Supreme Court of India

M/S. BHILAI REROLLERS ETC. ETC.versusMADHYA PRADESH ELECTRICITY BOARD AND ORS.

Citation: 2003 INSC 408
Decided: 19 August 2003
Disposal: Dismissed
Bench: S RAJENDRA BABU

Holding

Section 26(7) of the Indian Electricity Act, 1910 authorises the installation of additional meters such as the MDI meter, and its readings constitute a valid basis for levying excess‑load charges.

Summary

The appellants, steel re‑rolling mills, had a low‑tension electricity supply contract for a 150 HP load. The Board installed a Maximum Demand Indicator (MDI) meter to record the highest 30‑minute demand and, based on its readings, raised additional charges for excess load at double the normal tariff. The appellants challenged the legality of installing the MDI meter and the use of its readings to levy extra demand, arguing that the contract and the statutes did not permit such a meter for low‑tension consumers and that the readings were unreliable. The Board contended that Section 26(7) of the Indian Electricity Act, 1910 authorises additional meters, that the MDI meter is a recognised, technically sound device, and that the tariff and general conditions expressly allow supplementary charges for excess load. The Supreme Court held that the statutory provision does indeed permit installation of additional meters, that the MDI meter is a reliable method for determining excess demand, and that the Board’s demand was therefore lawful. Consequently, the appeals were dismissed.

Issues considered

The installation of an MDI (Maximum Demand Indicator) meter on a low‑tension connection is authorized under the Indian Electricity Act, 1910 and the supply agreement.
Whether readings of the MDI meter can be used to levy additional charges for load drawn beyond the contracted load.
Whether the Board may impose supplementary charges at twice the normal tariff for excess load under the applicable tariff notifications and general conditions.
Whether the concept of ‘thrust load’ limits the Board’s right to charge based on MDI meter readings.
Whether the tariff alternatives for low‑tension consumers permit billing based on maximum demand.

Legislation cited

Electricity Act, 1910s. 26(7)
Electricity (Supply) Act, 1948s. 49

Subjects

electricityMDI metermaximum demandlow tension supplyexcess loadtariffIndian Electricity Actsupply agreementsupplementary charges

Judgment

MIS. BHILAI REROLLERS ETC. ETC. A
v.
MADHYA PRADESH ELECTRICITY BOARD AND ORS.

AUGUST 19, 2003

[S. RAJENDRA BABU AND DORAISWAMY RAJU, JJ.] B

Electricity Laws:

Electricity (Supply) Act, i 948-Section 49-Electricity Act, 1910-
Section 26(7)-Agreement between steel re-rolling mill and Electricity C
Board-For contracted load supply of low tension energy-Installation of
meters to measure and record consumption in terms of agreement-MDI
meter installed to measure maximum demand of electric energy in a cycle of
half an hour of running the machinery in factory-Meter recording
consumption of energy availed in excess of contracted load-Additional D
demand raised-Challenged by way of Writ Petition-Dismissal by Single
Judge as also Division Bench of High Court-On appeal, held: In terms of
the statute, Board entitled to install additional meter and checking
apparatus-Installation of MDI meter reasonably safe method with due
credibility and recognition in the field-Action of the Board in raising
additional demand on basis of the reading justified E
Appellants are engaged in re-rolling of iron steel. They entered into an
agreement with the Electricity Board for contracted load supply of low tens=on
energy. In terms of the relevant provisions of the statute and the agreement
meter was installed to measure and record the consumption. MDI meter was
installed to measure maximum demand of electric energy in a cycle of half F
an hour of running the machinery in the factory. By a notification the tariff
relating to supply of low tension energy was enhanced. Thereafter, on the basis
of the MDI meter recording for consumption of energy availed in excess of
the contracted load, additional demand was raised for excess load capacity of
the energy drawn. Appellants filed writ petition for quashing the bills raised G
for an additional demand. Single Judge of High Court dismissed the petitions.
Division Bench also dismissed the appeals. Hence the present appeals.

Appellants contended that there is no provision either in the statute or
in the agreement executed between the parties for installation of MDI meter
787 H
788 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.

A on the low tension connection in the premises; that the MDI meter could not
be installed for the purpose of raising additional bills but may be only for
determination of the power factor in the premises of the LT consumer; that
the calculation of the connected load by the Board ori the basis of the max!mum
demand reading shown in MDI meter is fallacious and the reading so recorded
B does not suggest or indicate and prove a connected load; that the maximum
demand in any 30 minutes cycle may shoot up due to increase of load on the
AC motor or other factors having no real connection with the connected load;
that the Board has to go only by the total capacity of the motors certified by
the officials of the Board themselves for purpose of determining the alleged
excess utilization over and above the actual contracted load capacity; that such
C utilization is to be treated merely as the "thrust load" necessarily required
by the motor/machinery only when the same is put in motion and thereafter
what is actually consumed is said to be only the actual load capacity of the
motor/machinery as permitted under the provisions of the Indian Electricity
Rules, 1956 and the conditions of supply relating to the supply of electric
energy; that the device used by the Board can also result in misuse to the
D prejudice of the consumer; and that there is no justification for the impugned
demand as long as there is no charge or accusation against the mills of any
theft or adoption of any subterfuge method to evade payment of the rate for
actual consumption of electrical energy.

E Respondent-Board contended that an initial inspection disclosed use in
excess of the.contracted load, rendering the appellant liable to pay for units
corresponding to the excess load at twice the normal tariff rate (inclusive of
fuel charges and other charges paid as per tariff) as envisaged in the tariff
notification for the previous 3 months in which the existence of excess load
was detected; that this circumstance necessitated the installation of the MDI
F meter and the same was within the competency and powers of the Board under
the relevant provision of the statute as well as the terms and conditions of the
contract relating to supply of energy; that the recording Jr the excess drawal
of a load capacity at a particular point of time over a continuous duration of
30 minutes through the device of MDI meter is a technically approved method
G of certainty; that if the actual consumption load exceeded the contracted load
capacity without prior permission of the Board, action may be taken either to
discontinue the supply and or if ~my tariff becomes further payable on account
of such excess load consumption, the same has to be paid as supplementary
charges based on such increase and consequently based on the MDI meter
reading which rect>rds actually the maximum load availed of by the consumer
H along with actual energy consumed; that the MDI meter was installed only in
BHILAI REROLLERS v. M.P. ELECTRICITY BOARD 789
the presence of responsible member of the management itself; that reference A
to the thrust load concept is an attempt to confuse the real issue, in as much
as MDI meter does not record the thrust load exper!enced by the motor/
machinery at !he time of starting; ~nd that this method and system was being
uniformly applied without making any discrimination among different
consumers and said to be also a well recognized and widely accepted one and, B
therefore, the demand raised was legal, proper and quite in accordance with
law and cannot be avoided by the appellant

Dismissing the appeals, the Court

HELD: 1.1. The provisions contained in Section 26(7) of the Indian
Electricity Act, 1910 envisage the installation of additional meters and C
checking apparatus, in addition to the meter for ascertaining the amount of
energy supplied and quantity consumed. The utility of MDI meter to record
effectively and correctly the drawal of power at a continuous block period of
30 minutes in a month by a consumer has come as a reasonably safe method
with due credibility and recognition in the field and appears to be in vogue D
even at global level. It can be safely relied upon as the basis for investigating
and determining the excess quantity of load said to have been availed of by a
consumer over and above the contracted load as per the agreement is
concerned. If the reading by such a device installed could provide a sound
basis and yardstick for adjudging liability to pay the maximum demand
charges/minimum monthly charge, it should be considered to be equally E
efficacious for the purpose on hand also in adjudging the issue as to whether
the consumer has at any given point of time, in contravention of the a~reement
with the Board, availed and drawn electricity in excess of the contracted load.
(800-A-Dl

1.2. Electrical motors are designed to run up to a stipulated capacity of F
Horse Power. In the Bhilai Steel Plant (an undertaking of the Steel Authority
of India: a Government of India Enterprise) the motors used in rolling mills
are said to have overload capacity in the range of2 to 2.5 times their rated
capacity and at times even about 3 times, but only for a very short duration
and at any rate such a situation cannot be sustained like that continuously G
for a duration of 30 minutes. Hence it is stated that an MDI meter which
measure the demand in KW and integrating over a period of 30 minutes
should/will register a demand value in KW which is either less than or equal
to the motor rated KW. Therefore, if in these cases, the MDI meter disclosed
such higher rate of demand, it cannot be accepted that there was no overdrawal
in excess of the contracted load, since such excess drawal stand substantiated I-1
790 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.

A by the actual overdrawal in excess from the readings of the MDI meter and
the motor rated KW. The object of the appellant in making reference to lock
rotor test also does not seem to .be relevant since the said test could, it appears,
only help to determine the capacity of the motor and not of the total connected
load or the total load demanded and availed of during the course of actual
B consumption ofenergy. (800-E-H; 801-AI

1.3. The agreements entered into with the Board by the consumers like
the appellants make mention in respect of particulars relating to electric
supply, the maximum demand of the consumer in terms of H.P., in addition to
giving the connected load, alongside. The actual consumption of energy during
C the relevant period unit wise also go to indicate that with the normal utiliiation
of the contracted load, it would not have been possible for the mills of the
appellants to consume the number of units actually consumed. Further, the
agreement for supply between parties is inclusive of and also subject to the
provisions of the Indian Electricity Act, 1910, Electricity (Supply) Act, 1948
and notifications, Rules, Regulations framed thereunder as well as the general
D conditions for supply of electrical energy made by the Board and the
amendments made to all such, from time to time. Therefore, the respondent-
Board is entitled to raise the demand under challenge since such right has
been specifically provided for and is part of the conditions for supply and
particularly when such drawal of extra load in excess of the contracted load
E is bound to throw out of gear the entire supply system undermining its
efficiency, efficacy not only causing stress on the installations of the Board
but considerably affect other consumers who will experience voltage
fluctuations. (801-B-D; 802-C, DJ

Orissa State Electricity Board and Anr. v. IPI Steel Ltd and Ors., (1995)
F 4 sec 320, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6508 of2003.

From the Judgment and Order dated 5.10~1999 of the Madhya Pradesh
High Court in L.P.A. No. 311 of 1999.
G WITH
C.A. No. 6509, 6506, 6507, 6510 and 6519 of 2003.
Anoop G. Choudhury, Shanti Bhushan, Hemant Shanna, Ms. lndu Shanna,
Prakash Srivastava and Rakesh K. Sharma for the Appellants.

H V.R. Reddy, M.L. Jaiswal, Satish K. Agnihotri, Ms. Yogmaya Agnihotri
BHILAI REROLLERS v. M.P. ELECTRICITY BOARD [RAJENDRA BABU, J.] 791

and Mrs. Madhur Dadlani for the Respondents. A
The Judgment of the Court was delivered by

RAJENDRA BABU, J. Leave granted.

The above batch of appeals involves identical questions of law for B
consideration on almost similar factual background and ::s such are dealt with
together.

C.A. No.650812003 [Arising out of S.L.P. (C) No.212312000)

The appellant in this appeal has established a steel re-rolling Mill and C
is engaged in re-rolling of iron steel. Being a consumer of electric energy for
the purpose, the appellant entered into an agreement dated 24.12.92 with the
Madhya Pradesh Electricity Board (for short "Board" ) for supply of energy
on a contracted load agreement of 150 H.P. Low Tension A/C 400 volts
• industrial power at the rate of Rs. l.10 per unit in terms of the unit meter
reading subject to the terms and conditions set out therein. It is stated that D
on 18.2.94 the tariff relating to the supply of Law Tension energy has been
enhanced to Rs. 2.2j per unit for all units which consumed with minimum
charges of 60 units per month or part thereof of the contracted load . A meter
to measure and record the consumption was installed at the premises in terms
of the requirement of Section 26 of the Indian Electricity Act, 1910 and the E
terms of the agreement entered into with the Board. The appellant claims that
the bills prepared according to the meter reading in the unit meter located in
the premises in question was being regularly paid without default and that
the working of the meter was also being regularly checked from time to time
by the officials of the Board and that at· no time there was any complaint
regarding the using of any machinery to exceed the contracted load of 150 F
H.P. The grievance of the appellant was with reference to the installation what
is called as maximum demand indicator/meter for short (MDI meter), though
•
there was no provision in the agreement enabling them to do so. The MDI
meter is said to be a device to, measure the maximum demand at a particular
half an hour cycle of running the machinery in the factory, meaning thereby G
it measures the maximum demand of electric energy in a cycle of half an hour
and not either the actual consumption of electricity or the horse power of
motors or any other electrical equipment installed for use. According to the
appellant though electricity actually consumed is recorded in the energy
meter, the MDI meter showed higher amperage. It is further stated that though
H
792 SUPREME COURT REPORTS [2003) SUPP. 2 S.C.R.

A the total contracted load of machinery in the factory of the appellant has been
certified to be 147.5 H.P. and not in excess of the contracted load capacity
of 150 H.P, the Board, according to the appellant, on 12.8.94 arbitrarily worked
out the working load capacity of the machinery as 236 B.H.P. on their own • .,
and on the basis of the MDI meter reading for the months of March 94 to
June 94 and on that basis demanded the payment of an additional sum of Rs.
B 75,825/-. On threat of disconnection of supply the said amount was said to
have been paid to avoid any inconvenience resulting from such disconnection.
When representations in this regard with the authorities did not bring forth
any positive result, the appellant filed W.P. No. 876 of 1995 before the High
Court of Madhya Pradesh at Jabalpur, seeking to quash the bill~ raised for
C an additional demand of the nature noticed above and also prayed for
restraining the Board from raising such bills future on the basis of the MDI
meter installed in the premises.

The Board opposed the claim contending not only that the installation
of such a meter was permissible and the course of action taken by them on
D the basis of the result of the MDI meter reading raising further demand in
respect of utilization of the excess load over and above the contracted load
capacity were legal and proper and that the meter readings relating to all these
were said to be either in the presence of a responsible representative of the
appellant and that no exception could be taken either to the correctness of
E the readings recorded or the legality and propriety of the additional demand
raised on account of such consumption of energy in excess of the contracted
load. The learned Single Judge who heard the writ petition along with a batch
of other similar writ petitions rejected the claims of appellant while accepting
the stand taken for the respondent-Board. Aggrieved, LPA No.311 of 1999
was filed before the Division Bench and by an order dated 5.10.99 the Division
F Bench concurred with the decision of the learned Single judge and rejected
the appeal. Not satisfied the appellants have approached this Court.

The sum and substance of the claim on behalf of the appellant is : (a)
that, there is no provision for installation of MDI meter in the low tension
connection in the premises of the appellant either in the statute or in the
G agreement executed between the parties and, therefore, it is unauthorized and
illegal and cannot be used against the appellant; (b) that, merely on the basis
of the working of the MDI meter which has a limited role, even if it be, the
quantum of load capacity availed of for consumption could not either be
safely or accurately determined and that the Board has to go only by the total
H capacity of the motors which was even said to have been certified by the
BHILAI REROLLERS v. M.P. ELECTRICITY BOARD [RAJENDRA BABU, J.] 793
officials of the Board themselves for purpose of determining the alleged A
excess utilization over and above the actual contracted load capacity; (c) that,
such utiliza~ion is to be treated merely as the "thrust load" necessarily
required by the motor/machinery only when the same is put in motion and
thereafter what is actually consumed is said to be only the actual load
capacity of the motor/machinery as permitted under the provisions of the
Indian Electricity Rules, 1956 and the conditions of supply relating to the B
supply of electrical energy; (d) that, the MDI meter could not be installed for
the purpose of raising additional bills but may be on!y for determination of
power factor in the premises of the LT consumer and that in the actual
working of the said meter, as in this case, it was said to have exceeded and
even went as high as 236 H.P. and consequently the same is said to be ex- C
facie, unrealistic and even impossible to be believed and cannot, therefore be
a creditworthy process for being contenanced, to raise any additional demand
on the basis of such materials alone against the appellant.

Per contra, the respondent-Board contended that, the appellant had
entered into agreement for supply of electricity for re-rolling of iron or steel D
on a connection load agreement of 150 H.P. Low Tension A/C 400 volts; that,
an initial inspection disclosed use in excess of the contracted load, rendering
the appellant liable to pay for units corresponding to the excess load at twice
the·normal tariff rate (inclusive of fuel charges and other charges paid as per
tariff) as envisaged in the tariff notification dated 18.12.94 for the previous 3 E
months in which the existence of excess load was detected; that, this
circumstance necessitated the installation of the MDI meter and the same was
within the competency and powers of the Board under the relevant provision
of the statute as well as the very and conditions of the contract relating to
supply of energy; that, the recording of the drawal of a load capacity at a
particular point of time over continuous duration of 30 minutes through the F
device of MDI meter is a technically approved method of certainty; that,
having regard to Clause 31 (f) of general conditions for supply which is part
and parcel of the low tension agreement entered into between the parties, as
well as Clause 15 (a) and (b) of the same the installation of the MDI meter
is justified; that, if the actual consumption load exceeded the contracted load G
capacity without prior permission of the Board, action may be taken either to
discontinue the supply and or if any tariff becomes further payable on account
of such excess load consumption, the same has to be paid as supplementary
charges based on such increase and consequently based on the MDI meter
reading which records actually the maximum load availed of by the consumer
along with actual energy r:onsumed, the Board is entitled to re-rate the H

- - ----
794 SUPREME COURT REPORTS [2003) SUPP. 2 S.C.R.

A charges to be paid and such re-rating is binding on the consumer; that, the
· MDI meter was installed only in the presence of responsible member of the
management itself; that, as regards the claim on behalf of the appellant based
on the "thrust load" concept Board contends that the MDI meter records only
' the excess capacity drawn over a continuous period of 30 minutes duration
B at any time during a month; that, reference to the thrust load concept is
nothing but an attempt to confuse the real issue, in as much as MDI meter
does not record the thrust load experienced by the motor/machinery at the
time of starting which hardly is set to take only a few seconds or higher load/
maximum load experienced by the motor/machinery for a fraction of time; that,
this method and system was being uniformly applied without making any
C discrimination among different consumers and said to be also a well recognised
and widely accepted one and, therefore, the demand raised was legal proper
and quite in accordance with. law cannot be avoided by the appellant.

The grounds raised in the petition and the contentions raised in the
counter filed in this Court seems to have evoked further response in the form
· D of rejoinder by the appellant and additional counter b§ the Board. By these
pleadings the appellant dispute the accuracy of the re&:irding by the device
of MDI meter in its actual working of what is stated as drive needle in the
MDI meter to which the Board replied stating that the MDI meter had 2
needles, one called the pointer needle which shows the load utilized in
E kilowatts and this pointer is always said to be moved .by carrier needle or
drive needle and after completion of 30 minutes cycle of continuous drawal
the carrier needle alone resets automatically to "O" position leaving the
pointer needle to remain and its position as per the load recorded and new
cycles per 30 minutes gets repeated by themselves from time to time recording
any further fluctuations on the higher side. This method is claimed by the
F Board to be an appropriate and technically precise and proved one besides
. being worldwide approved method of such measurement. It is also urged for
the Board in traversing in the claim of the appellant to the contra, that the
appellant was billed only as per single part tariff (Alternative - I of L. T. tariff
F) on the basis of kilowatt recorded by the MDI meter and that as in the case
of low tension consumer (440 volt supply) MDI meter was being also utilized·
G in HT connections (11000 volt or 33000 volt supply) in which also, it is stated
that there is similar provision for single part and two part tariff and consequently
. it is claimed that the MDI meter can be utilized in single part opted tariff as
well as two opted .tariff. _, .

H C. A. No. 6S09 12003 , [Arising out of S.L.P. (C) No.230012000}
· BHILAI REROLLERS •· M.P. ELECTRICITY BOAR!J lRAIENDRA BABU, J.] 795
This appellant has a steel rolling mill in Raipur District and for purposes A
of the mill he obtained L. T. electrical power supply by entering into an
agreement with the Madhya Pradesh Electricity Board with power load of less
than 100 H.P. The agreed payment for consumption of energy was said to be
at Rs.1.90 per unit upto I 00 H.P. and rest at Rs. 2.25 per unit. As in the other
case, MDI meter has been installed in the mill premises in question and on
the basis of the said meter recording for the· consumption of energy availed B
in excess of the contracted load, addition demand wa5 said to have been
raised, in addition to "the regular consumption charges based on the ordinary
meter fixed for recording unit of consumption of electrical energy. As in the
other case, this appellant also approached the Madhya Pradesh High Court
at Jabalpur with W.P. No. 2996 of 1994, which came to be heard and disposed · C
by a common order in a batch of cases, resulting in the dismissal of the writ ·
petition. Thereupon the appellant filed LPA No.239 of 1999 and the Division
Bench also confirmed the order of the Single Judge by rejecting the appeal.
Hence, this appeal.

, The contentions of the parties on either side are almost similar to the D
one noticed in the earlier appeal and therefore, it is!unnecessary to advent.
to the same in great detail. · ·

C.A. NO. 650612003 [Arising out of S.L.P. (C) No. 279412000

This appellant also claims to have established a manufacturing unit in E
the name and style ofM/s. Kishan Steel, Rolling Mill at the Industrial Estate,
Urla, Raipur Distt and for purposes of his manufacturing activities availed
supply of L.T. Electrical energy by entering into an agreement with the
Madhya Pradesh Electricity Board with the sanctioned contract load of 100
H.P. Aggrieved against the action taken by raising a demand for the excess F
drawal/consumption of energy. than the contract/sanctioned load, on the
basis of the reading recorded by the MDI meter at the premises, this appellant
also filed W.P. No.3043of1994, which also came to be dismissed on 20.7.99.
Not satisfied, he filed LPA No.236 of 1996 ·which also did not meet with
success, resulting in the filing of this appeal, raising identical issues and
contentions, as in the other appeals. One further, grievance of this appellant G
is that though he sought for enhanced sanctioned load upto 150 H.P., the
same is not being considered favourably. The admitted position in this case
seems to' be that the inspecting authorities have found on different dates viz.
12.2.93 (excess connected load of 148 H.P), on 28.8.93 a_'! excess connected
load of 188 H.P.
H
796 SUPREME COURT REPORTS [2003) SUPP. 2 S.C.R.

A C.A. NO. 650712003 [Arising out of S.L.P. (C) No. 307912000}

This appellant claims to have established M/s Shree Krishna Steels at
Jawahar Nagar, Raipur (M.P.) and availed supply ofL.T. electrical energy by
entering into an agreement with the Madhya Pradesh Electricity Board for a ·'
contracted load capacity of l 00 H.P .. On the basis of the recording of excess
B load capacity availed of by the appellant as per the MDI meter reading, the
appellant has, also been called upon to pay for the excess load consumption
>
over and above the contracted load. This appellant also unsuccessfully filed ·+-
W.P. No. 3002 of 1994 seeking for relief as in the other cases and when the
said petition came to be dismissed filed also LPA No.241of1999 unsuccessfully.
c In this appeal identical contentions as have been raised in the other appeals
are raised before this Court.

C.A. No. 6510/2003 {Arising out of S.L.P.. (C) No. 3ll3 of 2000]

This appellant also, has availed of supply of L.T. electrical energy for
the steel mill in question by entering into an agreement with the Madhya
D
Pradesh Electricity Board for the contracted load capacity of98 H.P. and when
an action was taken on the basis of the recording of excess drawal of load
of electrical energy than the actual permitted load capacity by the MDI meter
)>
installed in the premises in question report to the High Court seems to have
been made by filing W.P. No.326of1995. When the same came to be dismissed
E along with the other group of writ petition, the appellant filed unsuccessfully
LPA No.240 of 1999, and thereafter filed this appeal, raising contentions
identical and similar to those raised in the other appeals.

CA.No. 651912003 [Arising out of S.L.P. (C) No. 3JJ5 of 2000]

F This appellant steel mills also availed of supply of L.T. electrical energy
by entering into in agreement with the Madhya Pradesh Electricity Board for
the contracted load supply of 150 H.P. When as iQ the other cases, on the
basis of the recording by the MDI meter installed in the premises demand was ....
raised for the excess load capacity of energy drawn, far in excess of the
contracted load, this appellant also unsuccessfully filed W.P. No. 3372of1999
G and when the further appeal filed before the Division Bench in LPA No.239
of 1999 came to be dismissed, this appeal came to be filed raising almost ~,

identical and similar grounds a:> have been raised in the other appeals.

Shri Shanti Bhushan, learned senior counsel, while adverting to the
definition of connected load/installed capacity to mean only the sum of the
H
BHILAI REROLLERS v. M.P. ELECTRICITY BOARD [RAJENDRA BABU, J.] 797
rated capacity of all the energy consuming devices and apparatus installed A
at the consumers promised connected to the installation including portable
apparatus and of maximum demand, to mean, unless otherwise defined by the
Board, twice the largest number of the kilowatt hours or kilo volt ampere
hours supplied to the consumer during any consecutive 30 minutes during
the relevant period contended that calculation of the connected load by the B
Board ·on the basis of the maximum demand reading shown in MDI meter is
fallacious and the reading so recorded does not suggest or indicate and prove
a connected load. Incidentally, it was also urged that the maximum demand
in any 30 minutes cycle may shoot up due to increase of load on the AC
Motor or several other factors having no real connection with the connected
load. It is the further contention on behalf of the appellant that under C
Alternative- I of Tariff F (single point tariff) there is no provision for billing
on the basis of maximum demand reading recorded by MDI meter and that
such a thing was permissible only under alternative II of Tariff F, and if at all
the choice left with the Board is to provide with the mills in question, by-
vector meter with MDI indicator and meter their billing compulsory under
Alternative II of Tariff F. Argued the leaned senior counsel further that the D
device used by the Board can also result in misuse to the prejudice of the
consumer and there is no justification for the impugned demand as long as
there is no charge or accusation against the mills of any theft or adoption of
any subterfuge method to evade payment of the rate for actual consumption
of electrical energy. Shri Anup Choudhary, learned senior counsel appearing E
on behalf of the appellant-mills, strongly supported the submissions of Mr.
Shanti Bhushan contending in addition that maximum demand can be made
only in respect of H.T. supply and not for L.T. supply and that such move
is not permitted at all under agreement. In substance, it is claimed that what
is done by the Board is in gross violation of the provision contained in the
statutory agreement entered into between parties. It was also urged that there F

.. is a special proc~dure envisaged by the Board under its orders for determining
the rating/capacity of AC Motors installed in the premises and that alone
should have been done in these cases instead of relying upon the readings
of the MDI meter. So far as this aspect is concerned it needs to be clarified
even at this stage that the said circular relates to a particular category of G
problem or to meet an eventuality where in the name plate details of the big
AC Motors are not available or capacity/rating of the motor mentioned in
doubtful and not to deal with a situation arising in these cases.

Per contra, Shri V.R. Reddy, learned senior counsel for the respondent-
Board took pains to deal with and explain everyone of the submissions made H
798 SUPREME COURT REPORTS [2003) SUPP. 2 S.C.R.

A above to justify the action of the Board in making the additional demand
based on the MDI meter reading disclosing the drawal of excess load energy
than the permitted/contracted load, causing thereby loss to the Board on
several counts. It is strenuously contended on behalf of the Board-the
excess drawal of load and consequent excess demand was said to inevitably
result in great stress on the whole system adversely affecting the maintenance
B works and scheme of supply as programmed, throwing over board and
disrupting several factors essential for maintaining the supply system, to
ensure smooth supply to various customers availing simultaneously of the
supply of energy under the system and it is for such reasons only the
agreement itself envisaged levy and collection of penal rate if the load capacity
C availed of was found to be in excess of the contracted load capacity. Reliance
has also been placed in this regard on the observations of this Court in the
decision reported in Orissa State Electricity Board and Anr. v. /Pl Steel Ltd
and Ors., [1995) 4 SCC 320. Reference has also been made to the notification
dated 18.2.94 issued by the Board in exercise of its powers under Section 49
of the Electricity (supply) Act, 1948 and all other enabling powers, revising
D the Low Tension Tariffs, in super session of the existing tariff and condition
No.2 application to Alternatives I, II & III of Tariffs, which enabled the Board
in case the connected load in the consumers premises at any time was found
.to exceed what has been agreed to be under. the contract to levy penal rates
corresponding to the excess load at twice the normal rate (including of fuel
E charges, if any and other charges payable as per tariff). While disputing the
credibility and correctness of the expert opinion sought to be used in support
.of the stand of the appellants, it was contended for the Board, that the
formula. adopted by the Board and method of determining the excess load
availed of over and above the contract load was the proper and correct
method, and in support thereof reliance was placed on opinion of another
F expert as well as from standard text book on the subject. In traversing the
,.
claim based upon what is called 'thrust load' the plea on behalf of the Board
was that such thrust load factor has no impact on MDI meter, since the same
was said to be so designed that sudden and/or momentary increase in the
utilization of load due to short circuit in system or due to high startin3 current
G does not count at all and that not only over load but duration for which that
.load was operating was also said to be equally sensed by MDI meter and that
too precisely. Reiterating the stand that the appellant were billed only for the
same tariff as contracted under the agreement, it was contended that the
demands raised are unassilable and in accordance with law.

H We have carefully considered the submissions on ,behalf
., of parties on
BHILAI REROLLERS v. M.P. ELECTRICITY BOARD [RAJENDRA BABU, J.] 799
either side. This Court, in the decision reported in Orissa State Electricity A
~

Board case (supra) though in dealing with the rights of the Electricity Board
for enforcing payment-a, maximum demand charges and minimum monthly
charges noticed about the utility of the MDI meter also called "trivector
meter" and observed as ~ereunder at para I 0:

"Every such consumer is provided with two meters. One is called the B
"trivector meter" and the other is the nonnal meter which records the
total quantity of energy consumed over a given period-which is ·
ordinarily a month. The meter which records the total consumption
requires no explanation or elaboration since we are all aware of it. It
is the other meter which requires some explanation. Now every large- C
scale consumer knows the amount of energy required by him and
requests for it from the Board. If the Board agrees to supply that or
any other particular amount of energy, it makes necessary arrangement
therefore by laying the lines to the extent necessary and installing
other requisite equipment. It is obvious that if a factory uses energy
at a particular level/load and for a particular period, it consumes a D
particular quantity of energy. The trivector meter records the highest
level/load at which the energy is drawn over any thirty-minute period
in a month while the other meter records the total consumption of
energy in units in the month. Let us take the case of the respondent
to illustrate the point. The maximum demand in his case is up to but
not exceeding 7778 KVA. That is his requirement. In the nonnal times, E
he is entitled to draw energy at the level/load. That is his maximum
demand under the agreement. But he may not always do so. Say, in
a given month, he draws energy at 6000 KVA level only, even then
he has to pay the minimum charges as stipulated in the agreement. But
if he draws and consumes energy exceeding eighty per cent of the F
energy, he pays demand and energy charges for what he utilises. Now,
let us notice how the trivector meter, i.e., the meter which records the
maximum demand works; the meter is so designed that it only records ·
the maximum load/level at which energy is drawn over any thirty-
minute period in a month. It only goes forward but never goes back
until it is put back manually. To be more precise, suppose the G
respondent has drawn energy at 7770 KV A for a thirty-minute period
on the first day of the month, the meter will record that figure and will
stay there even if the respondent consumes at 7000 or lesser KV A
during the rest of the month. From this circumstance, however, one
cannot jump to the conclusion that it is an arbitrary way of levying H
-,

800 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.

A consumption charges."

The provisions contained in sub-Section (7) of Section 26 of the Indian
Electricity Act, 1910 envisage installation of additional meter and checking
apparatus, in addition to the meter for ascertaining the amount of energy
supplied and quantity consumed. By and large it seems to be that the utility
B of MDI meter to record effectively and correctly the drawal of power at a
continuous block period of 30 minutes in a month by a consumer has come
stay as a reasonably safe method with due credibility and recognition in the
field and appears to be in vogue even at global level. The question as to
whether it can also safely be relied upon as the basis for investigation and
C detennining the excess quantity of load said to have_ been availed of by a
consumer over and above the contracted load as per the agreement is
concerned, in our view admits of no doubt and we could find no reasonable
or tenable and valid objection to exist so far as its relevance, utility and
purpose of determination as well. If the reading by such a device installed
could provide a sound basis and yardstick as accepted by this Court in the
D decision noticed supra for adjudging liability to pay -the maximum demand
charges/minimum monthly charge, it should in our view be considered to be
equally efficacious for the purpose on head also in adjudging the issue as
to whether the consumer has at any given point of time, in contravention of
the agreement with the Board, availed and drawn, electricity in excess of the
E contracted load.

Electrical motors are designed to run lip to a stipulated capacity of
Horse Power. At the same time as disclosed from the communication from
Bhilai Steel Plant (an undertaking of the Steel Authority oflndia: a Government
of India Enterprise) brought on record, so far as the motors used in rolling
F mills are concerned they are said to have overload capacity in the range of
2 to 2.5 times their rate~ capacity and at times even about 3 times, but only
for a very short duration and at any rate such a situation cannot be sustained
like that continuously for a duration of 30 minutes. Hence, it is stated that
an MDI meter which measure the demand in KW and integrating over a period
of 30 minutes should/will register a demand value in KW which either less
G than or equal to the motor rated KW. Therefore, if in these cases, the MDI
meter disclosed s~ch higher rate of demand, it would be futile for the appellants
to contend that there was no overdrawal in excess of the contracted load,
since such excess drawal stand substantiated by the actual overdrawal in
excess from the readings of the MDI meter and the motor rated KW as claimed
H by the appellants are not either genuine or correct. The object of the appellant
BHILA! REROLLERS v. M.P. ELECTRICITY BOARD [RAJENDRA BABU, J.) 801

in making reference to lock rotor test also does not seem to be relevant since A
the said test could, it appears, only help to determine the capacity of the
motor and not of the total connected load or the total load demanded and
availed of during the course of actual consumption of energy.

The agreements entered into with the Board by the consumers like the
appellants make mention in respect of particuiars relating to electric supply, B
the maximum demand of the consumer in terms of H.P., in addition to giving
the connected load, alongside. The actual consumption of energy during the
relevant period unit wise also go to indicate that with the normal utilization
of the contracted load, it would not have been possible for the mills of the
appellants concerned to consume the number of units actually consumed and C
this circumstance also seems to strongly support the stand of the respondent-
Board. The agreement for supply between parties is inclusive of and also
subject to the provisions of the Indian Electricity Act, 1910, Electricity (supply)
Act. 1948 and notifications, Rules, Regulations framed thereunder as well as
the general conditions for supply of electrical energy made by the Board and
the amendments made to all such, from time to time. Clause 3 l(f) of the D
General Conditions reads under the caption "Prejudicial use of supply" as
follows:

"If at any time, the maximum demand of an HT consumer or of an LT
consumer availing supply under IT two part tariff, exceeds his contract
demand or if the connected load of LT consumers other than those E
mentioned above exceeds the connected load mentioned in his
agreement or where agreement has not been taken the connected load
mentioned in the requisition from, without prior permission of the
Board, the Board may forthwith discontinue the supply. Further, if any
charges under the tariff applicable become payable on account of F
such increase the consumer shall be liable to pay supplementary
charges based on such increase for such period as the Divisional
Engineer of the Board may decide."

The Low Tension Tariffs, notified by the Board with effect from March
1994, stipulate in condition No.2, as hereunder; G
"The foregoing tariffs (except tariff A- I and Alternative of tariffs D,
E, F & G) are applicable to the extent of connected load for which the
agreement subsists between the Board and the consumer. In case the
connected load in the consumer's premises is at any time, found in
excess of what has been agreed to between the consumer and the H
802 SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.

A Board, the consumer shall have to pay in respect of tariffs other than
Alternative-III of tariff C (ii) for the units (including minimum charge)
corresponding to the excess load at twice the normal tariff rate
(inclusive of Fuel Charge, if any, and other charges payable as per
tariff) and in respect of Alternative-II of Tariff C (ii) at the following
rates: (rest omitted as unnecessary) ..................................................... .
B

The billing of excess supply at twice the normal tariff application
to consumer is without prejudice to the Board's right to discontinue
the supply in accordance with the provisions contained in the Board's
c General Conditions for Supply of Electrical Energy and Scale of
Miscellaneous and General Charges."

The respondent-Board, therefore, is entitled to raise the demand under
challenge since such right has been specifically provided for and is part of
the conditions for supply and particularly when such drawal of extra load in
excess of the contracted load is bound to throw out of gear the entire supply
system undermining its efficiency, efficacy not only causing stress on the
installations of the Board but considerably affect other consumers who will
experience voltage fluctuations. Consequently, we see no merit in the challenge
made on behalf of the appellants. The appeals, therefore, fail and shall stand
dismissed but with no costs.

NJ. Appeals dismissed

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