Holding

Consumers must pay the minimum guaranteed charges irrespective of actual supply, and the High Court may apply prospective overruling in such writ matters.

Summary

The appellants, industrial consumers, had entered into contracts with the Madhya Pradesh Electricity Board requiring them to pay a minimum guaranteed charge equivalent to 40% of the contract demand, irrespective of actual consumption. They challenged the Board's demand for these charges, arguing that the Board had not supplied the stipulated minimum load and that the High Court could not apply prospective overruling under Article 226. The Board contended that the minimum charge was a recovery of its investment and maintenance costs and that prospective overruling was permissible. The Supreme Court held that the contractual and tariff provisions unequivocally imposed a liability on consumers to pay the minimum guaranteed amount even if the Board’s supply fell short, and that the High Court may apply prospective overruling in writ proceedings. The Court also clarified that the Board’s obligation to supply the minimum load is implicit in the contract, and remitted the matters to the High Court to ascertain actual supply for each case. The appeals were disposed of, directing the High Court to restore the original proceedings and determine liability based on the findings.

Issues considered

Whether a consumer is liable to pay minimum guaranteed charges (40% load factor) when the Board’s actual supply is less than the guaranteed amount.
Whether the High Court can apply the doctrine of prospective overruling under its writ jurisdiction under Article 226 of the Constitution.
Interpretation of the contract and tariff clauses relating to minimum guarantee and the Board’s duty to supply.

Legislation cited

Subjects

electricity lawminimum guaranteed chargesload factorprospective overrulingcontract interpretationArticle 226tariffdemand chargespublic utility

Judgment

A MIS RAYMOND LTD. AND ANR. ETC. ETC.
v.
MADHYA PRADESH ELECTRICITY BOARD
AND ORS. ETC. ETC'.

NOVEMBER 16, 2000
B
[B.N. KIRPAL, DORAISWAMY RAJU AND
K.G. BALAKRISHNAN, JJ.]

Electricity Laws:
c
Minimum charges fixed on basis of minimum guaranteed consumption
by Electricity Board-Whether consumer required to pay even if consumption
is less than the minimum guaranteed consumption-Held, yes.

D Whether consumer required to pay if supply by Board is less than
minimum guaranteed consumption-Held, the Board shall be entitled to
charge only for energy actually supplied-Electricity Act, 191011948.

Constitution of India, 1950-Article 226-Principle ofprospective over
ruling-Application-Power of High Court exercising writ jurisdiction-
E Held, High Court can apply the principle if it is found necessary in balancing
the rights of parties and in the interest ofjustice-Articles 136, 141and142.

Appellant-industries entered into an agreement with Board for supply
and purchase of high tension electric energy for use in manufacture of their "(...,
F products. ~s per the agreement, consumer have to pay minimum guaranteed
amount to the Board fixed on the basis of minimum guaranteed consumption
equivalent to 40% load factor of contract demand if the actual consumption
falls below the minimum guaranteed consumption. On the basis, Board raised
bills for a certain period for the minimum guaranteed amount. The consumers
questioned the liability to pay difference amount between the actual ..,. ·
G consumption and the minimum guaranteed consumption, by filing Writ
Petition before the High Court. The Division Bench, not concurring with the
earlier decision of a Division Bench of the same High Court, referred the
cases to Full Bench for proper interpretation. The Full Bench interpreted
with reference to the agreement read with Tariff that whenever contracted
H supply falls short of 40% of the contract load (minimum guaranteed
668
RAYMOND LTD. v. M.P. ELECTRICITY BOARD 669

consumption), then the Board shall be entitled to charge only for the reduced A
energy actually supplied and not entitled to charge the minimum guaranteed
amount and also held that this interpretation shall have a prospective effect
from the date of its order. With the prospective declaration of law, no relief as
prayed for by the consumers was granted and the Writ Petitions were
dismissed by the High Court. In appeal to this Court, the consumers
challenged the prospective declaration of law while the Board challenged the B
view with respect to charge on reduced suppl_y/consumption.

The Board contended that the minimum charges is not subject to either
actual supply by the Board or consumption by the consumer and the. payment
• of such minimum guaranteed amount is in substance a partial return for C
various investments in the various installations and to. meet recurring
expenses for maintenance. The load factor envisaged is said to be a measure
of liability for minimum guarantee and not to cast any obligation on the Board
to effect supply of energy so as to make it a condition precedent for casting
liability on the consumer to pay the minimum guaranteed ·charges. The
consumers, on the other hand, contended that the contract must be construed D
as a whole in the context and object underlying the same and should be
meaningful and useful. The consumers further contended that the quality,
quantity and manner of supply have also to be taken into account in assessing
the usefulness of the energy for industrial purposes and to pay the minimum
guaranteed amount would result in grave injustice besides being inequitable E
an unconscionable. The consumers also questioned the principle of prospective
over ruling contending that such principles cannot be invoked by the High
Court exercising jurisdiction under Article 226 of the Constitution of India.

Disposing of the appeals, the Court
F
HELD: 1.1. The terms and conditions of supply, as envisaged in the
contract and the statutory provisions and general conditions have been
standardised for uniform application among consumers with variations merely
necessitated by the different class or categories of consumers and there is
no scope otherwise for expecting any scope for individual or free bargaining G
right in this regard by each consumer with the Board. Therefore, it is futile
for a consumer to contend that the Board was at the dictating end and the
parties were not equally positioned in setting the terms of the contract. The
further attempt made to contend that the failure on the part of the Board to
effect supply up to the contract demand level relieved the consumers from the
obligation undertaken to pay a minimum guaranteed sum per month, as though H
670 SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R.

A the contract demand is the minimum guaranteed for supply, not only lacks
any basis in law or on the terms of the contract governing the supply but also
directly runs counter to the terms in the contract which makes different
stipulations relating to contract demand and the minimum guarantee in the
form of a portion or percentage of the contract demand only. The question of
B exonerating the consumer from the liability undertaken to pay minimum
guaranteed charges for a month and billing only for the actual consumption
of energy or allowing a consumer to pay the rates on the actual consumption
of electricity measured in units will and can arise and has also been considered
for determination only in case the s~pply by the Board itself falls short of
the minimum of energy, the consumption of which go to make up the minimum
C guaranteed sum. It is well settled and there could be no controversy over the
position that if only the supply was available for consumption but the consumer
did not consume so much of energy up to the extent of the obligation cast
upon him to pay the minimum charge, there is no escape from the payment of
the minimum guaranteed charges, except in .very exceptional cases envisaged
in the contract and that too subject to the stipulations and restrictfons
D contained therein.1685-B'.'"F)

1.2. It is futile for the consumers to contend that they would not be liable
to abide by the minimum guaranteed charges undertaken, unless on every
day of the month/year and during the twenty four hours or round the clock
E the load factor and power supply agreed to be made, at one and the same level
without any shortfall, tripping or low voltage. The provisions of section 56 of
the Contract Act, 1872, sought to be relied upon, have no relevance or
application of the cases on hand. Countenancing. of s"uch claims would not
only defeat the very purpose, object and aim of providing for a minimum ~ "
charges guarantee cl? use but would ultimately result in mutilation of the
F very fabric to tariff structure rendering thereby the schemes of generation
and supply of power at the_ agreed concession rates uneconomical and non-
viable for the Board. This would also result in the re-writing of many of the
clauses in the contract and rendering nugatory the tariff pattern and system
itself, throwing into disarray and disharmony the efficient execution of the 'f
G power supply schemes. 1686-C-El ·

1.3. Since what was agreed to between the parties was to make the supply
available "continuously" during situations as envisaged in the contract, the
word "continuous" has one definite meaning only to convey uniterruptedness
in time sequence or essence and on the other hand the very word would also
H mean ' recurring at repeated intervals so as to be of repeated occurrence.'
RAYMOND LTD. v. M.P. ELECTRICITY BOARD 671
That apart, used as an adjective it draws colour from the context too and in A
the light of the clauses in the agreement and also section 22B of the
Electricity Act, 1948 and orders passed therein which are binding with equal
force upon both the consumer and the Board, the word is incapable of being
construed in such absolute terms. (686-F-Hl

1.4. As a matter of general principle, any stipulation for payment of B
minimum guarantee charges is unexceptionable, in a contract of this nature
wherein, the Board which undertakes generation, transmission and supply
of electrical energy has to, in order to fulfil its obligation, lay down lines and
install the required equipment and gadgets and constantly keep them in a
state of good repair and condition to render it possible for the consumer to C
draw the supply required at any and all times. These commitments are
irrespective of the capacity of Board to generate _at a given point of time or
during a relevant period the total quantum required for the consumption of
all consumers of vario1:1s categories or even during the days of breakdown
envisaged or staggering necessitated on account of orders of Government
regulating the distribution and consumption of energy as well as during D
periods when for reasons personal or ~culiar to the consumers or even beyond
their control the consumption is not and could not be of the mutually agreed
-extent The Board undertakes to generate and supply energy, in public interest
also at concessional rates of varying nature and it cannot be stated that the
rates so fixed invariably are to meet the expenditure· incurred by .the Board E
for generation and supply of energy to the last pie. Consequei,tly, if either in
the general conditions and terms of supply or the contract or the tariff rates
as the case may there be any stipulation, in clear and unmistakable terms
that the liability relating to the payment of guaranteed minimum charge could
or will be enforced irrespective of the actual consumption rate of the consumer
or even de hors the capacity or otherwise of the Board to supply even the F
minimum of the contract demanded energy, there could be no valid· objection
in law for any such stipulation being made and the consumer will be bound to
honour such commitment. The contract for the supply of electrical energy
cannot be treated on par with any other contracts of mutual rights and
obligations, having regards to the peculiar problems involved in the generation, G
transmission and supply which invariably depend upon the vagaries of
monsoon as well short supply to them of required coal and oil in time and
similar other problems over which the Board cannot h_ave any absolute control.
The recurring commitments relating to constant and periodical maintenance
of supply lines and other installations cannot be any the less even during such
times and such onerous liabilities cannot be left to fall exclusively upon the H
672 SUPREME COURT REPORTS [2000) SUPP. 4 S.C.R.

A Board and it is only keeping in view of all these aspects, payment of minimum
guaranteed charges is necessarily in-built in the tariff system of the Board
and the reasonableness or legality of the same cannot be considered either in
the abstract or in isolation of all these aspects. It is for this reason that all
over and the consumer is also made to share the constraints on Board's
B economy even during such periods. In fact the tariff inclusive of such a
provision for payment of a minimum guaranteed sum irrespective of the
supply/consumption factor appears to be the consideration for the
commitments undertaken by the Board as a package deal and it is not possible
or permissible to allow the consumer to wriggle out of such commitments
merely on the ground that the Board is not able to supply at any point of time
C or period required or agreed quantum of supply or even supply up to the level
of the minimum guaranteed rate of charges. Tinkering with portions of
contracts for any such reasons, merely on considerations of equity or
reasonableness pleaded for and vis-a-vis one party alone will amount to
mutilation of the whole scheme underlying the contract and render thereby
the very generation and supply of electrical energy economically unviable for
D the Board. Consumers, who enter into such commitments opei:ily and knowing
. fully well all there hazards involved in the generation, transmission and supply
will be estopped from going behind the solemn commitment and undertaking
on their/its part under the contract. The High Court does not seem to have
properly appreciated the ratio of the several decisions notice except merely
E referring to them in extenso, and yet ultimately just, arrived at a conclusion
merely for the reason that the court considered it to be more equitable, just
and reasonable to do so. (687-G-H; 688-A-H; 689-A-BI

1.5. So far as the cases under consideration and the liability of the
consumers relating to minimum guarantee are concerned, relevant clause
F relating to minimum guarantee charges as well as the tariff notification relied
upon, would go to show that what was guaranteed was not the payment of a flat
sum or amount of money to be calculated with reference to a particular number
or percentage of units, de hors the quantum of electrical energy distributed
and supplied· by the Board. In other words, the guarantee was of " ... such
G minimum consumption as when calculated at the tariff... " will yield a '
particular monthly/annual sum to the Board. Even going by the tariff
notification which prescribes also a minimum entitling the Board to collect
it, it merely casts liability on the consumer to "guarantee a minimum monthly
consumption equivalent to 40% load factor of the contract demand."
Consequently, for the consumer to honour his/its commitment so undertaken
.H to give a minimum consumption there should essentially be corresponding
·'
RAYMOND LTD. v. M.P. ELECTRICITY BOARD 673
supply by the Board at least to that extent, without which the consumption of A
the agreed minimum is rendered impossible by the very lapse of the Board.
The minimum guarantee, thl!s, appears to be not in terms of any fixed or
stipulated amount but in terms of merely the energy to be consumed. The
right, therefore, of the Board to demand the minimum guaranteed charges by
the very terms of the language in the contract as well as the one used in the
tariff notification is made enforceable depending upon a corresponding duty, B
impliedly undertaken to supply electrical enei:gy at least to that extent, and
not otherwise. It is for this and only reason, it is found that the ultimate
conclusion arrived at by the _Full Bench of the· High Court does not call for
any interference in these appeals. 1689-C-GI

' 1.6 On the basis of the existing clauses in the contract as well as the
c
Tariff notification the minimum guarantee assured was of the monthly
consumption equivalent to 40% load factor of the contract demand which
obligated the Board also to ensure supply at least to that extent to insist upon
the payment of the minimum charges, it becomes necessary to undertake an
exercise, to decide in individual cases, the question of actual supply said to D
have been made in order to find out whether the units of energy to the extent
of minimum of 40% of the contract demand has been made available for
consumption. For the purpose, thes.e cases have to be necessarily and are
hereby remitted to the High Court, for being restored to their original number
to find out the actual position about claim/dispute relating to the supply of E
energy equivalent to 40% load factor of the contract demand. Wherever the
High Court finds this fact in favour of the Board, the consumer has to pay the
minimum guaranteed consumption charges as claimed, without any further
;..
challenge to thi said liability~ Both parties shall be at liberty to substantiate
their respective stand in the light of the materials already on record or that
may be produced further before the High Court in the relegated proceedings. F
1690-E-GJ

Orissa State Electricity Board & A nr. v. IP l Steel ltd. & Ors., fl 9951 4
SCC 320; Mis Northern India Iron and Steel Co. v. State of Haryana & Anr.,
(1976) 2 SCC 877; Bihar State Electricity Board & Anr. v. Mis Dhanawat G
Rice & Oil Mills, (1989) l SCC 452; Bihar State Electricity Board, Patna & .
Ors. v. Mis Green Rubber Industries & Ors., f1990J 1 SCC 731; Andhra Steel
Corporation ltd. & Ors. v. Andhra Pradesh State Electricity Board & Ors.,
(1991) 3 SCC 263; The Amalgamated Electricity Company ltd. v. The
Ja/gaon Borough Municipality, 11975) 2 SCC 508; Saila Bala Roy
v.Chairman, Darjeeling Municipality, AIR (1936) Cal 265; M.G. Natesa H
674 SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R.

A v.
Chettiar Mad. SEB, 119691 1 Madras Law Journal 69 and Mis Gwalior
Steels Private Ltd. v. M.P. Electricity Board, AIR (1993) MP 118, referred to.

2.1 The writ jurisdictio.n conferred upon High Court under Article 226
of the Constitution does not carry any restriction in the quality and content
of such powers, this Court could always have recourse to the said doctrine or
B principle or even de hors the necessity to fall back upon the said principle
pass such orders under powers which are inherent in its being the highest
courts in the country which dicf1!tes, declaration and mandate runs throughout
the country and binds all courts a11d every authoritr or P.ersons therein and
havmg regard to Articles 141 ag.d 142 of the Constitution of India. The
C appellate powers under Article 136 of the Constitution itself would also be
sufficient to pass any such orders. This Court has been from time to time
exercising such powers whenever found to be necessary in balancing the rights
of parties and in the interest of justice. 1691-E-GI

2.2. The peculiar facts and cii-cumstances of these cases and the
D · interests of justice necessitate the application of law declared therein only
prospectively. The Electricity Board is a public authority of the State engaged
in the generation and supply of electrical energy at concessional rates to
different class and category of consumers in the State. The construction placed
is likely to have serious and adverse impact upon the finances and the economic
viability of the scheme underlying tariff and minim um guarantee charges
E already determined'. It is impossible for the Board at this point of time to make
up or change the pattern of tariff retrospectively to retrieve itself in this regard
for the past period. The construction and execution of various developmental
schemes and works are likely to suffer thereby a serious setback also. Keeping
in view all these aspects, it is justified in declaring that the law declared in
F these cases shall be for furture application only and not for the earlier period.
(692-A-CI

State of H.P. & Ors. v. Nurpur Private Bus Operators' Union & Ors.,
(1999)9 SCC .559; Go/aknath v. State of Punjab, AIR (1967) SC 1643;
Kesavananda Bharti v. State of Kera/a, AIR (1973) SC 1461; Mis K.S.
G Venkataraman & Co. v. State ofMadras, AIR (1966) SC 1089; Union of India
v. Mohd. Ramzan Khan, (199111 SCC 588; Managing Director ECIL v. B.
Karunakar & Ors., 11993) 4 SCC 727 and India Cement Ltd. v. State a/Tamil
Nadu,-AlR (1990) SC 85, referred to.

CIVIL APPE~LATE JURISDICTION: Civil Appeal Nos. 4218-4219 of
H 1998.
RAYMOND LTD. v. M.P. ELECTRICITY BOARD [RAJU. J.] 675
From the Judgment and order dated 21.4.98 of the Madhya Pradesh A
High Court in W.P. Nos. 3616/95 and 4711of1996.

WITH

Civil Appeal Nos. 4220-4221, 4222, 4223, 4224, 4226, 4227, 4228, 4229,
4230, 4231, 4233, 4239-40, 4243, 4244-4245, 4246, 4250, 4252, 5913 and 5928 of B
1998, 3809 of 1999, 3124 and 4831 of 2000.

G.L. Sanghi, C.S. Vadiyanathan, M.L. Jaiswal, Bhimrao N. Naik, Ravindra
Shrivastava, A.K. Chitale, U.A. Rana, Rajesh Nair, A.K. Sanghi, S.K. Agnihotri,
Ms. Yogmaya, Vivek Gambhir, Bharat Sangal, Anand Pandey, Ms. Asha Pathak,
Prakash Shrivastava, Prem Francis, Niraj Sharma, Ms. Shilpa Chitale and C
S. Ganesh for the appearing parties.

The Judgment of the Court was delivered by

RAJU, J. The above batch of appeals arise out of a common judgment
rendered in a batch of Writ Petitions by a Full Bench of the Madhya Pradesh D
High Court, since reported in AIR 1999 Madhya Pradesh 143 and also the
consequential separate orders passed subsequently by the Division Bench
dismissing the Writ Petitions. The Writ Petitioner -Industries filed appeals
against that portion of the opinion of the Full Bench confining the declaration
of law made for prospective application only and the dismissal of the Writ
Petitions, whereas, the Electricity Board had filed appeals against that portion E
of the opinion of the Full Bench declaring the position of law that whenever
the contracted supply falls short of 40% of the contract load then the Board
shall be entitled to charge only for the reduced energy actually supplied and
not for 40% of the contract load as minimum charges and thereby overruling
an earlier decision of a Division Bench of the said High Court reported in F
Mis. Gwalior Steels Private Ltd. v. M.P. Electricity Board, AIR (1993) M.P.
118. For the purpose of appreciating the points raised, we would advert to
the facts in one of these appeals, particularly those in Mis Raymond Ltd. in
C.A. Nos. 42 ! 8-4219 of 1998.

The appellant M/s Raymond Ltd., a company registered under the G
Companies Act, 1956 and having its cement manufacturing division within the
State of Madhya Pradesh, entered into an agreement with the Madhya Pradesh
Electricity Board on 27.3.1979 renewed periodically for supply and purchase
of high tension electric energy for use in the manufacture of cement. The
minimum contractual demand was for 33 MW (38,822 KV A) per day and clause
19 provided for the Tariff, while clause 21 stipulated the term relating to H
676 SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R.

A minimum guarantee in the following terms:
"21 (a) The consumer shall from the date of utilisation of electrical
energy, or from the date of expiry of the three month's notice mentioned
in clause 2 hereof guarantee such minimum consumption as and when
calculated at the tariff (excluding charges due to fuel adjustment
B clause, meter ·rent and miscellaneous. charges) will yield an annual
revenue of Rs. 5,40,000 (Rupees Five Lakhs Forty Thousand Only) or
pay this sum as a minimum. The deficit, if any, between the guaranteed
minimum charges and the actual charges shall be payable by the
Consumer.

C (b) The minimum guarantee specified in Clause 21(a) above shall at all
times be without prejudice to realisation by the Board of the minimum
prescribed under the tariff referred to in Clause 19 hereof.

(c) It hereby agreed further that the Board shall be entitled to fix and

D
charge enhanced amount of annual revenue if the Board, on completion
of all works for supply to the Consumer, finds it has incurred higher
expenditure than the pre-estimated cost and in that case the Consumer
-
shall pay to the Board the enhanced annual revenue so fixed by the
Board without any objection and will not raise any dispute regarding I·
the same.
E Clause 19 of the agreement reads as follows:

"The Consumer shall pay to the Board every month, charges for the
electrical energy supplied to the Consumer during the preceding month,
at the Board's tariff applicable to the class of service and in force from
time to time. A copy of the current H.T. tariff No.I-A of notification
F No.5/GA/147-A dated 11.03.1976 as amended applicable to the
Consumer is set out in the Schedule attached to this Agreement."

Under the notification issued f~r High Tension for 132 KV/220 KV·
supply, the minimum tariff prescribed for cement factories is said to be as
G hereunder:

"The consumer will guarantee a minimum monthly consumption (KWH)
equivalent to 40% load factor of the contract demand. The consumer
will be required to pay the energy charges on the said minimum
monthly consumption plus the demand charges on the billing demand
H for the month as minimum monthly payment irrespective of whether
RAYMOND LTD. v. M.P. ELECTRICITY BOARD [RAJU, J.] 677
any energy is consumed or not during the month. An average power A
factor of 0.9 will be applied for the calculation of corresponding unit
of 40% load factor on contractual demand."

----, The Senior Account Officer concerned of the Electricity Board issued
a bill dated 18.10.1995 raising a demand of Rs. 2,83, 18,581 for the consumption
period from 15.9.1995 to 15.10.1995. While recording the actual consumption B
in units of the electrical energy and the charges therefor, the ultimate bill and
"demand came to be raised on the basis of the minimum guarantee charges
equivalent to 40% load factor of contract demand. This, according to the
appellant, resulted in a demand of Rs. 87,45,685 in addition to the charges
really due on the actual consumption of energy during the period in question.
Challenging the same, Writ Petition No. 3616 of 1995 came to be filed, claiming C
either for refund or adjustment of the said excess amount against future
demands, the said sum being for electrical energy not really consumed by
them. During the pendency of the said Writ Petition, another bill dated
18.10.96 for the consumption period from 1.12.95 to 15.12.95 was said to have
been issued for Rs. I 0,24,867/-towards minimum guarantee charges equivalent D
to 40% load factor of contract demand. As against this, Writ Petition No. 4711
of 1996 came to be filed challenging the demand and seeking for either refund
- .• of the same or for adjustment thereof against future demands. The Electricity
Board contested the claim of the appellants and others contending that as per
the terms of the agreement entered into governing the supply of electrical
energy, the sum demanded is quite, in accordance with law, justified and E
cannot be avoided by any of the appellants, and the details of their defence
will be adverted to hereinafter, at the appropriate stage.

The batch of Writ Petitions initially came up before a Division Bench
and keeping in view the earlier decision of a Division Bench reported in AIR F
(1993) M.P. 118 (Supra), by an order dated 11.9.97, the matter was placed
before a Full Bench with the following observations:

"After reviewing all these cases on the subject we are impressed with
the arguments that the matter requires consideration by the larger
Bench because notwithstanding the fact that as per the terms of the G
agreement, an obligation has been cast on the consumer 40% load
factor of the contract demand and pay for the same every month. But
there is no corresponding obligation on the Electricity Board to supply
40% load factor of the contract demand. When there is no
corresponding duty on the part of the Electricity Board to supply
minimum 40% of the contract demand load every month still the H
678 SUPREME COURT REPORTS (2000] SUPP. 4 S.C.R.

A consumer is under an obligation to 40% of the contract demand load.
This prima-facie sound in equitable. Therefore, we think it proper that
since this is a larger issue which involve serious interpretation of the
aforesaid tariff clause of the Electricity Board as much, yet the matter
may be referred to a Larger Bench so that the matter can be placed
beyond the pale of any further controversy in the matter. Papers may
,-
B be placed before the Chief Justice for constituting a Larger Bench."

The Full Bench, which heard the matter, by its opinion dated 5.3.98 he.Id
as follows:

"25. After considering all aspects of the matter, we are of the opinion
c that the view taken by the learned Division Bench of this Court in the
case of Mis. Gwalior Steels Private Limited v. M.P. Electricify
Board, AIR (1993) Madh Pra 118, does not lay down a correct law and
we hold with reference to Clause 23(b) of the Agreement read with
Tariff, that whenever contracted supply falls short of 40% of the
D contract load, then the Board shall be entitled to charge for the
reduced energy (actually supplied) and will not be entitled to charge
40% of the contract load. This interpretation which appears to us to
be more equitable, just and reasonable shall be applicable only
prospectively that is from the date of the order and will not have any
retrospective operation. This is being done keeping in view that the
E Division Bench judgment of this Court has held the field since 1993
and the Board has been billing the consumers in the State on that
basis and now since we are taking a different view from that of the
Division Bench of this Court and we are interpreting the provision
contrary to the view taken by the Division Bench in the above case
F of M/s Gwalior Steel Private Limited it would be more just and equitable
to give this interpretation a prospective effect and not retrospective.
Similar course of action was adopted by the Hon. Supreme Court in
the case of L. Chandra Kumar v. Union of India, AIR (l 997) SC 1125.
Therefore, we hold that the present interpretation will be prospective
in nature and not retrospective."
G
Thereupon, the Writ Petitions came to be posted before the Division
Bench, and apparently on account of the prospective declaration of law, no
relief as prayed for in respect of particular demands for the earlier period could
be granted and the Writ Petitions came to be dismissed. Hence, the appeals
H by the Writ Petitioners before the High Court. So far as the Electricity Board
RAYMOND LTD. v. M.P. ELECTRICITY BOARD [RAJU. J.] 679
is concerned, they filed appeals, felt aggrieved by the judgment of the Full A
Bench insofar as it overruled the earlier judgment reported in AIR ( 1993) M.P.
118 (Supra). This Court, while granting leave in the Special Leave Petitions
filed, on 24.8.98 directed the appeals to be placed before a Bench of three
judges in view of the decision of this Court in Orissa State Electricity Board
& Anr. V. !Pl Steel ltd & Ors., reported in [1995] 4 sec 320.
B
Heard the learned counsel appearing on either side. Shri C.S.
Vaidyanathan, learned senior counsel for the Electricity Board, took us at
length through the various clauses in the agreements and contended that the
minimum charges expressly guaranteed in favour of the Board is not subject
to either actual supply by the Board or consumption by the consumer and C
the payment of such minimum guarantee at a rate equivalent to 40% load
factor of the contract demand is in substance a partial return for various
investments in the various installations and to meet recurring expenses for
maintenance and the consumers, having specifically undertaken to do so with
no provision for any reduction or deduction in the contract as such for such
reasons or grounds, cannot go back upon the solemn commitments and D
. undertaking under clause 19. In reinforcing the said stand it is further contended
that whenever the State Government pass orders under Section 22 B imposing
power cuts/reduction/staggering in supply both parties are obliged to carry
out the same and it would be futile for the consumers to read into the word
"consumption", the element of supply too. The load factor envisaged is said E
to be a measure of liability for minimum guarantee and not to cast any
obligation on the Board to effect supply of energy to that extent so as to make
it a condition precedent for casting liability on the consumer to pay the _
minimum guaranteed charges. It is further contended that the minimum
guarantee has been fixed for various industries such as cement, steel etc.
depending upon the different minimum load factors having regard to the F
investments on establishments and recurring maintenance expend.iture and it
is never considered to be part of the tariff but really relate to the realm of
mechanics of price fixation, exclusively within the discretion of the Board and
consequently the High Court could not have interfered with the same.

On behalf of the consumer industries Shri G.L. Sanghi, learned senior
G

• Advocate, made the leading arguments followed by Sarvashri A.K. C111tale,

•
Bhimrao Naik, Ravindra Srivastava, Senior Advocates, and S. Ganesh, U.A .
Rana, A.K. Sanghi and others. Adverting to clauses l(a), 3(a), (b), 8, 11, 12,
18, 19, 21 and 23, it was strenuously contended that the contract must be
construed as a whole in the context of the object underlying the same and H
680 SUPREME COURT REPORTS [2000) SUPP. 4 S.C.R.

A the basic contract being for supply continuously 33 KV electrical energy on
day to day basis, it should really be meaningful and really useful and possible
of consumption for the purposes of the industries concerned. It is further
stated that the quality, the quantity and manner of supply has also to be taken
into account in assessing the usefulness of the energy for industrial purposes
B and if it is shown that the supply actually made did not conform to these vital
aspects of supply then the undertaking to pay the minimum guaranteed
amount should itself have to go and any other construction would result in
grave injustice besides being also inequitable and unconscionable. The further
plea is that the Board during the period in dispute did not supply even the
bare minimum quality of.energy required to run the essential machineries to
C keep the manufacturing process going and continuous and the supply actually ·~

made was of poor quality, not really useful, erratic and non-continuous,
fluctuating and accentuated. with frequent trippings and in effect not .only
dislocating the normal working of the industries but also damaging the
machineries and retarding production and therefore, no exception could be
taken to the manner of construction placed on the clauses in the contract as
D well as the conclusions arrived at in respect of the stat.utory and other
liabilities of the consumers, by the High Court. The learned counsel appearing
also endeavoured to highlight some of the individual factual details pertaining
to their cases and also invited our attention to some of the correspondence
exchanged between parties regarding their grievances about the quality as
E well as the quantity of supply made to them. We may make it clear even at
this stage that we do not propose to undertake an enquiry into or adjudication
of such factual claims in these proce.edings, particularly in the teeth of the
manner of disposal given by the Division Bench after the opinion of the Full
Bench and the desire of the learned counsel themselves to relegate to the
High Court the matters, if need be, for determination of such claims.
F
Though. there was an attempt for the consumers to contend that any
shortfall in the supply of the total quantity of contract demand agreed to be
made would relieve them of all liabilities from payment of the minimum
guaranteed sum undertaken, we are unable to countenance any such claim,
G particularly in view of the very question thac was actually referred to and
decided by the Full Bench of the High Court and which on the face of it
merely pertained to the liability or otherwise of the consumer industries to pay
the minimum guaranteed charges even when the minimum 40% of the contract
demand energy is not supplied during the relevant period by the Board. As
a matter of fact, we find, in the light of the decision in AIR ( 1993) M.P. 118
H (Supra) the correctness of which was taken up for consideration by the Full
RAYMOND LTD. v. M.P. ELECTRICITY BOARD [RAJU, J.] 681

Bench, the question referred to the Full Bench itself is as to whether the A
consumer is required to pay minimum tariff of 40% of the contract load
irrespective of the fact that even 40% of the contract load energy has been
supplied or not to the consumer. Therefore, it is not permissible for the
consumer industries in these appeals to invite a decision as to the liability
or otherwise of the consumers to pay the minimum guaranteed charges
undertaken, notwithstanding the factual position that the supply made was B
actually 40% or even more though not of the extent of total contract demand
agreed to between the parties under the respective contracts. That apart,
countenancing such claims to be agitated in proceedings under Article 226
of the Constitution would amount to the extraordinary jurisdiction being
permitted to be availed to rewrite the contract and read just contractual C
liabilities and thereby undertaking an adjudication of rights of parties flowing
under a contract-a function normally assigned to the ordinary civil courts
of the land.

Apart from making such submissions on the merits of their claim, on the
basis of the very decision of the High Court and drawing sustenance to D
substantiate such claims, the consumer industries also attacked that portion
of the judgment which purported to confine the declaration of law made for
future application only by applying the principle of prospective overruling,
contending that such principles cannot be invoked by the High Courts
exercising jurisdiction under Article 226 of the Constitution of India and that E
the High Court, in any event, committed an error in not affording an opportunity
to them to make their submissions on the applicability or otherwise of the
principle of prospective overruling to the cases on hand.

Claims similar to the one sought to be now asserted, have come up for
consideration before this Court, though in somewhat different background of F
facts and pattern of contracts between consumers and Electricity Boards, and
either of the parties before us tried to lay their hands on some or the other
of the observations made in those cases, to justify their respective stand. In
Mis. Northern India Iron and Steel Co. v. State of Haryana & Anr., [ 1976]
2 sec sn the dispute arose between the parties as to whether in a si~uation G
where there were substantial power cuts and the Board was not able to
supply the energy required by the consumer in terms of the contract entered
into, the Board was entitled to get any "demand charge" and if so, to what
extent and whether the State could demand any duty on such demand charge.
This Court adverted to the existence of two well-known systems of tariff-
one the flat rate system in which a flat rate on units of energy consumed and H

'
682 SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R.

A the other known as the two-part tariff system, meant for big consumers of
electricity comprising of (i) what is known as 'demand charges' to cover.
investment, installation and the standing charges to some extent and. (ii)
energy charges for the actual amount of energy consumed. The Court
ultimately decided the question on the basis of the specific stipulation contained
B in clause 4(t) of the contract therein, which entitled the consumer to a
"proportionate reduction of demand charges/minimum charges", ifthe consumer
was not able to consume any part of the electrical energy due to any
circumstance beyond its control and for that purpose the circumstance of
power cut which disabled the Board to give the full supply to the consumer
because of the Government order made under Section 22B of the Electricity
C Act" 1910, was considered to be a circumstance which disabled the consumer
from consuming electricity as per the contract.

In Bihar State Electricity Board & Anr. v. Mis Dhanawat Rice & Oil
Mills, [ 1989) I SCC 452, this Court while applying the decision in [ 1976) 2 SCC
·877 (supra) construed clause 13 of the contract between parties in that case
D which specifically provided for the proportionate reduction of the annual
minimum guarantee bills, as merely entitling the consumer to a proportionate
reduction only and not completely avoid payment of annual minimum guarantee
bills, even in cases where there was failure on·the part of the Board to supply
electrical energy as per demand of the consumer under the contract. In Bihar
E State Electricity Board, Patna & Others v. Mis. Green Rpbher Industries &
Others, [ 1990) I SCC 731, this Court, while repelling a challenge to the clause
in the agreement which provided for payment of minimum guaranteed charges
irrespective of whether energy was consumed or not, observed that the same
was reasonable and valid for the reason that the supply of electricity to a {
consumer involves incurring of overhead installation expenses by the Board
F which do not vary with the quantity of electricity consumed and also for the
reason that those installations have to be continued and must be maintained
until the agreement itself comes to an end. Such a stipulation was also
considered to be not by way of penalty for not consuming the specified
quantity of energy but more for the obligation of the Board to kt:ep the energy
G available to the consumer at his end. Again in Andhra Steel Corporation Ltd.
& Ors. v. Andhra Pradesh State Electricity Board & Ors., [ 1991] 3 SCC 263
this Court held that the purpose of prescribing minimum charges is to ensure
1-
that no undue loss is caused to the Electricity Board due to the tendency of
the consumer to have connection for inflated requirement and the Board's
agreement to meet such requirement and the readiness to maintain the supply
H up to that requirement, even if no or very little energy is consumed. The
RAYMOND LTD. v. M.P. ELECTRICITY BOARD [RAJU, J.] 683
decision of the State Government under Section 78 A of the Supply Act, 1948, A
to fix concessional tariff was also held not sufficient to absolve the consumer
from the liability undertaken to pay the minimum guaranteed charges. In
coming to such a conclusion, reliance has also been placed upon the decisions
reported in [1990] I SCC 731 (Supra) and The Amalgamated Electricily
Company Ltd. v. The Jalgaon Borough Municipality, [1975] 2 SCC 508 B
wherein this Court observed as follows:

"9. Moreover it is obvious that if the plaintiff company was to give
bulk supply of electricity at a concessional rate 0.5 anna per unit it
had to iay down lines and to keep the power ready for being supplied
as and when required. The consumers could put their ~witches on
whenever they liked and therefore the plaintiff had to keep everything C
ready so that power is supplied the moment the switch was put on.
In these circumstances it was absolutely essential that the plaintiff
should have been ensured the payment of the minimum charges for
the supply of electrical energy whether consumed or not so that it
may be able to meet the bare maintenance expenses." D
In Orissa State Electricity Board & Another v. IP/ Steel Ltd. & Others,
[1995] 4 SCC 320 this Court had an occasion once again to deal with these
issues in the light of the earlier case law on the subject. This Court explained
therein the meaning of the expressions "maximum demand charges'',
"consumption charges" and dealt with the role as well as purpose of installing E
two meters-the normal meter meant for recording the total quantity of energy
consumed over a given period, invariably a month and "trivector meter"
meant for recording the highest level/ load at which the energy is drawn over
any thirty minute period in a month. While explaining the two part tariff
system meant for big/bulk consumers of electricity, this Court has emphasised
and reiterated the justification and reasonableness of the same, observing the F
following;'

"Normally speaking, a factory utilises energy at a broadly constant
level. May be, on certain occasions, whether on account of breakdowns,
strikes or shutdowns or for other reasons, the factory may not utilise G
energy at the requisite level over certain periods, but these are
exceptions. Every factory expects to work normally. So does the
Electricity Board expect-and accordingly produces energy required
by the factory and keeps it in readiness for that factory-keeping it
ready on tap, so to speak. As already emphasised, electricity once
generated cannot be stored for future use. This is the reason and the H

-
684 SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R.

A justification for the demand charges and the manner of charging for
it. There is yet another justification for this type of levy and it is this:
demand charges and consumption charges are intended to defray
different items. Broadly speaking, while demand charges are meant to
defray the capital costs, consumption charges are supposed to meet
the running charges. Every Electricity Board requires machinery, plant,
B equipment, sub-stations, transmission lines and so on, all of which
require a huge capital outlay. The Board like any other corporation
has to raise fonds for the purpose which means it has to obtain loans.
The loans have to be repaid, and with interest. Provision has to be
made for depreciation of machinery, equipment and buildings. Plants,
c machines, stations and transmission lines have to be maintained, all .,.
of which require a huge staff. It is to meet the capital outlay that
demand charges are levied and collected whereas the consumption
charges are levied and collected to meet the running charges."

Adverting to the actual grievance. of the consumer in that case that
D where the cut in supply, be it even for the reason of an order passed by the
Government under Section 22 B of the 1910 Act, is only to the extent of half
of the contract demand, it was held that during such periods of restricted
supply the consumer had to pay the energy charges for the actual consumption
plus maximum demand charges for the maximum demand availed of by him at
E the rate prescribed in the agreement. As in the cases before us, it seems to
have been projected there also that even during the periods of restricted
supply there were frequent cuts and breakdowns as well as irregular supply
and the Board cannot levy full demand charges merely because in any thirty
minute period in a given month, the power is availed at the maximum demand
level, and that except the actual consumption charges nothing further,
F particularly the full demand charges could be collected. After referring to the
decisions reported in [ 1990] I SCC 731 (Supra), and the other decisions which
were quoted with approval therein such as AIR (1936) Cal. 265 Saila Bala Roy
v. Chairman, Darjeeling Municipality and (1969) I Madras Law Journal 69
(M.G. Natesa Chettiar v. Mad. SEB) which were quoted with approval earlier
G by this Court, the challenge by the consumer came to be rejected. It was also
observed that breakdowns and trippings etc. which are not confined to
periods of restricted supply alone but may occur during normal times also
does not affect the liability of the consumer and only if there is no supply
at all for considerable periods, the situation would be different, whether it
happens during the period of normal supply or restricted supply, though on
H facts the case considered by the Court was not found to be one such.
RAYMOND LTD. v. M.P. ELECTRICITY BOARD [RA.JU, J.] 685
We have carefully considered the submissions of the learned counsel A
appearing on either side, in the light of the provisions of the 1910 Act and
1948 Act, the contract entered into between the parties, the general conditions
for supply and the tariff rates prescribed as well as the governing principles
as laid down by this Court. The terms and conditions of supply, as envisaged
in the contract and the statutory provisions and general conditions have been
standardised for uniform application among consumers with variations merely B
necessitated by the different class or categories of consumers and there is
no scope otherwise for expecting any scope for individual or free bargaining
right in this regard by each consumer with the Board. Therefore, it is futile
for a consumer to contend that the Board was at the dictating end and the
parties were not equally positioned in settling the terms of the contract. The C
further attempt made to contend that the failure on the part of the Board to
effect supply up to the contract demand level relieved the consumers from
the obligation undertaken to pay a minimum guaranteed sum per month, as
though the contract demand is the minimum guaranteed for supply, not only
lack any basis in law or on the terms of the contract governing the supply
but also directly runs counter to the terms in the contract which makes D
different stipulations relating to contract demand and the minimum guarantee
in the form of a portion or percentage of the contract demand, only. The
question of exonerating the consumer from the liability undertaken to pay
minimum guaranteed charges for a month and billing only for the actual
consumption of energy or allowing a consumer to pay the rates on the actual E
consumption of electricity measured in units will and can arise and has also
been considered for determination only in case the supply by the Board itself
fell short of the minimum of energy, the consumption of which go to make
.. up the minimum guaranteed sum. It is well settled and there could be no
controversy over the position that if only the supply was available for
consumption but the consumer did not consume so much of energy up to the F
extent of the obligation cast upon him to pay the minimum charges, there is
no escape from the payment of the minimum guaranteed charges, except in
very exceptional cases envisaged under clause 23 of the contract, and that
too subject to the stipulations and restrictions contained therein.
G
In the light of the serious controversies raised as to the duration,
quantity, manner and quality of supply of electrical energy expected .o be
made by the Board, it becomes inevitably necessary to de<;:ide first the question
relating to the unit or standard of measurement, which invariably must have
relevance, in our view, only to the billing cycle envisaged in the contract and
the tariff which is only a month. The payment by the consume.r is to be on H
686 SUPREME COURT REPORTS [2000) SUPP. 4 S.C.R.

A the electrical energy supplied during the preceding month. The parties have
also agreed that the maximum demand of the supply is to be measured with
reference to the month at the point of supply of the consumer and will. be
determined on the basis of the supply during any consecutive thirty minutes
in that month as recorded by the trivector meter. The power factor, according
B to the statutory conditions of supply which form part and parcel of the supply
of energy to a consumer, is also to be determined with reference to the supply
of energy to a consumer, and that factor is also to be determined with
reference to the supply of electrical energy made during a month. The minimum
consumption uf energy guaranteed, as per. the tariff notification, is also in
terms of a monthly minimum. While that be the position, it is futile for the
C consumers to contend that they will not be liable to abide by the minimum
guaranteed charges undertaken, unless on every day of the month/year and
during the twenty four hours or round the clock the load factor and power
supply agreed to be made, at one and is the same level without any shortfall,
tripping or low voltage. The provisions of Section 56 of the Contract Act,
1872 sought to be relied upon have no relevance or application to the cases
D on hand. Countenancing of such claims would not only defeat the very
purpose, object and aim of providing for a minimum charges guarantee clause
but would ultimately result in mutilation of the ver~ fabric of tariff structure
rendering thereby the schemes of generation and supply of power at the
agreed concessional rates uneconomical and non-viable for the Board. This
E would also result in the re-writing of many of the clauses in the contract and
rendering nugatory the tariff pattern and system itself throwing into disarray
and disharmony the efficient execution of the power supply schemes.

The further claim asserted on behalf of the consumers that since what
was agreed to between the parties was to make the supply available
F continuously except during situations envisaged in clau5e 11 of the contract,
the failure to effect such supply by the Board renders the very contract
relating to the payment of minimum guaranteed charges unenforceable against
them, does not merit acceptance in our hands. It cannot legitimately be
contended that the word "continuously" has one definite meaning only to
G convey uninterruptedness in time sequence or essence and on the other hand
the very word would also mean 'recurring at repeated intervals so as to be
of repeated occurrence·. That apart, used a:s an adjective it draws colour from
the context too, and in the light of the texture of clause 11 as well as clause
12 and clause 23 (b) and also Section 22 B of the 1948 Act and orders passed
therein which are binding with equal force upon both the consumer and the
H Board, the word is incapable of being construed in such absolute terms as
RAYMOND LTD. v. M.P. ELECTRICITY BOARD [RAJU, .I.] 687
endeavoured by the learned counsel for the consumers. A
The High Court was of the view that it would be more just, equitable
and reasonable to hold whenever the contracted supply fell short of 40% of
the contract load which alone accounts for the minimum guaranteed sum, then
the Board shall be entitled to charge for the reduced energy actually supplied B
and not the minimum of 40% of the contract demand. As noticed supra, on
behalf of the consumers, not only inspiration is drawn to support their claim
in this regard but an extreme stand is also sought to be taken by contending
that in such cases as also in cases where the supply is not of the contracted
load and to the extent of the agreed load factor without interruptions so as
to cause any disturbance or dislocation of the smooth functioning of their C
industry concerned, the obligation under the clause in the agreement providing
for the payment of the minimum guaranteed charges to the tune of 40% of
the contract load also would automatically stand snapped and not only that
the consumers will be relieved of their liability but they can be made answerable
only to the extent of energy actually supplied and which has been consumed.
There is no justification for countenancing this extreme stand either under D
any of the provisions of the Act or the regulations made thereunder or under
the provisions of the contract entered into between the parties and tariff
schedule notified and made binding upon the consumers. This would, if
accepted, give credence to the plea vaguely and indirectly projected as
though the contract demand is the minimum supply undertaken to be made E
by the Board, whereas in contrast clause 23 of the general conditions for
supply of electrical energy by the Board applicable to all consumers in
unmistakable terms stipulate that the maximum demand agreed to be supplied
and taken under the agreement shall be the consumers contract demand and
that if as a matter of fact in any given case the consumption exceeds this
level, then only the contract provides for additional charges to be paid by the F
consumers.

As a matter of general principle, any stipulation for payment of minimum
guarantee charges is unexceptionable, in a contract of this nature wherein, the
Board which undertakes generation, transmission and supply of electrical G
energy has to, in order to fulfil its obligation lay down lines and install the
required equipment and gadgets and constantly keep them in a state of good
repair and condition to render it possible for the consumer to draw the supply
required at any and all times. These commitments are irrespective of the
capacity of the Board to generate at a given point of time or during a relevant
period the total quantum required for the consumption of all consumers of H
688 SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R.

A various categories or even during the days of breakdown envisaged or
staggering necessitated on account of orders of Government regulating the
distribution and consumption of energy as well as during periods when for
reasons personal or peculiar to the consumers or even beyond their control
the consumption is not and could not be of the mutually agreed extent. The
Board undertakes to generate and supply energy, in public interest also at
B concessional rates of varying nature and it cannot be stated that the rates
so fixed invariably are to meet the expenditure incurred by the Board for
generation and supply of energy, to the last pie. Consequently, if either in the
general conditions and terms of supply or the contract or the tariff rates as
the case may there be any stipulation, in clear and unmistakable terms that
C the liability relating to the payment of guaranteed minimum charge could or
will be enforced irrespective of the actual consumption rate of the consumer
or even de hors the capacity or otherwise of the Board to supply even the
minimum of the contract demanded energy, there could be no valid objection
in law for any such stipulation being made and the consumer will be bound
to honour such commitment. The contract for the supply of electrical energy
D cannot be treated on par with any other contacts of mutual rights and
obligations, having regard to the peculiar problems involved in the generation,
transmission and supply which invariably depend upon the vagaries of
monsoon as well short supply to them of the required coal and oil in time and
similar other problems over which the Board cannot have any absolute control.
E The recurring commitments relating to constant and periodical maintenance
of supply lines and other installations cannot be anytheless even during such
times and such onerous liabilities cannot be left to fall exclusively upon the
Board and it is only keeping in view all these aspects, payment of minimum
guaranteed charges is necessarily in built in the tariff system of the Board and
the reasonableness or legality of the same cannot be considered either in the
F abstract or in isolation of all these aspects. It is for this reason that all over
and the consumer is also made to share the constraints on Board's economy
even during such periods. In fact the tariff inclusive of such a provision for
payment ofa minimum guaranteed sum irrespective of the supply/consumption
factor appears to be the consideration for the commitments undertaken by the
G Board as a package deal and it is not possible or permissible to allow the
consumer to wriggle out of such commitments merely on the ground that the
Board is not able to supply at any point of time or period the required or
agreed quantum of supply or even supply up to the level of the minimum
guaranteed rate of charges. Tinkering with portions of contracts for any such
reasons, merely on considerations of equity or reasonableness pleaded for
H and vis-a-vis one party alone will amount to mutilation of the whole scheme
RAYMOND LTD. v. M.P. ELECTRICITY BOARD [RAJU. J.] 689
underlying the contract and render thereby the very generation a1-1d supply A
of electrical energy economically unviable for the Board. Consumers, who
enter into such commitments openly and knowing fully well all these hazards
involved in the generation, transmission and supply, will be estopped from
going behind the solemn commitment and undertaking on their/its part under
the contract. The High Court does not seem to have properly appreciated the B
ratio of the several decisions noticed except merely referring to them in
extenso, and yet ultimately just, arrived at a conclusion merely for the reason
that the court considered it to be 'more equitable, just and reasonable' to do
so.

So far as the cases under consideration and the liability of the consumers (
relating to minimum guarantee are concerned, the relevant clause relating to
minimum guarantee charges as well as the tariff notification relied upon,
would go to show that what was guaranteed was not the payment of a flat
sum or amount of money to be calculated with reference to a particular
number or percentage of units, de hors the quantum of electrical energy
distributed and supplied by the Board. In other words, the guarantee was of D
" ... such minimum consumption as when calculated at the tariff..... " will yield
a particular monthly/annual sum to the Board. Even going by the tariff
notification which prescribes also a minimum entitling the Board to collect it
[vide clause 21 (b)] it merely casts liability on the consumer to "guarantee a
minimum monthly consumption equivalent to 40% load factor of the contract E
demand". Consequently, for the consumer to honour his/its commitment so
undertaken to give a minimum consumption there should essentially be
corresponding supply by the Board at least to that extent, without which the
consumption of the agreed minimum is rendered impossible by the very lapse
of the Board. The minimum guarantee, thus, appears to be not in terms of any
fixed or stipulated amount but in terms of merely the energy to be consumed. F
The right, therefore, of the Board to demand the minimum guaranteed charges,
by the very terms of the language in the contract as well as the one used in
the tariff notification is made enforceable depending upon a corresponding
duty, impliedly undertaken to supply elec.trical energy at least to that extent,
and not otherwise. It is for this and only reason we find that the ultimate G
conclusion arrived at by the Full Bench of the High Court does not call for
any interference in these appeals.

Shri C.S. Vaidyanathan, learned senior counsel for the Board, further
contended that the High Court committed an error in overlooking the facts
placed on record in the form of statements showing the units which were H
690 SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R.

A made available to the consumers during the periods in question and the units
determined on which the minimum charges became payable and that those
statements sufficiently substantiated the position that the units made available
were more than sufficient to cover the payment of minimum charges and the
contentions to the contrary that the Board had not been able to supply even
B 40% of the contract demand to insist upon the payment of minimum guaranteed
charges has no basis or merit of acceptance. In this connection, our attention
has been drawn by the counsel on either side to those materials and particulars
placed along with the Counter Affidavits/Return of the Board filed before the
High Court, the annexures thereto and some of the correspondence between
the officers of the Board and the consumers concerned. Unfortunately, even
C the Division Bench, before which the matters were posted for further hearing
and disposal pursuant to the opinion given by the Division Bench, did not
undertake to adjudicate this vital aspect of the issues involved which, in our
view, became very much relevant and essential in the light of the opinion of
the Full Bench. Apparently, on account of the fact that the Full Bench
confined the operation of its decision for future application only, and the
D liability for the periods under challenge, therefore, stood governed by the
position of law as declared by the decision in AIR (1993) MP 118 (supra)
which held the field, the Division Bench might hav~ thought such an exercise
to be superfluous. But, in the light of our conclusion that, as the matter
stands, on the basis of the existing clauses in the contract as well as the Tariff
E notification the minimum guarantee assured was of the monthly consumption
equivalent to 40% load factor of the contract demand which obligated the
Board also to ensure supply at least to that extent to insist upon the payment
of the minimum charges, it becomes necessary to undertake an exercise, to
decide in individual cases, the question of actual supply said to have been
made in order to find out whether the units of energy to the extent of minimum
F of 40% of the contract demand has been made available for consumption. For
this purpose, these cases have to be necessarily and are hereby remitted to
the High Court, for being restored to their original number to find out the
actual position about claim/dispute relating to the supply of energy equivalent
to 40% load factor of the contract demand. Wherever the High Court finds
G this fact in favour of the Board, the consumer has to pay the minimum
guaranteed consumption charges as claimed, without any further challenge to
the said liability. Both parties shall be at liberty to substantiate their respective
stand in the light of the materials already on record or that may be produced
further before the High Court in the relegated proceedings.

H So far as the challenge made to the judgment of the Full Bench of the
RAYMOND LTD. v. M.P. ELECTRICITY BOARD [RA.JU, J.] 691

High Court, in confining its operation and applicability only for future period, A
Shri G.L. Sanghi, learned counsel, followed by the others have strongly
contended that the High Court as such cannot apply the principle of
prospective overruling. Reliance in this regard has been placed upon the
decision reported in State of H.P. & Ors. v. Nurpur Private Bus Operators'
Union & Ors., [ 1999] 9 sec 559 to which one of us (B.N. Kirpal, J.) was a B
party. Passing reference has been made to the decision in Golak Nath v. State

... of Punjab, AIR (1967) SC 1643 and the observation contained therein that the
doctrine of prospective overruling can be invoked only in matters arising
under the Constitution and that it can be applied by the Supreme Court of
India. The decision in Golak Nath 's case as such was subsequently overruled
by the decision reported in Kesavananda Bharati v. State of Kera/a, AIR C
(1973) SC 1461 though not specifically on this point. Reliance has also been
placed upon the decision reported in Mis. K.S. Venkataraman & Co. v. State
of Madras, AIR (1966) SC I 089 even to contend that if the High Court had
no such power, this Court while hearing an appeal from such judgment of the
High Court, will equally cannot exercise such powers. This submission of the
learned counsel overlooks the vital fact in that case that not o'.lly the High D
Court was found to exercise under Section 66 of the Income Tax Act, 1922,
a special advisory jurisdiction the scope of which stood limited by the section
... conferring such jurisdiction but even the appeal to the Supreme Court having
been made only under Section 66 A (2) of the said Act was noticed to hold
that the jurisdiction of this Court also does not get enlarged and that the E
Supreme Court can also only do what the High Court could do. Apart from
the fact that the writ jurisdiction conferred upon High Courts under Article
226 of the Constitution does not carry any restriction in the quality and
content of such powers, this Court could always have recourse to the said

... doctrine or principle or even de hors the necessity to fall back upon the said
principle pass such orders under powers which are inherent in its being the
highest Court in the country whose dictates, declaration and mandate runs
throughout the country and binds all Courts and every authority or persons
F

therein and having regard to Articles 141 and 142 of the Constitution of India.
The Appellate powers under Article 136 of the Constitution itself would also
be sufficient to pass any such orders. This Court has been from time to time G
exercising such powers whenever found to be necessary in balancing the
rights of parties and in the interests of justice. [vi de: Union of India v. Mohd.
Ramzan Khan, [ 1991] 1 SCC 588; Managing Director ECIL v ..B. Karunakar
& Ors., (1993] 4 SCC 727; India Cement Ltd. v. State of Tamil Nadu, AIR
(1990) SC 85. The decision reported in [1999] 9 SCC 559 (Supra) at any rate
is no authority for any contra position to deny such powers to this Court. H
692 SUPREME COURT REPORTS (2000] SUPP. 4 S.C.R.

A The peculiar facts and circumstances of these cases and the interests
of justice, in our view, necessitate the application of the Law declared therein
only prospectively. The electricity Board is a public authority of the State
engaged in the generation and supply of electrical energy at concessional
rates to different class and category of consumers in the State. The construction
B placed by us is likely to have serious and adverse impact upon the finances
~nd the economic viability of the scheme underlying tariff and minimum
guarantee charges already determined. It is impossible for the Board, at this
point of time to make up or change the pattern of tariff retrospectively to
retrieve itself in this regard for the past period. The construction and execution
of various developmental schemes and works are likely to suffer thereby a
C serious set back also. Keeping in view all these aspects we will be justified
in declaring that the law declared in these cases shall be for future application
only and not for the earlier period.

For all the reasons stated above, the appeals are disposed of in the light
of the directions and observations contained herein and the High Court shall
D restore the proceedings to its original file and dispose of the same in
accordance with the directions contained in this judgment. The parties will
bear their respective costs.

B.S. Appeals disposed of.

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