M/S OSWAL AGRO MILLS LTD.versusPUNJAB STATE ELECTRICITY BOARD AND OTHERS.

                          [2013] 1 S.C.R. 526


A             MIS OSWAL AGRO MILLS LTD.
                              v
     PUNJAB STATE ELECTRICITY BOARD AND OTHERS.
            (Civil Appeal Nos. 662-663 of 2013)
                          JANUARY 23, 2013
B
                    [A.K. PATNAIK AND
            SUDHANSU JYOTI MUKHOPADHAYA, JJ.]

          Electricity Act, 1910:
c
        ss. 30 and 58 read with PSEB Circular No. CC23/90 and
  Clause 8-b of Tariff Schedule - Levy of load surcharge at
  additional rate - Held: Was only meant for a load which was
  unauthorized or not sanctioned and if a particular load of a
D consumer is sanctioned or authorized, load surcharge at
  additional rate could not be levied under Clause 8-b of the
  Schedule of Tariff - In the instant case, the load of the TG
  Set detected was a sanctioned load and was not an
  unauthorized load - Therefore, appellant could not be held
E liable for load surcharge under Clause 8-b, even if by the aid
  of bus coupler, inter-transferability of load could be effected
  between the TG Set of appellant and the energy supplied by
  respondent-Board - Demand raised against appellant
  quashed - Punjab State Electricity Board Circular No. CC 231
    90.
F
       The appellant-owner of a sugar mill, installed a TG set
  of 3187.500 KW capacity and applied for its approval to
  respondent no. 1 State Electricity Board. The Chief
  Engineer, Commercial of respondent no. 1-Board, by
G memo dated 8.12.1992, granted permission to the
  appellant for installation of two TG sets subject to some
  conditions. The instant appeals arose out of the demand
  notices issued to the appellant by the Sub-Divisional
  Officer of respondent no. 1 stating that as the TG Set and
H                                  526
    OSWAL AGRO MILLS LTD. v. PUNJAB STATE             527
             ELECTRICITY BOARD
stand by load had not been sanctioned by respondent          A
no. 1, the appellant was liable for excess unauthorized
TG set load of 3187.500 KW and standby load of 2226.330
KW at the additional rate of Rs.1000/- per KW.

    Allowing the appeals, the Court
                                                             B
     HELD: 1.1. It is apparent from the demand notice
dated 01.06.1993 that the unauthorized load comprised
the TG Set load 3187.500 KW and the standby load of
2226.330 KW. So far as the standby load of 2226.330 KW
is concerned, the demand for unauthorized load has           C
been set aside by the Single Judge by the order dated
01.04.2009 in CWP No.7299of1993 and the order has not
been challenged by respondents· either before the
Division Bench of the High Court or before this Court. In
fact, the appellant has been issued a fresh demand notice    D
dated 12.06.2009 pursuant to the order dated 01.04.2009
of the Single Judge in CWP No.7299 of 1993 restricting
the demand of Rs.26,77,797/- for the unauthorized load
on account of the TG Set. [para 10] [537-B-E]
                                                             E
     1.2. From the demand notice dated 01.06.1993, it is
evident that'the reason for the demand for unauthorized
load for the TG Set was non-compliance by the sugar mill
of Circular No.CC23/90 issued by respondent No.1-
Board. However, pursuant to the said Circular, the
appellant applied for and was permitted regularization of    F
load of two TG Sets by memo dated 08.12.1992 subject
to certain conditions.. Thus, on 09.12.1992 when the
Flying Squad of respondent no.1 visited the sugar mill of
the appellant, it had already been permitted installation
of TG sets. It is pertinent to note that neither the first   G
demand notice dated 10.12.1992 nor does the second
demand notice dated 01.06.1993 state that the demand for
unauthorized load for the TG Set was being made
because the appellant has not fulfilled the conditions
mentioned in the memo dated 08.12.1992. In fact, in the      H
    528    SUPREME COURT REPORTS               [2013} 1 S.C.R.


A two demand notices dated 10.12.1992 and 01.06.1993 no
  reference at all has been made to the memo dated
  08.12.1992. [para 11 and 14] [537-F; 538-B-C; 540-G; 541-
  A; 543-G-H; 544-A]

       1.3. It is evident from the demand notice dated
8
  01.06.1993 that for the unauthorized load, a demand has
  been made at the rate of Rs.1,000/- per KW in accordance
  with Clause 8-b of the Schedule of Tariff applicable to the
  sugar mill of the appellant as notified in the Commercial
  Circular No.12/89. It will be clear from Clause 8-b of the
C Schedule of Tariff that if the connected load of a consumer
  exceeds the sanctioned connected load, the excess load
  shall be unauthorized load chargeable at additional rate
  of Rs.1000/- per KW for each subsequent default. As on
  08.12.1992, the Chief Engineer, Commercial, has
D sanctioned or permitted -or regularized the installation of
  two TG Sets, the load of 3187.500 KW of the TG Set
  detected on' 19.12.1992 was a sanctioned load and was
  not an unauthorized load. Therefore, the appellant could
  not be held liable for load surcharge under clause 8-b of
E the Schedule of Tariff for the load of the TG Set, even if
  by the aid of bus coupler, inter-transferability of load
  could be effected between the TG Set of the appellant and
  the energy supplied by respondent no.1-Board. [para 12-
  13) [541-C-D, G-H; 542-A-D]
F
       1.4. What the Single Judge and Division Bench of the
  High Court failed to appreciate is that the appellant was
  separately liable for energy charges and demand charges
  to respondent no.1 for consumption of energy and
  demand of energy respectively under the Schedule of
G Tariff; and the levy of load surcharge at the additional rate
  of Rs.1000/- per KW was only meant for a load of the
  consumer which was unauthori zed or not sanctioned
  and if a particular load of a consum1~r is sanctioned or
  authorized, load surcharge at additional rate of Rs.1000/
H
    OSWAL AGRO MILLS LTD. v. PUNJAB STATE                      529
             ELECTRICITY BOARD

- per KW could not be levied under Clause 8-b of the                  A
Schedule of Tariff. [para 13] [542-E-H]

    1.5. The impugned orders of the Single Judge and
the Division Bench of the High Court are set aside and
the demand raised against the appellant in the demand                 8
notice dated 01.06.1993 and the demand notice dated
12.06.2009 for unauthorized load of the TG Set is
quashed. [para 15] [544-A-B]

    CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
662-663 of 2013.                                                      C

     From the Judgment & Order dated 1.05.2009 of the High
Court of Punjab & Haryana at Chandigarh in Letters Patent
Appeal No. 304 of 2009 and Judgment & Order dated
31.7.2009 in Review Application No. 6 of2009 & C.W.P.No.              D
7299 of 1993.

     Rohit Sharma, Abhijat P. Medh for the Appellant.

    Dr. Prabhat Kumar, Ajay Amritraj, Prerna Kumari,
Dharmendra Kumar Sinha for the Respondent.                            E

     The Judgment of the Court was delivered by

     A.K. PATNAIK, J. 1. Leave granted.

      2. The facts very briefly are that the appellant owns a sugar   F
mill situated at Phagwara, and the respondent no.1-Board is
supplying electricity to the sugar mill. In 1989, the appellant
installed a TG Set of 3187.500 KW capacity to meet some of
its electricity demand and applied for approval of its T.G Set to
the respondent no.1. By memo dated 08.12.1992, the Chief              G
Engineer, Commercial of the respondent no.1 granted
permission to the appellant for installation of 2 No. TG Sets
subject to some conditions. On 09.12.1992, however, the
Flying Squad, Jalandhar of the respondent no.1 visited the sugar
                                                                      H
    530     SUPREME COURT REPORTS                  [2013] 1 S.C.R.


A mill of the appellant and checked the electricity connection at
  the sugar mill. Pursuant to the report submitted by the Flying
  Squad, the Sub-Divisional Officer (Suburban), Phagwara of the
  respondent no.1 issued a demand notice dated 10.12.1992 to
  the appellant stating inter a/ia that the TG Set and stand-by load
B had not been sanctioned by the respondent no.1 and the
  appellant was liable for an excess unsanctioned load of
  4904.127 KW for load surcharge at the rate of Rs.1,000/- per
  KW, which worked out to Rs.49,04, 127/-.

          3. The appellant made a representation to the Sub-
C   Divisional Officer (Suburban), Phagwara, and to the Chief
    Engineer, Commercial of respondent no.1 against the demand
    of load surcharge of Rs.49,04, 127/-. When there was no
    response from the aforesaid two authorities of the respondent
    no.1, the appellant filed a Writ Petition CWP No.370 of 1993
D   before the High Court of Punjab and Haryana at Chandigarh
    challenging the demand of load surcharge of Rs.49,04, 127/-.
    The Division Bench of the High Court held in its order dated
    30.03.1993 that the respondent no.1 could charge for the
    excess load which was to be the sum of the rated capacities
E   of all the energy consuming apparatus in the consumer's
    installation, but from the order impugned by the High Court or
    from the documents filed by the respondent no.1 before the
    High Court along with its written reply, there is nothing to show
    that the TG Set having the capacity of 3187.5 KW was an
F   energy consuming apparatus. The Division Bench further held
    in its order dated 30.03.1993 that for the purpose of charging
    for the excess load, the load of the stand-by machinery was to
    be excluded and. therefore, the load to the extent of 2226.330
    KW of the stand-by apparatus in the order impugned before
G   the High Court could not be included. For the aforesaid
    reasons, the Division Bench quashed the demand of load
    surcharge of Rs.49,04,127/- leaving it to the respondent no.1
    to pass afresh aopropriate order. if so advised, with liberty to
    the appellant to challenge the same, if required.
H
    OSWAL AGRO MILLS LTD. v. PUNJAB STATE                     531
      ELECTRICITY BOARD [A.K. PATNAIK, J.]

      4. Thereafter, by a fresh demand notice dated 01.06.1993,       A
the Sub-Divisional Officer (Distribution), Suburban Sub-
Division, Phagwara,- raised the very same demand of
Rs.49,04,127/- for the unauthorized TG Set load of 3187.500
KW and stand-by load of 2226.330 KW totalling to 6520.155
KW at the rate of Rs.1,000/- per KW. The appellant filed a            B
second Writ Petition CWP No.7299 of 1993 challenging the
aforesaid demand. The learned Single Judge, who heard and
disposed of the writ petition, held in his order dated 01.04.2009
that the finding of the Division Bench of the High Court in earlier
Writ Petition CWP No.370 of 1993 that the stand-by load of            c
2226.330 KW could not be included in tlie demand for excess
load was binding on the respondent no.1 and hence the demand
of excess load on account of the stand-by load could not be
raised again by the respondent no.1. Regarding the connected
load of the TG Set, the learned Single Judge of the High Court        D
referred to the earlier order dated 21.08.2008 of the learned
Single Judge in which it was recorded that the learned counsel
for the appellant had very fairly stated that he would accept the
decision of the Dispute Settlement Committee of the
respondent no.1 and as the Dispute Settlement Committee had
decided the matter against the appellant, the addition on             E
account of the load connected on the TG Set could not be
faulted with. Aggrieved, the appellant filed Letters Patent
Appeal No.304 of 2009 before the Divis!on Bench of the High
Court, but by the impugned order dated 01.05.2009 the Division
Bench dismissed the appeal after holding that there was no            F
infirmity in the findings returned by the learned Single Judge
on the basis of the statement made by the counsel for the
appellant and the report submitted by the Dispute Settlement
Committee. The appellant filed a Review Application RA No.6
of 2009 before the Division Bench, but by the impugned order          G
dated 31.07.2009 the Division Bench dismissed the Review
Application. Aggrieved, the appellant has filed this appeal by
way of special leave under Article 136 of the Constitution
challenging the orders of the Division Bench of the High Court
                                                                      H
    532      SUPREME COURT REPORTS                  [2013] 1 S.C.R.


A   in the Letters Patent Appeal and the Review Application.

         5. Learned counsel for the appellant submitted that the only
    ground on which the learned Single Judge in CWP No.7299
    of 1993 declined to quash the demand for the excess
    connected load of the TG Set was that the learned counsel for
8
    the appellant had agreed before the learned Single Judge on
    21.08.2008 that he would accept the decision of the Dispute
    Settlement Committee of the respondent no.1 on this aspect
    of the matter. He submitted that a reading of the order dated
    21.08.2008 of the learned Single Judge would show that the
C   learned counsel for the appellant had only agreed to accept the
    decision of the Dispute Settlement Committee of the
    respondent no.1 on the question whether with the aid of a
    device called a bus coupler, inter-transferability of load could
    be effected between the TG Set of the appellant and the energy
D   supplied by the respondent no.1. He submitted that the learned
    counsel for the appellant, therefore, had not agreed before the
    learned Single Judge on 21.08.2008 to accept the decision of
    the Dispute Settlement Committee of the respondent no.1 with
    regard to the legality of the demand for the excess load on
E   account of the TG Set. He further submitted that it will be clear
    from the memo dated 08.12.1992 issued by the Chief Engineer,
    Commercial, that the respondent no.1 had permitted installation
    of the two TG Sets subject to certain conditions and, therefore,
    the load of the TG Set had been permitted/sanctioned by the
F   competent authority of the respondent no.1-Board and the
    appellant could not be charged any load surcharge at the
    additional rate of Rs.1,000/- per KW for 3187.500 KW
    connected load of the TG Set under the Commercial Circular
    No.12 of 1989.
G
         6. Learned counsel appearing for the respondents, on the
    other hand, submitted that the memo dated 08.12.1992 of the
    Chief Engineer, Commercial of the respondent no.1 would show
    that the appellant was permitted installation of 2 No. TG Sets

H
    OSWAL AGRO MILLS LTD. v. PUNJAB STATE                    533
      ELECTRICITY BOARD [A.K. PATNAIK, J.]

subject to certain conditions which were to be complied with         A
by the appellant and if the conditions were to be complied with,
the appellant was liable for prosecution under Section 58 read
with Section 43 of the Indian Electricity Act, 1910 and the
unauthorized TG Sets were to be disconnected after giving 24
hours notice and were not allowed to be run till its sanction is     B
obtained from the competent authority of the respondent no.1.
He submitted that the permission was only given for installation
of TG Set and not for the bus coupler and yet on 09.12.1992
when the Flying Squad of the respondent no.1 entered the sugar
mill of the appellant, they found that the TG Turbo Bus and the      c
supply of the respondent no.1 were electrically connected
through LT Bus Coupler and there was inter-transferability of
load. He submitted that, therefore, the TG Set of the appellant
was found as unauthorized load for which the appellant was
liable for load surcharge at the additional rate of Rs.1,000/- per   D
KW. He submitted that the learned Single Judge and the
Division Bench of the High Court were, therefore, right in
rejecting the challenge of the appellant to the demand of
Rs.26,77,797/- towards load surcharge for the TG Set at the
rate of Rs.1,000/- per KW.
                                                                     E
     7. The first question that we have to decide is whether on
21.08.2008 the learned counsel for the appellant had agreed
before the learned Single Judge to accept the decision of the
Dispute Settlement Committee of the respondent no.1 on the
legality of the demand of the unauthorized load of the TG Set        F
and, therefore, the learned Single Judge and the Division
Bench of the High Court were right in taking a view that the
appellant was not entitled to challenge the demand of load
surcharge for the authorized load in respect of the TG Set. The
order dated 21.08.2008 of the learned Single Judge in CWP            G
No. 7299 of 1993, which records the submission of the learned
counsel of the appellant, is extracted hereinbelow:

     "Present: Mr. Rahul Sharma, Advocate
                                                                     H
    534      SUPREME COURT REPORTS                   [2013] 1 S.C.R.

A                           For the petitioner.
                         Mr. H.S. Riar, Advocate
           with Mr. DPS Kahlon, Advocate for the Respondents.
                        Arguments in part heard.
                The dispute in this petition primarily relates to the
8         question, whether with the aid of a device called a bus
          coupler, inter-transferability of load could be effected
          between the captive generation apparatus of the petitioner
          and the energy supplied by the respondent-board. This is
          a disputed question of fact.
c
                At this stage learned counsel for the petitioner has
          very fairly stated that he would accept the decision of the
          Dispute Settlement Committee of the respondent-board on
          this aspect of the matter. Let the Dispute Settlement
D         Committee of the respondent-board, after hearing both the
          parties, give an opinion on the question whether the bus
          coupler installed by the petitioner would permit inter-
          transferability of the load between the Turbo Generator Set
          of the petitioner and the PSEB. Let representatives of both
          the parties appear before the Dispute Settlement
E
          Committee in this regard on 28.08.2008.

               The matter is adjourned for two weeks i.e. 8.9.2008.
          Copy of this order be given to both the learned counsel
          under the signatures of the Reader of this Court.
F
                                                                Sd/-
                                                        Ajay Tewari
                                                              Judge
                                                   August 21, 2008."
G         8. It will be clear from the aforesaid order dated 21.08.2008
    that the learned Single Judge was of the opinion that the dispute
    between the parties was on the question whether with the aid
    of a device called a bus coupler, inter-transferability of load
    could be effected between the captive generation apparatus
H
    OSWAL AGRO MILLS LTD. v. PUNJAB STATE                      535
      ELECTRICITY BOARD [A.K. PATNAIK, J.]
of the appellant and the energy supplied by the respondent no.1        A
and he was also of the opinion that this dispute was on a
question of fact and accordingly learned counsel for the
appellant had stated very fairly that he would accept the
decision of the Dispute Settlement Committee of the
respondent no.1 on this aspect of the matter. Hence, learned           B
counsel for the appellant had not agreed before the learned
Single Judge of the High Court that he would accept the
decision of the Dispute Settlement Committee of the
respondent no.1 on the legality of the demand for the extra load
on account of the TG Set. In fact, we find from the proceedings        c
of the Dispute Settlement Committee that the Dispute
Settlement Committee has also not decided on the legality of
the demand for the extra load on account of the TG Set, but
has only decided that with the aid of a device called a bus
coupler, inter-transferability of load could be effected between       D
the captive generation apparatus of the appellant and the
energy supplied by the respondent no.1. In our considered
opinion, therefore, the legality of the demand for the extra load
on account of the TG Set should have been decided by the
learned Single Judge or the Division Bench after taking into           E
account the finding of the Dispute Settlement Committee that
with the aid of a device called a bus coupler, inter-transferability
of load can be effected between the TG Set of the appellant
and the energy supplied by the respondent no.1.

      9. The next question that we have to decide is whether the       F
.appellant is liable for the demand of load surcharge for the
 unauthorized load in the notice dated 01.06.1993 issued by the
 Sub-Divisional Officer of the respondent no.1 keeping in view
 the finding of the Dispute Settlement Committee of the
 respondent No.1 that with the aid of bus coupler, inter-              G
 transferability of load can be effected between the captive
 generation apparatus of the appellant and the energy supplied
 by the respondent no.1 board. The justification of the demand
 made by the respondent no.1 is given in the demand notice
 dated 01.06.1993 of the Sub-Divisional Officer of the                 H
    536       SUPREME COURT REPORTS                  [2013] 1 S.C.R.


A   respondent no.1 in which demand for load surcharge has been
    raised. Relevant extract from the demand notice dated
    01.06.1993 containing the justification of the demand is
    extracted hereinbelow:

          "1. Total load running on PSEB System as checked by
B
          enforcement staff on 9.12.92: 1106.325 KW.

          2. As agreed by your representative Sh. Ramesh Chand
          who was present at the time of spot checking, the TG Set
          load which also includes the running stand bye load which
c         was taken on the basis of details of load given to the
          Board as per AJA form along with test reports submitted
          earlier and not on the basis of R.C. Set Capacity:
          3187.500 KW

D         Stand by Load on T.G. Set: 2226.330 KW

          Total: 6520.155 KW

          In addition to above, as per checking of enforcement staff
          on 9.2.92 and your representative Sh. Ramesh Chander
E         Sharma present at the time of checking the total load was
          accepted so this load is unauthorized. It is also made clear
          that under PSEB Circular No.12/89 General Condition 14
          and as per 8 .. of Tariff Schedule, the standby load until
          sanctioned by the Board is unauthorized. Your attention is
F         invited to your registered letter No.2922 dt. 26.8.89
          addressed to Member Commercial, PSEB, Patiala in
          which you had mentioned that new schedule of tariff for
          Sugar Mills would tend to increase difficulties and also
          admitted that keeping this in view approximately Rs.35/40
G         lacs required to be deposited for running the 4434 KW on
          T.G. Set, expenses of which are not bearable. Keeping this
          in view the Board has issued Special instruction to the
          sugar mills vide Circular No.CC23/90 along with some
          condition, the compliance of which is not fulfilled by you.
H
   OSWAL AGRO MILLS LTD. v. PUNJAB STATE                     537
     ELECTRICITY BOARD [A.K. PATNAIK, J.]
    As a result of this a load of 4904.127 KW was declared           A
    unauthorized after checking by the XEN Enforcement on
    9.12.92. Keeping in view the unauthorized load you are
    requested to deposit Rs.49,04,127/- as per Board Circular
    No. CC 12/89 clause No.2 C 23/90@ Rs.1000/- per KW.
    Since it is your 2nd default you have already deposited          B
    Rs.33,347/- on 23.5.91 towards first default."

     10. It is apparent from what has been extracted from the
demand notice dated 01.06.1993 of the Sub-Divisional Officer
of the respondent no.1 that the unauthorized load comprised          C
the TG Set load 3187.500 KW and the standby load of
2226.330 KW. So far as the standby load of 2226.330 KW is
concerned, the demand for unauthorized load has been set
aside by the learned Single Judge by the order dated
01.04.2009 in CWP No. 7299 of 1993 and the order dated
01.04.2009 has not been challenged by the respondents either         D
before the Division Bench of the High Court or before this Court.
In fact, we find that the Sub-Divisional Officer of the respondent
no.1 has issued a fresh demand notice dated 1.2.06.2009 to
the appellant pursuant to the order dated 01.04.2009 of the
learned Single Judge in CWP No.7299 of 1993 restricting the          E
demand of Rs.26,77,797/- for the unauthorized load on account
of the TG Set. Hence, we are to examine whether the reasons
given in the demand notice dated 01.06.1993 of the Sub-
Divisional Officer of the respondent no.1 for the unauthorized
load of the TG Set are legal.                                        F

       11. From the aforesaid extract of the demand notice dated
01.06.1993 of the Sub-Divisional Officer of the respondent no.1,
we find that the reason for the demand for unauthorized load
for the TG Set is that respondent No.1- Board has issued             G
special instruction to sugar mills vide Circular No.CC23/90
along with some conditions, compliance of which have not been
fulfilled by the appellant and as a result the load on account of
TG Set was declared unauthorized after checking by XEN
Enforcement on 09.12.1992. We have examined the Circular             H
    538         SUPREME COURT REPORTS                  [2013] 1 S.C.R.


A  No.CC 23/90 and we find that by the said Circular issued by
  the Chief Engineer, Commercial of the respondent No.1, all
  concerned were informed that respondent no.1 has decided to
  regularize the load of the sugar mills fed from TG Sets after
  recovering ACD worked out according to the capacity of TG
B Sets. In para 3 of the Circular, the working details for
  regularizing load of sugar mills from the supply of respondent
  no.1-Board and TG Sets have been given and at the end of
  the Circular it is mentioned that necessary action for regularizing
  total load of the sugar mills may be taken accordingly. Pursuant
c to the said Circular, the appellant applied for regularization of
  load of two TG Sets and by memo dated 08.12.1992 issued
  by the Chief Engineer, Commercial of the respondent no.1, the
  appellant was permitted to install two TG Sets subject to certain
  conditions. The memo dated 08.12.1992 issued by the Chief
D Engineer, Commercial of the respondent no.1 is extracted
  hereinbelow:

                  "PUNJAB STATE ELECTRICTY BOARD

          From
E                The Chief Engineer I Commercial,
                 Tariff & Billing Directorate, PSEB,
                 The Mall, Patiala 147001
          To,
F                M/s Oswal Agro Mills Ltd.
                 Sugar Divn. G.T. Road,
                 Phagwara (Pb.)
                 Memo No.64192/Com/54/lndl./Jall.
                 Dated 8.1~.92
G          Sub: Permission for installation of 2 no. TG Sets of 3730
                KVA & 500 KVA capacity.

        Reference your letter regarding permission for installation
        of 2 No. TG Sets.
H
OSWAL AGRO MILLS LTD. v. PUNJAB STATE                     539
  ELECTRICITY BOARD [A.K. PATNAIK, J.]
You are hereby permitted to install 2 No. TG sets of 3750         A
KVA Capacity of make Jyoti Vadodars, 420 Volts of 1500
RPM KVA Tg Set of Crompton make 400 volts & 375
RPM, subject to the following conditions:-

 i. All relevant provisions of the I.E. Rules, 1956 shall be      B
 complied with by you and test report of the installation shall
 be furnished.

 ii. That the Generating set will be operated whenever called
 upon to do so by the Pb. State Elecy. Board for meeting
 your demand or for giving suitable relief to the Board's         C
 system by meeting the demand of the other consumers
 also, depending upon the prevailing situation.

 iii. Full proof arrangements to be approved by SE/DS
 concerned shall be provided to avoid mixing of Board's           D
 supply with that to be generated by the generating sets. It
 shall be ensured that the nature of the PSEB supply is
 isolated ruing change over to TG sets supply.

  iv. That after obtaining receipts of this permission you will
  give notice not less than 7 (seven) days to the concerned       E
· District Magistrate in terms of Section 30 of the Indian
  Elecy. Act, 1910 intimating the nature and purpose of
  supply.

 v. That the separate notice of not less than 7 (days) shall      F
 also be given to Chief Electrical Inspector to Govt. Punjab
 as laid down in Section 30 of the Indian Electricity Act,
 1910. Notice shall also be accompanied by the following
 documents:-

  a.     Particulars of the Electrical installation and plan      G
         thereof.

   b.    A copy of the notice sent to the District Magistrate.

  c.     An attested copy of the consent received from the        H
     540        SUPREME COURT REPORTS                 [2013] 1 S.C.R.


A                 Punjab State Electy. Board.

           d.    Original Challan of the prescribed inspection fee
                 under the following Head of Account;

                 -043 - Taxes and Duties on Electricity fee under the
B                Indian Electricity Rules."

           e.    Test report from Licensed Wiring Contractor in
                 token of his having carried out the job and tested
                 the installation for safety.
c          f.    A single line key diagram indicating the
                 arrangement of connecting the generator
                 installation to the existing electrical installation.

         vi. That suitable energy meter shall be installed to comply
D        with the requirement of Rule-6 of Punjab Electricity Duty
         Rules 1958. The meter shall be got tested from the nearest
         PSEB laboratory.

        vii. That in case you fail to comply with the above provision
E       you shall make yourself liable for prosecution under
        Section 58 read with Section 43 of Indian Electricity Act,
        1910. The unauthorized T.G. Sets shall be disconnected
        after giving 24 hours notice and shall not be allowed to run
        till its sanction is obtained from the competent authority.
        In case you do not disconnect the TG Sets or apply for
F
        regularization of TG Sets your connection shall be
        disconnected after giving 24 hours notice in writing for
        contravening the provisions of the said Act and Clause 19
        of the PSEB, abridged conditions of supply. Supply in such
        cases shall not be restored unless you disconnect the TG
G       Sets and furnish test report for sanction electric installation
        or comply with the above provisions."

         Thus, on 09.12.1992 when the Flying Squad, Jalandhar,
    of respondent no.1 visited the sugar mill of the appellant, the
H
    OSWAL AGRO MILLS LTD. v. PUNJAB STATE                      541
      ELECTRICITY BOARD [A.K. PATNAIK, J.]
Chief Engineer, Commercial of respondent no.1 had already               A
permitted installation of TG Sets in the sugar mill of the
appellant. If the appellant had refused to comply with the
conditions mentioned in the Circular No.CC 23/90 for
regularization of the load of the sugar mill fed from the TG Sets,
the Chief Engineer, Commercial, would not have granted such             B
permission in the memo dated 08.12.1992. Alternatively, even
if the appellant had refused to comply with some conditions in
the Circular No.CC 23/90, the Chief Engineer, Commercial did
not consider such refusal to disentitle the appellant for
regularization of the installation of the TG Set and permitted the      c
installation of the TG Sets by the memo dated 08.12.1992.

     12. We further find from the aforesaid extract from the
demand notice dated 01.06.1993 that for the unauthorized load,
a demand has been made at the rate of Rs.1,000/- per KW in
accordance with Clause 8-b of the Schedule of Tariff applicable         D
to the sugar mill of the appellant as notified in the Commercial
Circular No.12/89. Clause 8-b of the Schedule of Tariff as
notified in the Commercial Circular no.12/89 is extracted
herein below:
                                                                        E
     "SCHEDULE OF TARIFF:

     i. Schedule L.S. - Large Industrial Power Supply 1 to 7.

     8 ................. .
                                                                        F
     '8-b. If the connected load of a consumer exceeds the
     sanctioned connected load, the excess load shall be
     unauthorized load. Such excess of the connected load shall
     be charged load surcharge at an additional rate of
     Rs.1000/- per KW for each subsequent default."                     G

      It will be clear from Clause 8-b of the Schedule of Tariff that
if the connected load of a consumer exceeds the sanctioned
connected load, the excess load shall be unauthorized load and
such excess connected load shall be charged at additional rate
of Rs.1000/- per KW for each subsequent default. If, therefore,         H
     542      SUPREME COURT REPORTS                 [2013] 1 S.C.R.


 A   any load is sanctioned by the appropriate authority of
     respondent no.1-Board, such load cannot be held to be
     unauthorized load or excess load liable to surcharge at the rate
     of Rs.1000/- per KW. As we have already found, on
     08.12.1992, the Chief Engineer, Commercial, has sanctioned
s    or permitted or regularized the installation of two TG Sets and
     hence the load of 3187.500 KW of the TG Set detected on
     19.12.1992 was a sanctioned load and was not an
     unauthorized load for which the appellant can be charged load
     surcharge at the rate of Rs.1000/- per KW under Clause 8-b
c    of the Schedule of Tariff.

          13. Once we hold that the load of the TG Sets was
   sanctioned and authorized, the appellant could not be held liable
   for load surcharge under clause 8-b of the Schedule of Tariff
   for the load of the TG Set, even if by the aid of bus coupler,
D inter-transferability of load could be effected between the TG
   Set of the appellant and the energy supplied by the respondent
   no.1-Board. For the consumption of energy from the supply of
   the respondent no.1, the appellant was liable for every unit of
   energy consumed to the respondent no.1. For demand of
E energy, the appellant being a sugar mill was also liable for
  demand charges with minimum contract demand of not less
  than the capacity of the distribution transformer(s) installed by
  the appellant and not 60% of the connected load as stated in
  the Commercial Circular Nos.12/89 and 23/90. What the
F learned Single Judge and Division Bench of the High Court
  failed to appreciate is that the appellant was separately liable
  for energy charges and demand charges to the respondent no.1
  for consumption of energy and demand of energy respectively
  under the Schedule of Tariff and the levy of load surcharge at
G the additional rate of Rs.1000/- per KW was only meant for a
  load of the consumer which was unauthorized or not sanctioned
  and if a particular load of a consumer is sanctioned or
  authorized, load surcharge at additional rate of Rs.1000/- per
  KW could not be levied under Clause 8-b of the Schedule of
H Tariff.
   OSWAL AGRO MILLS LTD. v. PUNJAB STATE                   543
     ELECTRICITY BOARD [A.K. PATNAIK, J.]
       14. Learned counsel for the respondents vehemently A
submitted that the permission to install the TG Sets granted by
the memo dated 08.12.1992 by the Chief Engineer,
Commercial of the respondent no.1 was subject to various
conditions mentioned in the memo dated 08.12.1992 and these
conditions have not been fulfilled by the appellant. Learned B
counsel for the respondents is right that since the permission
to install the TG Sets was granted by the memo dated
08.12.1992 subject to various conditions, the load of the TG
Sets installed could not be said to be sanctioned or authorized
if the conditions in the memo dated 08.12.1992 were not . c
fulfilled. It was, therefore, open to the respondents to treat the
load of the TG Set as unauthorized on the ground that the
conditions in the memo dated 08.12.1992 permitting the
installation of the TG Sets were not fulfilled. But neither in the
first demand notice dated 10.12.1992 nor in the second
                                                                   0
demand notice dated 01.06.1993 of the Sub-Divisional Officer
of the respondent no.1 raising the demand for unauthorized
load for the TG Set, there is any mention that the demand for
 unauthorized load was being raised because the appellant had
not fulfilled the conditions mentioned in the memo dated E
08.12.1992 of the Chief Engineer, Commercial of the
 respondent no.1. In the demand notice dated 10.12.1992 of the
Sub-Divisional Officer of the respondent no.1, the only reason
given for raising the demand for unauthorized load was that the
TG Set load "has not yet been sanctioned by the Board". After
the High Court quashed the first demand notice dated F
 10.12.1992 in CWP No.370 of 1993, leaving it to the
respondent no.1 to pass afresh an appropriate order, the Sub-
 Divisional Officer issued the second demand notice dated
01.06.1993, but in this lengthy second demand notice also it
has not been stated that the demand for unauthorized load for G
the TG Set was being made because the appellant has not
fulfilled the conditions mentioned in the memo dated
08.12.1992 of the Chief Engineer, Commercial of the
 respondent no.1. In fact, in the two demand notices dated
 10.12.1992 and 01.06.1993 no reference at all has been made H
    544     SUPREME COURT REPORTS                [2013] 1 S.C.R.


A to the memo dated 08.12.1992 of the Chief Engineer,
  Commercial of the respondent no.1.

       15. In the result, these appeals are allowed. The impugned
  orders of the learned Single Judge and the Division Bench of
  the High Court are set aside and the demand raised against
8
  the appellant in the demand notice dated 01.06.1993 and the
  demand notice dated 12.06.2009 for unauthorized load of the
  TG Set is quashed. The parties shall bear their own costs.

   R.P.                                        Appeals allowed.