Judgment:
ORDER
A.K. Mathur, J.
1. All the writ petitions involve similar questions of law as such they are disposed of by a common order. The list of cases is appended herewith and marked as Schedule 'A'.
2. For the convenient disposal of these writ petitions the facts of S. B. Civil Writ Petition No. 3357 of 1984, M/s. Alpha Alloy Steels Pvt. Ltd. are taken into consideration.
3. The petitioner by this writ petition has prayed that the notice issued for enhanced security by respondent No. 2 vide Ex. 1 may be quashed and Clause (b) under the Head Security Deposits in Part II of the Conditions known as the General Conditions of Supply and Scale of Miscellaneous Charges Relating to the Supply of Electricity (1964) (hereinafter referred to as 'the General Conditions of1964') may he struck down. It has further been prayed that Sub-clause (2) in the Note under the Head Security Deposit in Part II of the General Conditions of 1964 which provides that no interest will be paid by the Board on the security may also be struck down. Lastly, it has been prayed that the Board may be restrained from recovering the enhanced security deposits from the petitioners.
4. The petitioner entered into an agreement with the Rajasthan State Electricity Board (hereinafter called as 'the Board') for the supply of electricity through High tension lines. An agreement to this effect was executed. The Board framed the General Conditions of supply and scale of Miscellaneous Charges Relating to Supply of Electricity 1964. According to these General Conditions of 1964 the consumers are required to deposit security for securing payments of future bills for the supply of electric energy. Respondent No. 2 issued notices to the consumers calling upon them to deposit enhanced cash security as well as Bank Guarantee. This was issued vide Ex. 1. The petitioner protested against this enhancement of security deposit and approached all the authorities. The petitioner submitted a representation on 9-11-1984 and agreed to deposit the enhanced cash security and Bank Guarantee provided the same are calculated on the basis of average monthly consumption. The petitioner also requested the respondents to adjust the amount against refund of Rs. 10,450/- due to it. But the respondents declined to accept the suggestion of the petitioner. Therefore, the peititioner was driven to file the persent writ petition.
5. Mr. Purohit, learned counsel for the petitioners placed three submissions for my consideration. So far as the power of the Board to enhance the security deposit is concerned, the same has not been disputed because of the reason that such power of the Board has been affirmed by their Lordships of the Supreme Court in Jagdamba Paper Industries (Pvt.) Ltd. v. Haryana State Electricity Board, AIR 1983 SC 1296. But the learned counsel for the petitioners submit that the petitioners are entitled to interest on security deposits at the rates admissible on fixed deposits by Scheduled Banks. Secondly, it was submitted that the calculation whichhas been made of taking three months' highest consumption of the last year is not the correct criteria for enhancing the security deposit. Learned counsel also submitted that this enhanced security deposit is not applicable to High tension lines. He further submitted that the notice has been issued by the respondent No. 2 who is not authorised to do so.
6. A return has been filed on behalf of the respondents and the respondents have taken the position that in terms of the General Conditions of 1964 they are entitled to enhance the security deposit and these conditions have been framed by the Board and thereafter the A.E.N. has issued Ex. 1 in pursuance of the Board's resolution. This has been stated by filing an affidavit of the E.X.N., R.S.E.B., Jodhpur. It has further been submitted that the petitioners are not entitled to any interest as they have been asked to give one month's cash security deposit and two months' bank guarantee (but in later cases the Board has demanded two months' cash deposit and one month's bank guarantee). Lastly, it was submitted that the calculation of enhanced security deposit on the basis of three months' highest consumption of the last year is a rational criterion and the Board is entitled to charge enhanced security under the General Conditions of 1964.
7. Before, I proceed to examine the arguments of the learned counsel for the parties, it will be useful to refer the salient features of the General Conditions of 1964. The General Conditions of 1964 has been framed under Section 49 of the Electricity (Supply) Act. General Condition No. 20(e) which is relevant for our purposes, reads as under :--
'20(e). The Board shall be at liberty at any time to apply any security so deposited towards payment of satisfaction of any money which shall become due or owing by the consumer. The Board shall be at liberty to demand enhanced Security deposit from any consumer at any time during the period of continuance of supply to him. The consumer may at any times with the previous consent of the Board transfer the contract and its liabilities to any other person approved by the Board.'
Security deposit appears in Part II of the Schedule which reads as under : --
'Security Deposits.-(a) Domestic and non-Domestic loadsWhen bills are issued monthlyBi-monthly(i) Up to 15 KW
connected loadRs. 20/- per
0.5 KW Rs. 30/- per
0.5 KWConnected load or part thereof(ii) Above 15 KW connected load Rs. 25/- per
0.5 KW Rs. 50/- per
0.5 KW Connected load or part thereof or 3 months' estimated consumption charges whichever is higher.(b) All othersRs. 407- per KW of connected load or pan thereof or 3 months' estimated consumption charges whichever is higher.
N.B. (i) An additional security of Rs. 50/- per service will be required from the consumer who does not own the premises in which the connection is desired.
(iii) Security Deposits from Government servant shall be as per the Govt. Notification issued from time to time. In the absence of any such notification, the above rates of Security Deposits shall also be application to Govt. Servants. But additional security of Rs. 50/- will not be required from a Govt. servant living in a Government quarter duly allotted to him.'
So far as the question whether enhanced security deposit can be legitimately taken or not, the general power of the Board has not been disputed. The Board has the power to enhance the security deposit in terms of the General Condition No. 20(e). The enhanced security has been held to be good and the same has been justified by their Lordships of the Supreme Court in M/s. Jagdamba Paper Industries' case (AIR 1983 SC 1296) (supra) and while approving the judgment of the Andhra Pradesh High Court in Kistna Cement Works v. Secretary, A.P.S.E.B., AIR 1979 Andh Pra 291 their Lordships have affirmed the observations made in Kistna Cement Works which reads as under : --
'To our mind, this is quite satisfactory explanation of the reasons behind insistence on cash security. Certainly a public utility service like Electricity Board cannot launch itself on litigation to recover consumption charges on a large scale. Power generation, which it does is an essential service and that shall never be allowed to suffer on account of improper security. We have already referred to the fact that it is reasonable on the part of the Board to require security for three months'consumption charges. Now to require that amount to be deposited in the form of cash is eminently reasonable.'
The Rajasthan High Court has accepted the view of the Andhra Pradesh High Court. We accept the view of the Andhra Pradesh High Court.
8. From this it appears that the security is only for the purposes of ensuring the payment from the consumers of the supply made by the Board to the consumers. The idea behind this security is that the dues of the Electricity Board may be ensured and the same can be adjusted against the security deposit. The bills are normally issued by the Board after one month or a month and half after the consumption of the power. For ensuring the payment of electricity charges this kind of security is demanded so that the Board may not be dragged to unnecessary litigation for the recovery of power supply charges from the consumers. As a matter of fact this enhanced security is nothing but the amount belonging to the consumers and the Board is the custodian of that amount for its future payment of the charges for the consumptionof energy consumed by the consumers. In this connection my attention was also drawn to the procedure. Mr. Purohit and Balia, learned counsel for the peitioners referred to condition No. 20(e) and also invited my attention to conditions Nos. 22(c) and 25(a). Condition No. 20(e) has already been quoted above by me. Condition No. 22(c) reads as under:--
'22(c) The consumer shall pay to the Board every month at the local office of the Board or as may be otherwise required, charges for the electrical energy supplied to him during the preceding month at the rates specified in the Board's standard rates schedule applicable to the class of service and in force from time to time, with such revision increasing or decreasing rates, and such revised Vales from the dale specified shall apply to such consumers during and for the unexpired period of the agreement concluded by the consumer.'
Condition No. 25(a) reads as under : --
'25(a) Bill shall be paid by the consumer at the Board's office within the grace time allowed from time lo lime categories of consumers or as provided in the agreement for supply, failing which the consumers shall be liable to pay the delayed payment charge or shall not be allowed the prompt payment discount as may be provided in the rate applicable to the consumer or in the agreement executed by the consumer.
If the payment of the bill is made by cheque or draft the same should be sent or posted sufficiently in advance so as to reach the local office of the Board a day earlier before the last date of payment. If the cheque or draft is posted at least three clear days before the last date of payment, the proof of which shall be available in the form of certificate of posting of Registration of post, it shall be considered to have been posted sufficiently in advance, and the consumer shall not be liable for late receipt, if any, in the local office of the Board due to postal delays.'
9. Condition No. 20(e) clearly says that the Board shall be at liberty to apply any security so deposited towards the payment or satisfaction of any money which shall become due or owing by the consumer.Condition No. 22(c) contains that the consumer shall pay to the Board every month charges for the electrical energy supplied to him during the preceding month at the rates specified in the Board's standard rates schedule applicable to the class of service. So the procedure is that after the consumer has consumed the electric energy the Board shall furnish a bill according to the rates prescribed by the Board lo the consumer and he is required to make payment in accordance within the time limit fixed as contemplated in Rule 25. Thus, as per the terms of the statutory contract the bill is to be furnished to the consumer after the consumption of the energy supplied by the Board within the time limit fixed by it. Thus, the amount which has been kept by the Board is for the purpose of ensuring the payment. The position of the Board is that of a trustee for the amount so deposited with it. Condition No. 20(e) enables the Board to utilise that amount towards the payment of the Bill and if the amount is still remained to be paid the same can be demanded from the consumer. Thus, in any case the position of the Board is that of a trustee of the so-called amount of security deposit with it. Mr. Shishodia and Mr. Bhandari learned counsel for the Board submitted that in fact the Board has already supplied them the energy and the same has been consumed by the consumers, therefore, the petitioners are not enlitled to claim any inleresl on the security deposit. But the submission of Mr. Shishodia and Mr. Bhandari does not appear to be well placed. There are no two opinions in the matter that the Board holds a monopoly in supply of electric energy, The Board being a public utility service cannot act like a private litigant and deprive the interest which is legitimately due to the consumers. In terms of the statutory conditions the bills have to be sent to the consumers after they have consumed the energy and thereafter the Board can demand the payment for the energy supplied to the consumers. It is not the case that the security amount has been claimed as a matter of right, It is only for the purpose of ensuring the payment of the bills which are served by the Board on the consumers after consumption of the energy. It is not correct to say that the Board has supplied the energy before payment is being made and the actual payment is madeafter one month or one and half months therefore interest is not payable to the consumers. The contract between the petitioners and the Board is governed by the statutory conditions. The General Conditions of 1964 have been framed under the Electricity Act, thus the Board is bound by the conditions. As per Conditions Nos. 22 and 25 the money cannot be demanded from the consumers in advance for the consumption of the energy but the payment can only be demanded after the consumption of the energy within the lime limit specified by the Board. Thus, the amount of enhanced security remains with the Board as a trust money and the petitioners cannot be denied legitimate interest on that amount. Their Lordships of the Supreme Court in M/s. Jagdamba Paper Industries' case (AIR 1983 SC 1296) (supra) have observed as under regarding the interest part : --
'On the security amount interest at the rate of 4% was initially payable. The same has already been enhanced to 8% per annum. Since the amount is held as security, we indicated to the counsel for the Board that security amount should bear the same interest as admissible on fixed deposits of Scheduled Banks for a terms of years and we suggested keeping the present rate of interest in view that it should be enhanced to 10%. Board's counsel has now agreed that steps would be taken to enhance the present rate of interest of 8% to 10% with effect from October I, 1983.
Thus, it clearly transpires that the consumers are entitled to interest at the rate which is admissible to fixed deposits of Scheduled Banks for a term of one year proportionately. Note (ii) below Security deposits in Part II of the Schedule of Service and Miscellaneous Charges which denies interest to depositor consumers is illegal and ultra vires of Article 14 and it is struck down. Thus, the petitioners are entitled to interest on the cash deposit made by them with the Board at the rate admissible on fixed deposits of the Scheduled Banks for one year proportionately.
10. Now, the next question that arises for consideration is that what should be calculation of three months' security deposit. The Board has taken three months' highestconsumption as the criterion for calculating three months' security deposit. Both the learned counsel submit that this criterion does not appear to be rational. It cannot be lost sight of the fact that in the last couple of years the supply by the Board has not been very happy. To leave a blanket discretion in the hands of the Board that they may choose any three months where there is highest consumption by the consumers that will be unfair to the consumers. This would amount to putting the consumers in a disadvantageous position and leaving a room to the Board to exploit the consumers. After all the Board is a public utility service and it cannot become master. The claim of security deposit is for securing the payment of the Board for the energy supplied by it. If any person commits default in payment of the bill, the Board is not powerless to secure that amount. There are already a number of provisions in the Supply Act and the General Conditions whereby the Board can enforce the payment very conveniently. At the same lime it is not the intention that the Board should be forced to go for litigation for the recovery of its dues. Thus, a rationale has to be arrived at so as to secure the payment of the Board and at the same time avoid undue hardship to the consumers. The very fact that the enhanced security deposit has been provided in the General Conditions ensures the payment of the Board of its dues. The criterion of the Board that the highest consumption of the previous year should be a yardstick to enhance the security deposit would amount to giving a blanket power to the Board and that will cause great hardship to the consumers. Mr. Shishodia pointed out three different contingencies and submitted that, one could be the highest consumption of three months of the previous year or it could be three continuous months' consumption of the previous year. Lastly three months' average consumption of previous year, as contended by the petitioners. After considering all the three contingencies I think that the last contingency pointed out by the learned counsel for the petitioners is more rational and in consonance with reason. So far as the contingencies pointed out by Mr. Shishodia are concerned they give a monopoly and leave an unfeltered discretion in the hands ofthe Board, whereas the third criterion which has been propounded by the learned counsel for the petitioners is more rational and appears to he reasonable. Three months' average consumption of last 12 months can cover the minimum and maximum period of consumption. As against this both the criteria submitted by Mr. Shishodia leave no room but leave blanket discretion in the hands of the Board whereby they can pick any three months' highest consumption or any three continuous months advantageous to them. That will amount to arbiter the mailer from position of advantage leaving no choice to consumers. Thus, I think that third criterion submitted by Mr. Purohit appears to be more reasonable that three months' average of the previous year consumption should be adopted for enhancing the security deposit. In this view of the matter I find that three months' criterion of highest consumption of the previous year adopted by the Board is arbitrary and irrational. In this connection I will also take note of the observations made by their Lordships in M/s. Jagdamba Paper Industries case (supra) wherein affirming the contention of the respondents their Lordships observed as under : --
'We agree, however, on the facts placed that the stand of the Board that a demand equal to the energy bill of two months or a little more is not unreasonable. Once we reach the conclusion that the Board has the power to unilaterally revise the conditions of supply, it must follow that the demand of higher additional security for payment of energy bills is unassailable, provided that the power is not exercised arbitrarily or unreasonably.'
Thus, the criterion adopted for enhancing the security deposit in the present cases appears to be arbitrary and unreasonable. In this connection, Mr. Shishodia also drew my attention to the seasoned factory which does not necessarily run for whole of the year. This is for the Board to decide any reasonable criterion for calculating the enhanced security regarding seasonal factories.
11. Mr. Purohit submitted that the order Annexure 1 has been issued under the signatures of the Assistant Engineer and he is not the Board therefore the order is not legal. In view of the affidavit filed by Mr. Bhandariof the Executive Engineer, R.S.B.B. if appears that this enhancement order was issued by the Board and the intimation has been issued by the Assistant Engineer after calculating the amount under his signatures. Thus, this contention of Mr. Purohit has no force.
12. Learned counsel for the petitioners also submitted that this security deposit is not applicable to the petitioners being connected with High tension lines. But this submission of the learned counsel is also not well founded for the simple reason that in Part II under the head Security Deposits the item 'all others' is so widely worded that it will include the items which are not covered by (a)(i) and (a)(ii). In this view of the matter I do not find any force in this contention of Mr. Purohit.
13. In the result, I allow all the writ petitions in part and struck down Note (ii) appended to Security Deposits in Part II of the Schedule of Service and Miscellaneous Charges attached to the General Conditions of Supply 1964. The petitioners are entitled to interest on the enhanced cash security deposit as admissible by the Scheduled Banks on fixed deposits, for a term of one year. Secondly, the respondents are directed to calculate the amount of enhanced security on the basis of three months' average consumption of the previous year. The respondents are directed to revise the bills accordingly and pay interest from the date of deposit of the enhanced cash security.