U.P.S.E.B.versusATMA STEELS AND ORS.

A                                  U.P.S.E.B.
                                       v.
                             ATMA STEELS AND ORS.

                                 JANUARY 20, 1998

B                   [ B.N. KIRPAL AND S.P. KURDUKAR, JJ.]


            Indian Electricity Act, 1910 :

        S. 26-Eleclrical Inspector-Jurisdiction ofPotential Transformer-
C Fault in-,--Quantum of electricity consumed not correctly recorded in meter-
  Assessment made by Executive Engineer and bill issued to consumer
  accordingly-Suit by consumer before civil court-Connection restored on
  undertaking given to pay the amount demanded-Application u/s 26 filed
  before Chief Electrical Inspector-Allowed with the observation that though
D the PT had blown off, amount demanded was npt reasonable. On appeal,
  appellate authority holding that PT could not ·be regarded as meter and
                                                                                   r
  therefore Electrical Inspector had no jurisdiction to entertain application u!
  s 26-High Court upholding the exercise ofjurisdiction by Electrical Inspector,
  but directing the appeal to be decided by technical hand nominated by
  Government other than Energy Secretary-Held, PT to be regarded as a
E meter-Electrical Inspector had jurisdiction to exercise power u/s 26-High
  Court not justified in issuing direction as to who is to hear the appeal-It
  is for the Government co decide-Consumer cannot be absolved of the
  obligation to pay the amount demanded as undertaken by it before the civil
  court-Refund, if any, would be subject to the decision in appeal u/s 36.
F           CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 502-503 of
    1998.

          From the Judgment and Order dated 17.2.95 of the Allahabad High Court
    in C.M.W.P. No. 49 (M/S) of 1995.

G        D.A. Dave, A.B. Rohtagi, Pradeep Misra, R.B. Misra and Kamlendra
    Misra for the Appellant.

            A.K. Singh and Vishal Dixit for the Respondent.

H           The following Order of the Court was delivered :
                                             228
                                             U.P.S.E.B. v. ATMA STEELS                           229
                          Special leave granted in both the matters.                                    A
               J_
                           The respondent obtains electricity from the appellant. On I 0th December,
                    1992 a surprise check was made at the respondent's place and it was found
                    that in the potential transformer (PT) a fuse had been blown off with the result
                    that it was not supplying any electricity from primary cable to secondary
                    cable and as a consequences thereof, the quantum of electricity consumed            B
         )-•
                    was not being correctly recorded in the meter. A notice was issued requiring
                    the respondent to show cause as to why charges for less consumption be not
                    charged for the period December 1991 to December 1992. In order to avoid
                    the disconnection of the electricity, the respondent, with the permission of the
                    authority, installed a new PT on the respondent undertaking to pay in future
                    for the supply given to it.
                                                                                                        c
                           On 29th December 1992 respondent gave a reply to the show cause
                    notice and inter alia raised a dispute that the PT and the meter panelling were
                    not working properly. After taking into consideration the reply, the Executive
                     Engineer on 22nd January 1993 made an assessment of Rs. 57,77,891.38 and           D
......
         "'(
                    raised a bill. Thereupon the respondent filed a suit in the Court of Civil Judge,
                    Ghaziabad challenging the said assessment. The Civil Judge passed an ex-


j
     "              parte ad-interim injunction restraining the appellant from recovering the
                    assessment amount and from disconnecting the supply. In the writtel'. statement
                    filed by the appellant herein the demand of Rs. 57,77,891.38 was justified.
                    According to the appellant the respondent, while the suit was still pending,        E
=!                  filed an application before the Chief Electrical Inspector on 20th February 1993
                    purporting to be under section 26 of the Indian Electricity Act, I9!0 requiring
                    the Inspector to exercise his jurisdiction under the said provision and to
                    quash the aforesaid assessment which had been made. by the Executive
                    Engineer. On 6th April, 1993 the respondent filed an application before the         F
         '<.        Civil Judge, Ghaziabad, inter-alia, prayed that the electricity which had been
                    disconnected should be restored and the respondent be permitted to pay the
-(·
                    aforesaid demand by instalments. Along with the application 12 post-dated
                    cheques were. filed and the respondent gave an undertaking to the Court to
-(
                    the effect that if after the acceptance of the cheques and restoration of
                    electricity any cheque is not encashed or it is dishonoured then ihe appellant      G
~
                    herein will have the right to disconnect the electricity of the respondent
         .,._
                    without any notice. This application was made while reserving the right of the
                    respondent to make a reference for arbitration. On the same day, the Trial
                    Court accepted the application and ordered the reconnection of the electricity


-
                    and it was specifically mentioned in this order that the conditions mentioned       H
 ,
                                                                                          '
                                                                                        -'1I
    230                    SUPREME COURT REPORTS                    [1998] l S.C.R.

A in the respondent's application will form part of the order. 3 days thereafter,
    the suit itself was withdrawn.

          The Chief Electrical Inspector took cognizance of the application which
    was filed before it and issued notice to the appellant herein. Though reply
    was filed to the said application, the respondent filed a Writ Petition before
B   the Allahabad High Court which was disposed of on 5th November, \993 with
    a direction to the Electrical Inspector to decide the reference within 6 weeks.

          By the order dated 15th April, 1994 the Electrical Inspector allowed the
    application after coming to the conclusion that the fuse in one cf the PT had
    blown off but the amount which was demanded by the appellant was not
C   reasonable. Curiously enough, having come to the conclusion that the meter
    had not recorded the correct amount of the consumption of electricity because
    of the blowing off the fuse the Electrical Inspector did not himself assess as
    to what should have been the correct amount payable by the respondent.
                '
D          The appellant then filed an appeal before the State Goverrunent under
    sec. 36(2) of the Indian Electricity Act, 1910: This appeal was allowed with
    the appellate authority coming to the conclusion that transformer could not
    be regarded as a meter and therefore the Electrical Inspector had no jurisdiction
    under sec. 26(6) of the said Act to entertain the application of the respondent.
    This fmding was again challenged by the respondent by way of a Writ '
E   Petition and the High Court, by the impugned Judgment came to the conclusion
    that the transformer had to be regarded as a meter within the meaning of that
    word in sec.26(7) and the appellate authority was no! justified in coming to
    the conclusion that the Electricity Engineer had no jurisdiction to decide the
    application. The appellate authority's order having been set aside, the matter
    was remanded by the High Court but with the direction that the appeal should
F   be decided by the competent authority preferably by a technical h'!"d nominated
    by _the State Government other than the Energy Secretary.

          We have heard the counsel for the parties and seen the material on
    record and we see no reason to disagree with the conclusion of the High
G   Court regarding the Inspector entertaining the application under sec.26(7)
    specially in view of the fact that in the Manual on H.T. Consumers Metering
    published by the Central Board of Irrigation and Power regarding the potential
    transformer with relation to salient feature of metering equipment it is stated
    as under :-

H               "(i) The metering equipments consist of CT and PT units. For LT ·
                        U.P.S.E.B. v. ATMA STEELS                           231
        meters (i.e., for 3 phase 4 wire) only three single phase VTs are          A
        required. For HT metering 3 phase PT and two CTs in R & B phases
        are required. CTs and PTs or only CTs for LT metering are to be tested
        for their correct polarity and ratio as per their terminal markings and
        name plate details respectively, beside their insulation resistance etc.
        Since the CT and PT ratios have a direct relation with the consumption     B
        recorded by a meter."

       It is clear that the only function cif the PT in a given case like the
present where the power is being supplied to the respondent at 11000 Volt,
is to reduce it to 110 Volt so as to enable the meter to record the amount of
power which is consumed by the industry. It is common ground that the C
existing meter could not record the power consumed unless there was stepping
down of the voltage from I 1000 to 110. This stepping down was done by the
PT. It is also not in dispute that after the recording of the consumption by
the meter the power, which was reduced from 11000 to 110 Volt, is not used
by the respondent. This clearly shows that the only function of the PT was
to enable the ascertaining or regulating of the amount of energy supplied to D
the respondent. This instrument namely the PT has, therefore, to be regarded
as a meter in view of the provisions of sub-section (7) of sec.26 and the
second proviso, in particular, and therefore the High Court was right in
coming to the conclusion that the Electrical Inspector had the jurisdiction to
exercise his powers under sec.26(7) of the Act. The order of the appeal late E
authority, therefore, was rightly set aside.

      The High Court, however, was not justified in issuing a direction that .
the appeal should be heard by a technical hand and by a person other than
the Energy Secretary. Under sec 36, sub-section (2) an appeal which is filed
against the order of the Electrical Inspector has to be heard by the Government, F
who may by a general or special order, direct it to be heard by an Advisory
Board. Who is to hear the appeal is for the Government to decide and
therefore a direction indicating as to who in the Government should hear is
ordinarily not in conformity with the provision of sec.36(2) and was not called
for on the facts and in the circumstances of this case. Therefore, the judgment
of the High Court to this extend cannot be sustained.                            G
      The High Court also over-looked the fact that the respondent had
secured a favourable order from the Civil Judge, Ghaziabad on its own giving
an Undertaking that he would pay the amount demanded by the respondent
if the electricity is ordered to be reconnected. The undertaking so given
formed part of the order when the said application was accepted and                H
    232                   SUPREME COURT REPORTS                     [ 1998] l S.C.R.

A reconnection directed. In view of the conduct of the respondent, who of
    course had reserved its right to take recourse to arbitration as it disputed the   -(
    demand of the appellant, the High Court ought to have put the respondent
    to terms while directing the hearing of the appeal.

         In our opinion, the respondent cannot be absolved of its obligation to
B pay the amount demanded, as agreed by it in the undertaking which it had
  furnished to the Civil Judge, Ghaziabad. We accordingly direct that the
  appellant would be entitled to realise the amount outstanding as per the
  demand dated 20th January 1993. We are infonned that a part of the demand
  has paid inasmuch as 5 out cf 12 cheques which were tendered were encashed
C and for the balance amount a Bank guarantee has been furnished. The appellant
  will be at liberty to en cash the said Bank guarantee. The direction of the High
  Court remanding the case to the appellate authority for decision on merits is
  upheld. If the appeal is dismissed the respondent would be entitled to refund
  of the excess amount paid by it but if ultimately the whole or part of the
  demand raised by the appellant is upheld then the respondent will be liable
D to pay interest. Similarly, if the appeal is dismissed the respondent will be
  entitled to interest on the amount to be refunded to him. The rate of interest
  in either case will be 24%.

          Both the appeals are disposed of. There will be no order as to costs.

E R.P.                                                       Appeals disposed of.