Sardar Ali Khan, J.
1. The above two Writ Appeals arise curt of a common order dt. 21-11-1990 passed by a learned single Judge in W.P. 8584/90 and batch. The petitioner in W.P. 9652/90 has preferred W.A. No. 1480/90 while the petitioner in W.P. No. 13742/90 has preferred W.A. No. 28/91.
2. The impugned order dated 21-11-1990 passed by the learned single Judge has resulted in the dismissal of the writ petitions refusing to interfere with the orders passed by the Andhra Pradesh State Electricity Board categorising certain industries as negative industries with inadequate social returns and thereby refusing release of new loads or additional loads in favour of such industries.
3. The appellants are private and public limited companies who were consumers of electrical energy at their factories situate at various places in Andhra Pradesh. It would be essential to view the common problem arising in these writ appeals in the back ground of the developments which have led to the categorisation of certain industries as negative industries with no social return in matters of employment etc., by the State Electricity Board. It is a well-known fact that there has been a steep increase in the demand for giving connections to new industries which has created a crisis between the demand and supply of energy generated in the State of Andhra Pradesh. In order to cope up with this situation, the Board, in consultation with the Industries Department of the State Government, had identified certain industries which require a high capital investment by the Board but create very low employment potential compared to certain other industries like Textiles etc. The Director of the Industries Department, Government of Andhra Pradesh, dealing with the question of extension of electrical supply to industries, informed the Board that the State Government is aware of the difficulties arising out of the fact that additional generating capacity will not be sufficient to cater to the needs of the coming industries which had necessitated categorisation of industries under preferential list and negative list. The industries coming under the negative list are not to be given release of new or additional electrical supply and feasibility of supply certificates are not to be issued by the A.P. State Electricity Board. Certain industries which do not fall under either of these heads are proposed to be kept in the intermediate list and their cases can be considered separately. Accordingly, the Board issued a press notification categorising 12 industries therein as negative industries. It would not be out of place to re-produce the press notification issued by the Board which is in the following terms:
'Press Notification'
'Considering the gap between the supply and demand for power and the likelihood of such shortage continuing for some more time in future, A.P.S.E. Board in consultation with the Government, has decided that power supply to industries should in future be limited in respect of such of new industries which have high social return. Industries listed below have been identified as those which do not have adequate social return for supply of power.
Sl. No. Name of the Industry1. Calcium Carbide2. Silicon Carbide3. Sodium Metal4. Ferro Alloys5. Caustic Soda6. Mini-steel plants7. Cold Rolled steels8. Castings9. Steel tubes and pipes10. Wire drawing11. Re-rolling12. Sponge ironFeasibility of supply certificates will not, therefore, be given to the above industries. Any diversification of the existing industry into the lines of manufacture listed above as well as expansion of production on these lines will also attract similar negative approach.
A.P.S.E. Board.'
It is evident from a reading of the above said press notification that the Board has categorised these industries on the basis of the social return and has, therefore, decided that feasibility of supply certificates will not be given to the above industries and that no new load or energy or additional energy will be released in favour of such industries. It is this action of the Electricity Board which was challenged in the writ petitions and is now a subject matter of the writ appeals before us.
4. Sri B. Adinarayana Rao, learned counsel for the appellants, has made three main submissions. His first submission is that the Board under Section 79 of the Electricity (Supply) Act, 1948 is empowered to make regulations but it cannot confer upon itself the power to unilaterally reject the requisition of the appellants and the Board has a contractual obligation to supply electrical energy as requistioned by the consumers. The second submission made by the learned counsel for the appellants is that the Board is not empowered to categorise industries on the basis of social returns or on the basis of such industries generating employment for the benefit of the people at large. His third submission is that under Clause VI of the Schedule to the Indian Electricity Act, 1910 the Board is under an obligation to release supply in favour of the industries for whom the distribution mains have already been laid. The learned counsel for the appellants has further submitted that the press notification issued by the State Electricity Board runs contrary to the relevant provisions of the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948 and can have no effect and, therefore, must be struck down as such.
5. Before dealing with the arguments advanced by the learned counsel for the appellants, it would be necessary to consider a few more details which have led to the issuing of the press notification promulgating a negative list for certain industries by the Electricity Board. It is not as if such negative list has been prepared by the Board without going into the pros and cons of the situation but the fact of the matter is that the Board has gone through the exercise meticulously before such statement was made under which the concerned industries stand barred from the release of the additional or new supplies to them. When the request was made by the appellants for additional loads certain information was called for by the Board from the State Government which reveals the fact that the appellants were included among the 12 specified categories of industries in respect of which the Board has taken a decision not to issue feasibility certificates for new loads or additional loads. It seems that there is a shortage of power by 300 to 400 MW while there is an increase of connected load by over 800 MW per year. According to the sources available to the Board, it would be able to add only about 300 MW from the two sources, i.e., 210 MW from Vijayawada and 66 MW from gas based power station during the year 1989-90. More over, in the 13th annual power survey issued by the Central Electricity authority, it is stated that the deficit is likely to continue till the year 1994-95, and it may indeed increase year after year and the total estimate of the deficit by 1994-95 is supposed to be 1553 MW in respect of load and 12781 MW in respect of energy. This has resulted in compelling the Board to place a check on the supply and demand of the electrical energy. The Board has, therefore, prepared a negative list of 12 industries in consultation with the State Government and decided that supply to the industries in respect of which load approval was already given and for those industries to which feasibility certificates were already given, release of supply will be considered by the Standing Committee on a case by case basis. The Standing Committee which met on 19-3-1990 reiterated the decision of the Board and is disposing of the applications for release of the power in accordance with the policy of the Board. The primary duty of the Board is to supply electricity in the most efficient and economic manner upon such terms and conditions as the Board thinks fit and for this purpose the Board is authorised to take such decision which will be conducive to the existing circumstances relating to the demand and supply of the electrical energy. It is with this view that the Board has prepared an office note and classified the 12 industries in the negative list. The guide lines to be followed in accordance with this note in respect of the 12 industries included in the negative list are as follows :
'(a) For the cases where the load approvals are given and where the consumers have fulfilled all the required departmental formalities, the cases will be put up to Standing Committee for issue of release orders.
(b) For cases where feasibility of supply certificates were already issued, the cases will be put up to Standing Committee for load approval case by case.
(c) In cases where feasibility certificates are not issued to the consumers as per Board's decision, consumer will be intimated accordingly in each case.'
The Chairman of the Board has endorsed on the note-file stating, inter alia, that the gap between the supply and demand for power and the likelihood of such shortage continuing for some more time in future has resulted in the decision which was taken by the Board to deny new load or additional supply to the industries in question. Thereafter, a press notification has been issued, which has already been referred to, indicating the action taken by the Board with regard to the industries enumerated in the negative list.
6. It is in the back ground of the above events that the submissions made by the learned counsel for the appellants will have to be considered. His first submission is that the Board does not have the power to enumerate or categorise the industries on the basis of low social returns and that the concept of employment injected by the Board in this regard is thoroughly irrelevant for the purpose of supplying the electrical energy to the industries in question. In other words, what the learned counsel contends is that under Section 79(j) of the Electricity (Supply) Act, 1948, the Board may make regulations but it cannot confer upon itself the power to unilaterally reject the requisition of the appellants and the Board has a contractual obligation to supply electrical energy as requisitioned by the consumers. In this connection it would be necessary to examine closely Section 49 of the Electricity (Supply) Act; 1948 which is in the following terms :
'49. Provision for the sale of electricity by the Board to persons other than licensees :-
(1) Subject to the provisions of this Act and of regulations, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs.
(2) In fixing the uniform tariffs, the Board shall have regard to all or any of the following factors, namely :-
(a) the nature of the supply and the purposes for which it is required ;
(b) the co-ordinated development of the supply and distribution of electricity within the State in the most efficient and economical manner, with particular reference to such development in areas not for the time being served or adequately served by the licensee ;
(c) the simplification and standardisation of methods and rates of charges for such supplies ;
(d) the extension and cheapening of supplies of electricity to sparsely developed areas.
(3) Nothing in the foregoing provisions of this section shall derogate from the power of the Board, if it considers it necessary or expedient to fix different tariffs for the supply of electricity to any person not being a licensee, having regard to the geographical position of any area, the nature of the supply and purpose for which supply is required and any other relevant factors.
(4) In fixing the tariff and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person'
It is significant to note that the opening words of Section 49 state that 'subject to the provisions of this Act and of regulations, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs.' It is evident that the Board is authorised under this section to supply electricity upon such terms and conditions as it thinks fit and may for the purpose of such supply frame uniform tariffs. The Board is, therefore, authorised to lay down terms and conditions and is also empowered for that purpose to frame uniform tariffs. This dual purpose to be performed by the Board is subject to the provisions of the Act and the regulations, if any, made in that behalf. The wording of the section is wide enough to invest the Board with the powers which are necessary to settle the terms and conditions and also to frame uniform tariffs for the supply of electrical energy to any person. Under Sub-section (4) of Section 49 this dual purpose vested in the Board is made clear and it is provided that in fixing the tariff and terms and conditions for the supply of electricity, the Board shall not show undue preference to any person. Therefore, it is difficult to agree with the submission made by the learned counsel for the appellant that the Board is under an absolute obligation to make supplies in the absence of any regulation that may have been framed under Section 49(j) of the Electricity (Supply) Act, 1948. Under Section 49(j) of the Electricity (Supply) Act, 1948 it is provided that the Board may make regulations not inconsistent with the Act and the rules made thereunder to lay down principles governing the supply of electricity by the Board to persons other than licensees under Section 49. It is no doubt true that no such regulations have been framed as such under Section 49(j) of the Electricity (Supply) Act, 1948 governing supply of electricity by the Board to persons other than licensees under Section 49. But Section 49 itself confers ample powers on the Board to lay down terms and conditions as it thinks fit and also to frame uniform tariffs. The only control of the Board of the power to lay down such terms and conditions is contained in the opening words of the section that subject to the provisions of the Act and of regulations, if any, made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs. If the Board has come to the conclusion that due to wide gap existing between demand and supply of electricity it has become necessary to categorise certain industries as industries of low employment potential which cannot be given any additional or fresh load of electrical energy, then it cannot be said that the Board has travelled beyond its -authority under Section 49 of the Elecricity (Supply) Act, 1948. More over, it is significant to note that the Board has come to this conclusion of certain industries being negative in character only after due deliberations and there is enough material to show that the finalisation of the negative list has been done only after consultation with the State Government. Secondly it is equally important to note that the Board is not cutting off the existing supply to any of these units but is only denying additional or new load of supplies to such industries. The action of the Board is to restrict the supply of energy and not to completely cut off the existing supply to such units, which yield low social returns.
7. The scope of Section 49 of the Elecricity (Supply) Act, 1948 has been discussed in various pronouncements of the Supreme Court which fortifies the view taken by us in this matter. In Jagdamba taper Industries (P) Ltd. v. H.S.E. Board, : [1984]1SCR165 the Supreme Court while considering the scope of Section 49 of the Electricity (Supply) Act, 1948, held that the Board has been conferred statutory power under Section 49(j) to determine the conditions on the basis of which supply of electricity is to be made. In that case the Board had initially introduced the condition regarding security for meter and for payment of energy bill which was accepted as a term of agreement between the consumers and the Board and the Board had reserved to itself the right to amend, cancel or add to any of the schedules and conditions at any time, on the basis of which supply was to be made to the consumers. When the Board sought to revise the conditions of supply its action was challenged by the consumers. The Supreme Court held that the Board has the power to unilaterally revise the conditions of supply and that the demand of higher additional security for payment of energy bills is unassailable. In Hyderabad Engg. Industries Ltd. v. A.P.S.E. Board, : [1988]3SCR159 a similar question as to whether the Board has power unilaterally to alter the conditions of supply came up for consideration before the Supreme Court. The consumers in that case were high tension power consumers and the notification issued by the Board stipulated certain conditions under which such supplies were to be made to the consumers. While interpreting Sub-section (1) of Section 49, the Supreme Court held that the Board can lay down conditions of supply and for purposes of such supply it may also frame uniform tariffs. Sub-section (1) authorises the Board to lay down the conditions of supply and to fix uniform tariffs which are the two dual purposes which the Board can perform under Section 49(2). The Supreme Court also made a reference to Sub-section (4) of Section 49 to make it clear that the Board has got not merely the power to fix conditions of supply but also to fix tariffs. The scope of Section 49, therefore, has been given a liberal judicial interpretation. In Rohtas Industries Ltd. v. Chairman, B.S.E.B., : [1984]3SCR59 Sub-section (3) of Section 49 of the Electricity (Supply) Act, 1948 was considered and it was held that the said Sub-section expressly authorises the Board to fix different tariffs for the supply of electricity to any person not being a licensee, having regard, inter alia, to the nature of the supply, the purpose for which the supply is required and other relevant factors. The dictum of the Supreme Court in the above case dealing with the question of uniform tariffs to be levied by the Board clearly points to the fact that the Board is empowered to supply energy in accordance with the terms and conditions laid down by the Board and for that purpose it has been given a wide discretion to promulgate uniform tariffs on the basis of which the supplies are to be made to the consumers. Similar view has been taken with regard to the scope of Section 49 in M.S.E. Board v. Kalyan Municipality, : [1968]3SCR137 . Therefore, there is no substance in the argument of the learned counsel for the appellants that in the absence of a proper regulation framed under Section 49(j) of the Electricity (Supply) Act, 1948 the Board is not empowered to frame a list of such negative industries which cannot be released any additional or new load of supply of electrical energy because of their low employment potential.
8. The second submission made by the learned counsel for the appellants is an indirect attack on the power of the Board that it cannot stipulate terms and conditions on the basis of which supplies are to be made to the consumers. It goes without saying that the categorisation of the industries on the basis of their employment potential or social return, as the case may be, for the benefit of the country as a whole, is a valid consideration on the basis of which the industries can be categorised for release of additional or new load of supply in favour of such industries. More over, in view of the wide interpretation given by the Supreme Court to Sub-section (1) of Section 49 of the Electricity (Supply) Act, 1948, it is clear that the Board does have the power to take into consideration the importance of the industries in an emerging industrial society and to categorise them as such.
9. The third submission made by Sri B. Adinarayana Rao, learned counsel for the appellants, is that under Clause VI of the Schedule promulgated under Section 3(2)(f) of the Indian Electricity Act. 1910 the Board is under an obligation to supply energy within one month from the date of making of the requisition save in so far as the Board is prevented from doing so by cyclone, floods, storms or other occurrences beyond its control. In order to appreciate this argument made by the learned counsel for the appellants, it would be necessary to examine the provisions of Section 26 of the Elecricity Supply Act, 1948, which is in the following terms :
'26. Board to have powers and obligations of licensee under Act 9 of 1910:-
Subject to the provisions of this Act, the Board shall, in respect of the whole State, have all the powers and obligations of a licensee under the Indian Electricity Act, 1910 and this Act shall be deemed to be the licence of the Board for the purposes of that Act:
Provided that nothing in Sections 3 - 11, Sub-sections (2) and (3) of Section 21 and Section 22, Sub-section (2) of Section 22A and Sections 23 and 27 of that Act or in Clause s I to IV, Clause VII and Clause s IX to XII of the Schedule to that Act relating to the duties and obligations of a licensee shall apply to the Board:
Provided further that the provisions of Clause VI of the Schedule to that Act shall apply to the Board in respect of that area where distribution mains have been laid by the Board and the supply of energy through any of them has commenced.'
Under Section 26 the Board is deemed to have all the powers and obligations of a licensee under the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948 shall be deemed to be the licence of the Board for the purposes of that Act. This, in effect, means that the Board continues to be a licensee but the conditions of the licence are contained in the provisions of the Electricity (Supply) Act, 1948. The Board, in other words, cannot do anything as a licensee which it is not empowered to do under the Electricity (Supply) Act, 1948. More over, the opening words of Section 26 of the Electricity (Supply) Act, 1948 are 'subject to the provisions of this Act' which means that the terms and conditions of licence of the Board are governed by the provisions of the Electricity (Supply) Act, 1948. The Board may be a licensee under the Indian Electricity Act, 1910 but in the event of a conflict between the provisions of the Indian Electricity Act, 1910 and the provisions of the Electricity (Supply) Act, 1948, the provisions of the Electricity (Supply) Act, 1948 will prevail. Under the first proviso to Section 26 of the Electricity (Supply) Act, 1948 Sections 3 - 11, Sub-sections (2) and (3) of Section 21 and Section 22, Sub-section (2) of Section 22A and Sections 23 and 27 of the Indian Electricity Act, 1910, Clause s I to V, Clause VII and Clause s IX to XII of the Schedule to that Act (Indian Electricity Act, 1910) relating to the duties and obligations of a licensee are excluded. The Schedule in which Clause VI occurs has been promulgated in pursuance of the powers vested under Section 3(2)(f) of the Indian Electricity Act, 1910. Section 3 itself has been excluded under the first proviso to Section 26 from operation with regard to the duties and obligations of the Board in its capacity as a licensee under the Act of 1910. Nevertheless, the second proviso to Section 26 of the Electricity (Supply) Act, 1948 provides that Clause VI of the Schedule will be applicable in respect of an area where distribution mains have been laid by the Board and the supply of energy through any of them has commenced. It is, therefore, clear that but for the second proviso, the provisions of Clause VI of the Schedule to the Act of 1910 would not have been applicable to the Board functioning under the Electricity (Supply) Act of 1948. It is no doubt true that the proviso carves out an exception to the section in which it occurs but the opening words of Section 26 will control the provisos as well for the reason that proviso is also a part of the Section. It may create an exception but it does not cease to be a part of the section in which it finds a place. Therefore, the operation of the second proviso about Clause VI of the schedule attached to the Indian Electricity Act, 1910 will also be subject to the provisions of the Electricity (Supply) Act of 1948. It cannot be deemed to be an absolute obligation under the second proviso to supply electricity in accordance with Clause VI of the Schedule unless such supply is in consonance with the provisions of the Electricity (Supply) Act, 1948. Moreover, Clause VI of the schedule continues to operate in so far as the Board is concerned but it cannot be given an overriding effect if there is a conflict between the provisions of Clause VI of the Schedule attached to the Indian Electricity Act of 1910 and the provisions of the Electricity (Supply) Act, 1948. The second limitation which is placed on the operation of Clause VI of the Schedule is that it will apply to the Board in respect of the area where distribution mains have been laid by the Board and the supply of energy through any of them has commenced. It is only when the distribution mains have been laid by the Board and the supply of energy has commenced that the Board will be under an obligation to comply with the provisions of Clause VI of the schedule. If the twin requirements of the distribution mains and the supply of energy having commenced are not fulfilled, then there would be no question of the Board coming under an obligation to supply the energy under Clause VI of the Schedule, referred to above. A similar view has been taken by the Supreme Court in State of Uttar Pradesh v. Hindustan Alluminium Corporation, AIR 1979 Supreme Court 1456 in which it was held that Section 22 of the Act of 1910 making it incumbent upon the licensee to supply energy will not be applicable and Clause VI of the schedule would apply subject to the restrictions contained in the second proviso to Section 26 of the Electricity (Supply) Act of 1948. So even though the Board is deemed to be a licensee, the obligation under Section 26 of the Act of 1948 to supply energy within the area of its operation is not fastened on it. We may hasten to add that under the first proviso to Section 26 of the Electricity (Supply) Act of 1948 Section 22 has been excluded to cast any duties and obligations on the Board in its capacity as a .licensee under the Indian Electricity Act of 1910. The Supreme Court further held that the provisions of the schedule to the Act are deemed to be incorporated in and to form part of every licence granted under Part II. Clause VI of that schedule states that where after distributing mains have been laid down and the supply of energy through them has commenced, a requisition is made by the owner or occupier of any premises situate within the area of supply requiring the licensee to supply energy for such premises, the licensee shall make the supply and shall continue to do so in accordance with the requisition. We clearly see three main restrictions for the operation of the second proviso occurring in Section 26 of the Act of 1948. The first and the foremost restriction is that though the proviso makes it obligatory on the part of the Board to comply with Clause VI of the Schedule, it is always subject to the provisions of the Act of 1948. The second restriction is that in case there is a conflict between the obligations assumed by the Board under the provisions of the Electricity (Supply) Act of 1948 and those assumed by it in its capacity as a licensee, the provisions of the Electricity (Supply) Act of 1948 would prevail. The third restriction is that it is only when it is proved as a point of fact that the distribution mains have been laid by the Board and the supply of energy has commenced that the obligation will come into play. The obligations of the Board under Clause VI of the Schedule to the Indian Electricity Act of 1910 will always be subject to the availability of the electrical energy for distribution to the consumers. In this view of the matter, there will have to be harmoneous construction of the provisions of Section 49 of the Electricity (Supply) Act, 1948 and Section 26 of the same Act read with Clause VI of the Schedule promulgated under Section 3(2)(f) of the Indian Electricity Act of 1910. A harmoneous construction of the above provisions clearly points to the fact that the obligation of the Board in its capacity as a licensee is conditioned by the terms of its licence; and the terms of its licence are those which are provided by the Electricity (Supply) Act of 1948. Considering the matter from this angle also, the third submission fails as being devoid of any substance.
10. In view of the fore-going discussion, both the Writ Appeals fail and are, therefore, dismissed and the order of the learned single Judge is confirmed. In the circumstances of the cases, there will be no order as to costs.