN, J.) 271

(iv) .......... . A

(v) any amount received from an employee of the
company by way of security deposit;

(vi) any amount received by way of security or as an
B
advance from any purchasing agent, selling agent, or
other agents in the course of or for the purposes of the
business of the company or any advance received
against orders for the supply of goods or properties or
for the rendering of any service; ....... "
c
We may add that merely because the English Acts provide for
interest, it is not necessary the same should be adopted here as well.

Thus, we hold that the Division Bench of the Rajasthan High
Court erred in striking down Condition No. 20 of the General Condi- D
tions of the Rajasthan Electricity Board as violative of Article 14 of the
Constitution of India.

Has this Court decided the question of rate of interest inlagdamba
Paper Industries (Pvt.) Ltd. v. Haryana State Electricity Board [19831
E
4 SCC 508? In that case the following two points were raised as seen
from paragraph 3 at page 511 :
.•
-- I. The enahancement made in the security amount towards the
meter is without any justification.
F
2. The enhancement of security deposit was not warranted.

On the question of interest in paragraph I I at page 515 in Jagdamba ·s
.case (supra) it is stated thus:-
G
"On the security amount interest at the rate of 4 per
cent was initially payable. The same has already been
enhanced to 8 per cent per annum. Since the amount
is held as security, we indicated to the counsel for the
Board that security amount should bear the same
H
272 SUPREME COURT REPORTS [1993] 3 S.C.R.

A interest as admissible on fixed dep9sits of Scheduled .
Banks for a term of years and we suggested keeping
the present rate of interest in view that it should be
enhanced to 10 per cent. Board's counsel has now
agreed that steps would be taken to enhance the
present rate of interest of 8 per cent to lOper cent \Vi th
B effect from October l, 1983."

It requires to l:!e carefulJy noted that the question of interest on
security was not raised before the Court. Therefore, the Court had no
occasion to decide this issue of interest. That part of the judgment, as
C rightly contended by Mr. Soli J. Sorabeejee, learned counsel, is sub-
silentio. However, the learned counsel for the consumers pressed into
service the various orders passed by this Court in relation to interest
and urged that it is concluded by those orders. We are unable to accept
this argument. All the orders have their root in Interlocutory Applica-
D tion No. 1 Cjf 1989 in Writ petition No. 578 of 1987. That order is
extracted in fuIJ:

"We have heard counsel for the parties. Mr. Gopal
Subramaniam; counsel for the State Electricity Board
on instructions states that the initial deposit which has
E been made by the consumer petitioner, to the tune of
Rs. 10,07,378.81 was intended as security for pay-
ment of energy dues. In terms of our order of 5t/J May.
1988. the petitioner would be entitled to the interest on
that amount from the date of the deposit at the rate of
F 12% per annum. Mr. Gobind Mukhoty, counsel for
the petitioner now agrees to deposit the balance amount
of Rs. 6,91,621 minus the interest which is said to be
the additional security and while making the deposit
of the additional amount, the petitioner is entitled to
deduct the interest already accrued on the deposit of
G Rs. 10,07,378.81 from the date of the deposit at the
rate of 12% per annum. The balance amount after
deduction of the interest. shall be ·deposited in two
equal quarterly instalments, the first being due by
15.10.89.
H
FERRO ALLOYS CORPN. '" A.P.S.E.B. [MOHAN. J.) 273

The application for directions is disposed of accord- A
ingly."

Based on this, in Writ Petition No. 613 of 1990 it was
stated thus:
B
"In view of the order made by this Court in the
connected matters on September 7, 1989, after hear-
ing parties in Writ Petition No. 578/87 on the amount
deposited by the consumer as security, interest at the
rate of 12% would be admissible.
c
The Writ petition is disposed of accordingly."

Two other orders remain to be seen. One rendered in W.P. 5582
of l 989which was disposed of by consent and the other in W.P.No. 576
of I 990 where the writ petition was disposed of in the following D
manner:

"If the Electricity Board has been directed to allow
interest at the rate of 12% per annum on the security
deposited with the Board by the petitioners similarly
E
situated, the claims of the petitioners should similarly
be dealt with by the Board. The Writ Petition is
disposed of."

On careful examination of the above orders, we do not think the
Court ever intended to adjudicate upon the rate of interest or render a F
decision on that question. Therefore, it cannot be contended that the
disposal of Writ Petition No. 613 of 1990, though by a Bench of 3
judges would be binding on us because, as pointed out above. It was
entirely based on Interlocutory order. We are of the view that we are
free to decide the q~estion on its merits. G

The argument of Mr. Anil Divan, learned counsel that unequals
are treated equals has no basis. It may be that the consumers of
electricity, where it is raw material, would be prompt in their payment
,in their own interest. On that basis, it cannot be contended that they H
274 SUPREME COURT REPORTS (199313 S.C.R.

A cannot be treated in the same way as defaulters. The test, in our
considered opinion, is whether in the general application of law there
is any discrimination. Merely because some of the consumers are
prompt those related cases cannot render the provision constitutional.
We may usefolly refer to the following ca~es:

B
The Collector of Customs, Madras v.Nathelfa (1962] 3 SCR 786
at 829-30 it was observed?

"The deleterious effects of smuggling, as pointed out
in the extract from the Report, are real and it is not in
c dispute that the prevention and eradication of smug-
gling is a proper and legally attainable objective and
that this is sought to be achieved by the relevant law.
If therefore for the purpose of achieving th desired
objective and to ensure that the intentions of Parlia-
D
ment shall not be defeated a law is enacted which
operates somewhat harshly on a small section of the
public, taken in c"njunction with the position that
without a law in that form and with that amplitude
smuggling might not be possible of being effectively
checked, the question arises whether the law could be
E held to be violative of the freedom guaranteed by Art.
19 ( l) (f) & (g) as imposing an unreasonable restrain.
That the restrictions are in the "interest of the general
public" is beyond controversy."

F /11 Vivian .losepl! v. Municipal Corporation, Bombay,
[1972] 2 SCR 257 at 276-77 it was observed:

"The levy of the cess under s. 27 of the Act is not based
on the principle of quid pro quo. Its object is not to
repair all residential premises, but to preserve and
G
-prolong their lives in order to avert the dilema caused
by the acute shortage of residential accommodation
on the one hand, and the reluctance and/or inability of

H
the owners to carry out repairs resulting from the Rent
Act, on the oth1.:r and to establish an agency so that
structural repairs to buildings in dangerous or ruinous
-
FERRO ALLOYS CORPN. v. A.P.S.E.B. [MOHAN, J.] 275

conditions can be carried out. The finances for these A
/
objects are provided from a fund from the impugned
cess and contributions by the State and the Corpora-
tion.

The contention that some of the buildings falling in
B
categories B and C would not need structural repairs
throughout the life of the Act or that such repairs
would carried out in buildings not cared for by de-
faulting landlords, takes no notice of the fact that the
primary object of the Act is not to repair all buildings
subject to cess but to prevent the annually recurrent C
mischief of house collapes and the human tragedy and
deprivations they cause. The cess being thus levied to
prevent such disasters, there is no question of unequal
treatment between one class of owners and another.
The classification of buildings into three categories is
D
based, as already stated, on their age and the construc-
__,
tion current during the periods of their erection. It
is, therefore, based on an intelligible differentia and is
closely related to the objects of the legislation. There
is, therefore no question of unequals being treated as
equals, as each building of the Board and has to be E
structurally repaired if the need were to arise."

-- In B. Banerjee v. Anita Pan, [1975] 2 SCR 774 at 787-88 it was
observed:
F
..Moreover, what is the evil corrected by the Amend-
ment Act? The influx of a transferee class of evictors
of tenants and. institution of litigation to eject and
rack-rent or re-build to make larger profits. Appar-
ently, the inflow of such suits must have been swelling
slowly over the years and when the stream became a G
flood the Legislature rushed with an amending bill.
Had it made the law merely prospective these who had
-- in numbers, already gone to Court and induced legis-
- lative intention would have escaped the inhibition.
This would defeat the object and so the application of
276 SUPREME COURT REPORTS [1993) 3 S.C.R.

A the additional than to pending actions could not be
called unreasonable. To omit to do so would have
been unreasonable . folly. The question is whether
those cases which were filed several years ago should
have been carved out of the category of transferees hit
by the act? Where do you draw the line? When did the
B evil assume proportions? These are best left to legis-
lative wisdom and not court's commensense although
there may be grievances for some innocent transfer-
ees.

c If this be the paradigm of judicial review of constitu-
tionality, we have to ignore exceptional cases which
suffer misfortune unwittingly. The law is made for the
bulk of the community to produce social justice and
isolated instances of unintended injury are inevitable
martyre for the conunon good since God Himself has
D
failed to make perfect laws and perfect justice, Freaks
have to be accepted by the victims rightly or wrongly
as froensic fate!"

In Fatellclzand Himmatlal v. State ofMaharashtra, [1977] 2 SCR
E 828 at 851 it was observed:

"May be, some stray money-lenders may be good
souls and to stigmatize the lovely and unlovely is
simplistic betise. But the legislature cannot easily
F make meticulous exceptions and has to proceed on
broad categorisations, not singular individualisations .
. So viewed pragmatics overrule punctilious and un-
conscionable money-lenders fall into a defined group.
Nor have the creditors placed material before the
Court to contradict the presumption which must be
G made in favour of the legislative judgment. After all,
the law-makers representatives of the people, are
expected .to know the socio-economic conditions and
c~,stomers. Since nice distinctions to suit every kindly
creditor is beyond the law-rn1lking process, we have to
H uphold the grouping as reasonable andJhe restrictions
as justified in the circumstances of the case. In this
FERRO ALLOYS CORP'.'. v. A.P~S.E.B. [MOHAl\'.. J.) 277

branch, there are no finalities." A

The attack on additional consumer deposit is that no reasons have
been adduced for additional demand. It stands to reason that ifthere is
a revision in the rate of tariff there must be an upward revision in the
consumption security deposit since it has direct bearing to the level of
B
supply in consumption of electricity. For example.in the State of Uttar
Pradesh, the tariffs were adjusted upwards in October 1986. The
revision in the form of an additiona'l security deposit with interest at the
rate of 3 per cent was 1'nade in January 1987. These facts indicate the
rationale in the demand of additional security deposit. As stated above,
this being a condition of supply, no reason need be given at the time of c
upward revision. Therefore. we reject the argument of Mr. Govind
Mukhoty, learned cou~sel in this regard.

In view of the above finding, upholding the clause relating to non-
payment of interest. for example, Rajasthan and Orissa, what is to D
happen to such of those cases where interest is provided like Andhra
Pradesh. Utter Pradesh and Bihar? In all those cases wherever the
electricity boards have framed a provision for payment of interest after
adjusting its finances at a stated rate they cannot be allowed to delete
such a clause. The provision for interest has been made by the various
Boards having regard to the overall budgetary and financial position. E
Further, keeping in view the quantum and made of security deposit and
billing and recovery practice. Nor again, could the Board withold
payment.of interest on the basis of this judgment. Ho\vever, if there is
any change in the circumstances affecting the budgetary and finacial
position, the Board can examine the case and decide the future course F
of action. But any change resulting in non-payment or reduction of
interest will have to be justified by cogent reasons and materials having
a bearing on the financial position of each Board and facts and
circumstances of each case.

We also add that notwithstanding .lagdamba 's case (supra) as on G
today, Haryana Electriciry Board has dispensed with payment of
interest. We make it clear by this judgment that we are not deciding the
validity of such provision since the matter is stated to be pending.

,.._
Inconclusion, we hold: H
278 SUPREME COURT REPORTS (199~!3 S.CR.
"
·f- .

A ( l) Section, 49 of the Supply Act is valid.

(2) The nature of consumption deposit is to secure prompt
payment and is intended for appropriation.

(3) There is no liability oo the Electricity Board either under the
8
statute or conunon law or equity to pay interest.

(4) Conditions and the terms of supply providing fornon-paymcnt
of interest is not so unconscionable as to shock the conscience of the
Court.
c
(5) No reason need he given for. enhancement of ,additional
security deposit. .. -
Accordingly we uphold the judgment of Andhra Pradesh High
D Court and reverse the judgment of Rajasthan High Court.
T

In the result, the following cased filed against Andhra Pradesh
Electricity Board are dismissed:

E S.L.P. (C) Nos. 13004/89, 14995/89, 14629/89, 14899/89, 15739/
89, 15817/89, 7475/90, 6374/90, 9661-65/90, 5461/90, 6371/90. 5294/
90, 6779/90, 5492/90, 5921/90, 5559/90, 4793-94/90. 4791°-91/90,
6375/90. 6570/90, 12270/90, 9926/90, 11548/90, 2600/90, 6372.-
73/90, 6035-44/90, 6505/90, 6374/90, 6094/90, 6765-68/90. 6462/90,
5306-08/90, 9132/90, 12424/90, 6370/90, C.A. No. 1779/90, S.L.P.
F (C) Nos. 17465/91, 17679/91, 17865-66/91, 20125/91. 19532/91,
18043/91, 19586-93/91, 19597-600, 20076/91, 21/92, 649/92,
2564/92, 5782-83/92, 8336/92. 9124-25/92, 9488/92, 12318/92, 12506/
92, 12610/92, 12805/92, 12804/92, 12814/92, 14439/92, 14449/92,
14555/92, l 739-43&43A/92, 13593/92, C.A. No. 2409/92, W.P. (c)
G Nos. 603/92, 455/92, 3558/83, 566/92, 1353/89. 48/92, 362/92, 1293/
89, 6770/90. ,.

The TransferPetition(c) No. 366/92 filed by the Andhra Pradesh

H
Electricity Board is allowed.
--
FERRO ALLOYS CORP!\.'" A.P.S.E.B. IMOllAN. J.) 279

The following cases fill!d by Rajasthan State Electricity Rnard are A
allowed:

C.A. Nos. 4714/91 & 4928-43/<Jl, SLP (c) Nos. 446/92."703/92,
12941/90. 433-36192. 439-42/92, C.A. Nos. 5342/92. I 187-88/IJ2.
4512192. 4510192. 4511 /1)2, 2800/92. 1204/92, 406-436/~2, S.L. P. (c) B
No. 20192. 46/92, 47 /92, 50/IJ2, 53/92, 44'>-452/92, 494/92. 516/92, 48/
92. 41)/<)2. 51/92.52192. 54/92, 55192, 43-45/CJ2, 56-72/92, 428-432/92,
4-B-4441'>2.453-457192, 503-08/92. 512-14/92, 530-33/92, 14450/92.

The following cases filed by the Bihar Electricity Board are C
allowed:

- SLP(c) Nos. 11799/89. 1856/90, 8318/92. 16028/92.

The following cases against Uttar Pradesh Electricity Board are
D
dismissed.

W.P. (c) Nos. 513/87, 804/87, 1144/87. 743/87. 531/87, 729X7.
739/87, 526/91, 576/87, 577/87, 801/87, 833/87. 769/87. 676/87, 578/
87. 728/87, 762/87. 818/87, 526/87, 744/87. 742/87. 540/87, 1238/87,
E
738/87. 684/87. S.L.P. (c) Nos. 2952-56/1987, 15885/91. & 12902/9 l.

The W.P. (c) No. 1317/90 filed against Punjab Electricity Board

--
is dismissed.

All the I.A.s are allowed. F

However, there shall he no order as to costs.

T.N.A. . Petitions disposed of.
G