Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment

Judgment:

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			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
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			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
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$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
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		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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Yogeshwar Dayal, J.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
)
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(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
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$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
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		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
)
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(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
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$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(5) The case of the petitioners before the High Court was that Section283 of the Delhi Municipal Corporation Act, 1957 (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
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$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.'

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.'

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
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		'circuit' => null
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$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :-

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.'

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
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		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
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		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
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		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
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		'circuit' => null
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$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :-

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
)
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(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
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		'circuit' => null
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	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
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		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
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$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
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		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :-

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
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		'circuit' => null
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$ctype = ' High Court'
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$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi Municipal Corporation Act, 1957.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
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		'circuit' => null
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	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
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		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
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		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
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	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
)
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(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
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$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
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		'circuit' => null
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$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
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		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
$args = array(
	(int) 0 => '694711',
	(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
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(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.

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	'title_for_layout' => 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | ',
	'desc' => array(
		'Judgement' => array(
			'id' => '694711',
			'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
			'appealno' => 'Civil Appeal No. 1478 of 1990',
			'appellant' => 'Ashok Soap Factory and anr.',
			'authreffered' => '',
			'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
			'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
			'caseanalysis' => null,
			'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
			'citingcases' => '',
			'counselplain' => '',
			'counseldef' => '',
			'court' => 'Delhi',
			'court_type' => 'HC',
			'decidedon' => '1993-01-12',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
			'judgement' => '<p style="text-align: justify;">Yogeshwar Dayal, J. </p><p style="text-align: justify;">(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p style="text-align: justify;">(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p style="text-align: justify;">(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p style="text-align: justify;">(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p style="text-align: justify;">(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p style="text-align: justify;">(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p style="text-align: justify;">(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p style="text-align: justify;">(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p style="text-align: justify;">First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p style="text-align: justify;">'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p style="text-align: justify;">(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p style="text-align: justify;">'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p style="text-align: justify;"> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p style="text-align: justify;">9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p style="text-align: justify;">(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p style="text-align: justify;">(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p style="text-align: justify;">(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p style="text-align: justify;">(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p style="text-align: justify;">(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p style="text-align: justify;">(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p style="text-align: justify;">15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p style="text-align: justify;">(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p style="text-align: justify;">(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p style="text-align: justify;">(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p style="text-align: justify;">(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p style="text-align: justify;">(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p style="text-align: justify;">(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p style="text-align: justify;">(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p style="text-align: justify;">'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p style="text-align: justify;">(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a>.</p><p style="text-align: justify;">(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p style="text-align: justify;">'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p style="text-align: justify;">(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p style="text-align: justify;">(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p style="text-align: justify;">(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p style="text-align: justify;">'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p style="text-align: justify;">(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p style="text-align: justify;">(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p style="text-align: justify;">(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p style="text-align: justify;">(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p style="text-align: justify;">(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p style="text-align: justify;">(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p style="text-align: justify;">(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p style="text-align: justify;"></p><p style="text-align: justify;">',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => '',
			'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
			'ratiodecidendi' => '',
			'respondent' => 'Municipal Corporation of Delhi and ors.',
			'sub' => 'Electricity',
			'link' => null,
			'circuit' => null
		)
	),
	'casename_url' => 'ashok-soap-factory-vs-municipal-corporation',
	'args' => array(
		(int) 0 => '694711',
		(int) 1 => 'ashok-soap-factory-vs-municipal-corporation'
	)
)
$title_for_layout = 'Ashok Soap Factory and anr Vs Municipal Corporation of Delhi and ors - Citation 694711 - Court Judgment | '
$desc = array(
	'Judgement' => array(
		'id' => '694711',
		'acts' => '<a href="/act/134741/delhi-municipal-corporation-act-1957-complete-act">Municipal Corporation Act, 1957</a> - Sections 283; Delhi Electricity Act, 1910 - Sections 22; <a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Article 14',
		'appealno' => 'Civil Appeal No. 1478 of 1990',
		'appellant' => 'Ashok Soap Factory and anr.',
		'authreffered' => '',
		'casename' => 'Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors.',
		'casenote' => '
ELECTRICITY  ACT  1910 - Section 2(h)-MCD is not licensed under Part II of the Act to supply energy but is a licensee by virtue of DMC Act 1957 and not Under Section 2 (h) of the Act.;Section 21-is not applicable on MCD which is a local authority and is not
a licensee Under Section 2 (h) of the Act. ;Section 22-is applicable where a separate supply of energy is provided
to the consumer and has nothing to do with the minimum consumption guarantee
charges provided as part of tariff. ;PRICE   FIXATION - Fixation of electricity tariff is a legislative function-challange of-only
on the ground of unreasonableness and arbitrariness-not necessary to disclose reasons.;Interference by Court-can be made when price is fixed arbitrarily without any basis for it-not immune from judicial review merely because it can be dressed up as breach of Contract. 
 -  -  In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. by Resolution dated 30/03/1989 and it recommended to the 'nD. Section 21(2) reads as follows :21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs. (31) We are thus satisfied that the recommendations of the D.',
		'caseanalysis' => null,
		'casesref' => 'Ashok Soap Factory & Anr. v. M.C.D.;',
		'citingcases' => '',
		'counselplain' => '',
		'counseldef' => '',
		'court' => 'Delhi',
		'court_type' => 'HC',
		'decidedon' => '1993-01-12',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => ' J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.',
		'judgement' => '<p>Yogeshwar Dayal, J. </p><p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.</p><p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.</p><p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.</p><p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.</p><p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.</p><p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.</p><p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-</p><p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'</p><p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' </p><p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' </p><p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- </p><p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-</p><p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' </p><p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. </p><p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'</p><p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. </p><p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.</p><p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.</p><p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.</p><p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- </p><p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.</p><p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.</p><p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.</p><p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.</p><p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.</p><p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.</p><p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.</p><p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- </p><p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'</p><p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.</p><p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. </p><p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'</p><p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.</p><p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.</p><p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee </p><p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.</p><p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.</p><p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.</p><p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.</p><p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.</p><p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.</p><p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.</p><p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p></p><p>',
		'observations' => null,
		'overruledby' => null,
		'prhistory' => '',
		'pubs' => '49(1993)DLT630; 1993(27)DRJ95',
		'ratiodecidendi' => '',
		'respondent' => 'Municipal Corporation of Delhi and ors.',
		'sub' => 'Electricity',
		'link' => null,
		'circuit' => null
	)
)
$casename_url = 'ashok-soap-factory-vs-municipal-corporation'
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$url = 'https://sooperkanoon.com/case/amp/694711/ashok-soap-factory-vs-municipal-corporation'
$ctype = ' High Court'
$caseref = 'Ashok Soap Factory & Anr. v. M.C.D.<br>'
$content = array(
	(int) 0 => '<p>Yogeshwar Dayal, J. ',
	(int) 1 => '<p>(1) These are batch of appeals against the judgment of Delhi High Court dated 1/03/1990 whereby the HighCourt by a common judgment disposed of a bunch of writ petitions, interalia, filed by Gulab Rai against the Municipal Corporation of Delhi andothers.',
	(int) 2 => '<p>(2) The challenge in the writ petitions was to the Resolution of the Municipal Corporation of Delhi (hereinafter referred to as M.C.D.) Whereby it approved the proposal of the Delhi Electricity Supply Committee (in short D.E.S.U.) to enhance minimum consumption guarantee charges fromRs. 40.00 per K.VA to Rs. 340.00 per Kva in respect of arc/induction furnaces.',
	(int) 3 => '<p>(3) The petitioners in the writ petitions had set up/installed are/induction furnaces for the manufacture of castings and have their factories in Delhi.',
	(int) 4 => '<p>(4) One of the important raw-materials for the writ petitioners iselectricity. Each of the petitioners had obtained electricity from the respondents and the sanctioned load is more than 100 KWS. The exact sanctionedload. among the various writ petitioners, varies, depending upon the size and capacity of the furnaces set up by them but each one of them has a sanctioned load of more than 100 KWS.',
	(int) 5 => '<p>(5) The case of the petitioners before the High Court was that Section283 of the Delhi <a>Municipal Corporation Act, 1957</a> (hereinafter referred to as'the Corporation Act') empowers respondent No. 1 (D.M.C.) to hevy charges for the supply of electricity on such rates as may be fixed from time to time by the D.M.C. in accordance with law. For the purpose of charging the consumers, the D.M.C. has divided the consumers in different categories/classes providing for different tariffs for each category. One of the categories is large industrial power' (LIP) consumers. The consumers who have a sanctioned load of 100 Kws fall in the category of large industrial powers.The writ petitioners fall under this category as each one of them has a sanctioned load of more than 100 KWS. For the levy of charges for the supply of electricity there are two systems of tariff which are followed,namely-the flat rate system and the other two-part tariff system. Under heformer, a flat rate is charged on the units of energy consumed while the latter system is meant for big consumers of electricity i.e. industrial power,and it is comprised of two charges (1) minimum consumption guarantee charges (called demand charges) and (2) energy charges for the actual amount of energy consumed.',
	(int) 6 => '<p>(6) It was the case of the petitioners that two-part tariff system was applicable to them. Under this system an Lip consumer pays minimum guarantee consumption charges at the rate fixed by the respondents. If the LIP consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay the minimum guarantee charges.But in case the consumer consumes more electricity than what is prescribed by the minimum guarantee charges than the consumer pays the minimum guarantee charges and also pays the electricity charges for the actual consumption of electricity beyond the minimum guarantee charges, in such a manner that the minimum guarantee charges are merged in the total bill of electricity consumed and a rebate is given to the consumer. In other words,if a consumer consumes more than the specified minimum quantity of electricity then, in effect, he will pay for electricity which is actually consumed by him.',
	(int) 7 => '<p>(7) For the period from 1985-86 to 1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per KVA fur Iouo Kva and Rs. 38.00 per K.VA above 1000 K.VA. The tariff for the Lip consumers in respect of the aforesaid period, including the minimum guarantee charges, as fixed by the respondents was as follows ;-',
	(int) 8 => '<p>(d) Tariff.Demand charges First 1000 Kva of Rs. 40.00 per KVA billing demand for or part thereof. the month All above 1000 Kva Rs. 38.00 per KVA of billing demand for of part thereof. the mouth.'',
	(int) 9 => '<p>First 5,00,000 units per month at 85 paise per unit.All above 5,00,000 units per month at 84 paise per unit.Subject to;a maximum overall rate of Rs. 1.10 per Kva without prejudice to the minimum payment as laid down in item (g) below and adjustment clause at(xvii) above under General Conditions uf Applications.' ',
	(int) 10 => '<p>'ITEM(g) of the said tariff prescribes that the minimum bill would be the amount of the demand charges based upon the Kva of billing demand.Item (g) reads as under :- '(G)Minimum Bill The amount of the demand charges based upon the K.VA of billing demand.' ',
	(int) 11 => '<p>(8) The billing as per the aforesaid tariff had been explained by the petitioners before the High Court with the following illustration :- ',
	(int) 12 => '<p>'(A)If a consumer with a sanctioned load of 1000 Kva does not consume any energy in a given month, he would be liable to pay the minimum guarantee charge of Rs. 40,000.00 i.e. 1000 Kva (sanctioned load/contracts demand) X40.00 (minimum guarantee charge)= Rs. 40,000.00.Even if he consumes electricity, but the value of the units actually consumed by him works out to less than Rs. 40,000.00 which is the minimum consumption guarantee charges, even then he will have to pay the minimum consumption guarantee charges ofRs. 40,000.00.(b) In the event one consumer consumes energy of the value of more than Rs. 40,000.00 then the billing would be done in the following manner:-Assuming that the consumer consumes 80,000 units of electricity :-',
	(int) 13 => '<p> 1000 Kva (sanctioned load)x 40.00 (rate of minimum guarantee =Rs.44,000.00charges)80,000 (units consumed)0.85 paise (energy charge) per unit =Rs. 68,000.00Total Rs. 1,08,000.00 ln terms of the tariff, the maximum charge cannot be more than the over all rate of Rs. 1.10 per unit consumed. thereforee,80,000 units consumed would be chargeable at the maximum rate of Rs. 1.10 per unit which works out to Rs. 88.000.00. Since the amount of Rs. 1,08,000.00 is higher than Rs. 88.000.00 i.e. byRs. 20.000.00 a rebate of Rs. 20,000.00 would be given to the consumer and the consumer would be billed only for Rs. 88.000.00 .It would be thus evident from the above illustration that the consumer, in any event, has to pay the minimum guarantee charge even if the value/price of the energy actually consumed is more than the minimum consumption guarantee charges, the amount of the minimum consumption guarantee gets merged into/with the energy charges.' ',
	(int) 14 => '<p>9. It was then submitted on behalf of the writ petitioners that the General Manager of respondent No. 2 wrote a letter dated 24th January,;989 to D.E.S.C., inter alias proposing revision of rates of minimum consumption guarantee charges in respect of arc/induction furnaces. In this letter the General Manager gave the figures of the fixed expenditure per Kw permonth. It was slated that the rates of minimum consumption guarantee were fixed in 1985 and the increase in fixed expenditure per Kw per month necessitated the revision of rates of minimum consumption guarantee charges. It was also mentioned that the transmission and distribution losses were quite high and they fell into two categories, namely, technical losses and commercial losses, The cause for commercial losses was explained by the General Manager in the following words :-The Commercial losses are also attributed to pilferage/fraudulent abstraction of energy etc. The minimum consumption guarantee being quite low also attributes to the tendency of fraudulent abstraction of energy. After giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, it has been felt desirable to revise the rate of minimum consumption guarantee to a reasonable level so that consumers are not attracted for such unfair means and the rates are commensurate with the fixed expenditure being measured by the undertaking.In the proposal contained in this letter, there was no suggestion for increase of minimum consumption charge for domestic category but for other categories increase was recommended and in respect of arc/induction furnaces the increase for minimum consumption guarantee charge was to be Rs. 340.00instead of Rs. 40/per KVA. ',
	(int) 15 => '<p>(10) This proposal contained in the letter dated 24th January, 1989was discussed by the D.E.S.C. in its meeting held on 9/03/1989 and the case was referred back to the General Manager to inform the D.E.S.C.whether the respondent was recovering its dues from the bulk supply consumers based on their actual consumption. Pursuant thereto, the General Manager wrote another letter dated 23/03/1989 to D.E.S.C. and, interalia, stated that the billing is normally done on the basis of consumption recorded in the meters out in many instances it has been noticed that meters were found to be defective. The consumption recorded was found to be much less than the consumption which was recorded in the previous year and when compared to the connected load, the consumption was found to be extremely less in many cases causing loss of huge amount to the Undertaking. It was also stated in this letter that for the aforesaid reason 'the proposal was put up to D.E.S.C. for levy of higher minimum consumption charges in the case of arc/induction furnaces on basis of their load. It is worth mentioning that these furnaces normally run continuously and, thereforee, levy of minimum charges is considered justified.'',
	(int) 16 => '<p>(11) The aforesaid proposal of the General Manager was accepted byD.E.S.C. by Resolution dated 30/03/1989 and it recommended to the 'nD.M.C. that the proposed revised rates of minimum consumption guarantee charges be approved only in respect of plastic and arc/induction furnaces in their respective categories. ',
	(int) 17 => '<p>(12) Pursuant to the aforesaid Resolution of the D.E.S.C., the D.M.C.also vide its Resolution dated 1/05/1989 approved the enhancement of Vol. XIIX M/s. Ashok Soap Factory & Anr. v. M.C.D. & Ors.the minimum consumption guarantee charges only in respect of arc/induction furnaces to Rs. 340.00 per K.VA or part thereof instead of Rs. 4U.00 per K.VA.',
	(int) 18 => '<p>(13) The writ petitions, out of which the present appeals arise, were field by the owners of arc/induction furnaces challenging the aforesaid enhancement of the minimum consumption guarantee charges.',
	(int) 19 => '<p>(14) The result of the enhancement by the aforesaid Resolution of theDM.C. was that for demand charges for the first 1000 Kva of billing demand for the month, instead of tariff being Rs. 40.00 per K.VA or part there of it was enhanced to Rs. 340.00 per K.VA or part thereof.',
	(int) 20 => '<p>(15) It is common case that all the writ petitioners had entered into agreements with the D.M.C. and Clause 15(a) thereof provided as follows :- ',
	(int) 21 => '<p>15.(A)The consumer shall pay each month to the Undertaking for electrical energy supplied during the preceding month such amount as shall be calculated and ascertained in accordance with the Rate Schedule L.I.P. attached hereto. The rates contained in the schedule are those in force at the time of executing this agreement. The consumer shall be eligible for whatever reduction or rebate as maybe granted on the rates and shall be liable to pay for whatever surcharge or increase in these rates as may from time to time believed or made by the Undertaking. Any other method of charging decided by the Undertaking shall also be applicable.The rate schedule of the L.I.P. consumers, which was part of the agreement,for the year 1988-89 has already been reproduced above.',
	(int) 22 => '<p>(16) Various contentions were urged by the appellants before the High Court. One of the main contentions raised was that the provisions of Section 21 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the1910 Act') apply and the decision to increase minimum charges .is contrary to Section 21(2) of the said Act.',
	(int) 23 => '<p>(17) It was submitted that changing the rates at which minimum charges are to be realised amounts to altering or amending the conditions of supply and this could not be done without the previous sanction of the State Government. Admittedly the State Government had not, in the present case granted the approval for the change in the rates and, thereforee, the proposed increase was in violation of Section 21(2) of the 1910 Act. The High Court rejected this submission and held that in case the local authority was the licensee, no prior approval of the Government for changing the rates is requird in law.',
	(int) 24 => '<p>(18) It was next submitted before the High Court that the minimum guarantee charges can only be levied under the proviso to Section 22 of the1910 Act. It was submitted that under the proviso to Section 22 the licensee can only charge that amount which will give it a reasonable return on the capital expenditure and cover standing charges incurred by it in order to meet the possible maximum demand. According to the learned Counsel the respondent's have to satisfy the Court that the minimum demand charges have been raised to Rs. 340.00 from Rs. 40.00 and that the additional capital expenditure had been incurred which would justify Rs. 340.00 being charged as a reasonable return on the said capital expenditure.',
	(int) 25 => '<p>(19) The High Court rejected this submission and took the view that apart from proviso to Section 22, the agreement between the parties justified the claim of the D.M.C. for minimum consumption guarantee charges.',
	(int) 26 => '<p>(20) The next submission of the appellants was that the tariff viz-a-viz a consumer owning are furnace was vocative of Article 14 of the Constitution in as much as the other bulk consumers in the category of L.I. P.consumers have not been so treated. The High Court rejected this contention also and dismissed the writ petitions.',
	(int) 27 => '<p>(21) Before us also the arguments have been urged by the various Counsel who appeared during the hearing of the batch of the appeals on similar lines.',
	(int) 28 => '<p>(22) Before considering the first submission based on the provisions of Section 21(2) of the 1910 Act it would be useful to notice the provisionsthereof. Section 21(2) reads as follows :- ',
	(int) 29 => '<p>'21(2)A licensee may, with the previous sanction of the State Government, given after consulting the State Electricity Board and also the local authority, where the licensee is not the local authority,make conditions not inconsistent with this Act or with his license or with any rules made under this Act to regulate his relations with persons who are or intend to become consumers, and may, with the like sanction given after the like consultation, add to or alter or amend any such condititions; and any conditions made by a licensee without such sanction shall be null and void :Provided that any such conditions made before the 23rd day ofJanuary, 1922 shall, if sanctioned by the State Government on application made by the licensee before such date; as the State Government may, by general or special order, fix in this behalf, be deemed to have been made in accordance with the provisions of this Sub-section.'',
	(int) 30 => '<p>(23) It will be noticed that this provision is applicable to the licensees other than the local authorities. 'Licensee as defined in the 1910 Act in Section 2(h) means 'any person licensed under Part Ii to supply energy'. TheD.M.C., which is the licensee in the present case is not a licensee licensed under Part Ii to supply energy. P.M.C, is licensee by virtue of the provisions contained in the Delhi <a>Municipal Corporation Act, 1957</a>.',
	(int) 31 => '<p>(24) Coming to the second submission urged before the High Court the provisions of Section 22 of the 1910 Act may be noticed. ',
	(int) 32 => '<p>'22.Obligation on licensee to supply energy :-- Where energy is supplied by a licensee, every person within the area of supply shall except insofar as is otherwise provided by the terms and conditions of the license, be entitled, on application, to a supply on the same terms as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply :Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration.'',
	(int) 33 => '<p>(25) The reliance before us was placed by the learned Counsel for the appellants on the proviso to Section 22. It will be noticed that the proviso talks about 'a separate supply unless he has agreed with the licensee to pay him such minimum annual sum'. In the present case there is no question of any separate supply or any agreement in relation to minimum annual sum.Section 22 deals with totally different situation and has nothing to do with the minimum consumption guarantee charges provided as part of the tariff which in turn was part of the agreement between the parties.',
	(int) 34 => '<p>(26) In the present case, on facts, the challenge is to the tariff. As stated above, the tariff is the two part tariff system. The two part tariff system is comprised of two charges- (1) minimum consumption guarantee charges called demand charges and (ii) energy charges for the actual amount of energy consumed. Under this system an L.I.P. consumer pays a minimum guarantee consumption charges at the rate fixed by the D.M.C. If the L.I.P.consumer does not consume the specified minimum quantity of electricity or no energy at all even then he has to pay minimum consumption guarantee charges. But in case the consumer consumes more electricity than the minimum, then the consumer pays the electricity charges for the actual consumption of electricity beyond the minimum consumption guarantee charges, in such a manner that minimum consumption guarantee charges are merged in the total bill for electricity consumed. In other words, if a consumer consumes more than the specified minimum quantity of electricity then,in effect, he will pay for electricity which is actually consumed by him. Asstated earlier the appellants have obtained licenses for the supply of electricity to a sanctioned load of more than 100 K.W and they fall in the category ofL.I.P. and the two part tariff is applicable to them. For the period 1985-86 to1988-89 the respondents had fixed rates of minimum consumption guarantee charges at the rate of Rs. 40.00 per Kva for 1000 Kva and Rs. 33.00 perK.VA for consumption above 1000 KVA.',
	(int) 35 => '<p>(27) We had already noticed the reasons which persuaded theD.E.S.C. to justify and recommend the increase in minimum consumption guarantee charges to the D.M.C. The commercial losses mentioned in the letter of the General Manager were attributed to pilferage/fraudulentabstraction of energy etc. The minimum consumption guarantee chargesbeing quite low also attributed to the tendency of fraudulent abstraction of energy and it was after giving a serious thought to reduce the pilferage/fraudulent abstraction of energy, the D.M.C. felt desirable to revise therate of minimum consumption guarantee charges to a reasonable level sothat consumers are not tempted to adopt such unfair means and the rates arecommensurate with the fixed expenditure being measured by the undertaking. The reasons for the revision of minimum consumption charges, in respect of arc/induction furnaces, were that in many instances it was noticedthat meters where bulk supply were made were found to he defective and theconsumption recorded was found to be extremely low causing loss of hugerevenue. The arc/induction furnaces normally run continuosly and, thereforee, it was justifed to increase the rate of minimum consumption guarantee ',
	(int) 36 => '<p>'charges. The variation in the electricity consumed by different consumersindicated that the charge of pilferage of electricity and gross under-utilisationor consumption of electricity compared to the sanctioned load was not without foundation. The respondents had placed on record a tabulated statementof the consumers using induction furnaces before the High Court. If we lookat the said chart reproduced in the judgment of the High Court under appealit deals with 52 consumers including most of the appellants. This statementshows large variation of the electricity consumed, particularly at Seriall Nos. 2,13, 15, 26 and 44. If we look at consumer at Seriall No. 44 it shows that theunit worked only for 29 hours in the whole month as per the consumptionper unit per month. Whereas the unit at Seriall No. 26 had a sanctionedload of 1573.11 K.WS, the approximate number of hours worked by it in amonth were 106 i.e. little more than 4 days in month. It is surprising thatthe units are still surviving by working for a short period. On the assumptionthat the electricity consumed is as per the sanctioned load the approximatenumber of hours for which the induction furnaces have been worked in amonth has been stated in the said statement. There was thus a reasonablebasis to assume theft by substantial number of arc/induction furnacesconsumers. It will be noticed that consumer contracts for a minimum supplyof electrcitiy of certain dimensions and the D.M.C. which is licensee in thepresent case, has to buy energy by way of bulk supply from outside sourcesand has to keep it readily available for the consumer, for the whole yearround. Surely the consumer, who contracts for such high quantity of energy,does so because of its need and not for keeping it as stand by. without payingfor it. No licensee can possibly keep such enormous quantity of electricity inreserve for a consumer, month after month, without its consumption. Thatis why in the tariff, which was part of the agreement, for L.I.P. consumersthere was two part tariff system - partly minimum consumption guarantee charges and partly for actual energy consumed.',
	(int) 37 => '<p>(28) It was also stipulated that the minimnm consumption guarantee charges would not be payable if a consumer utilises or consumes 60% of thesanctioned load. The rate per unit had not been changed. It was only the minimum guarantee charges which has been revised. If a consumer consumesmore than 60% of the sanctioned load, then he is not adversely affected bythe revision of the minimum demand charges from Rs. 40.00 per Kva permonth to Rs. 340.00 per K.VA per month. It is difficult to appreciate orunderstand how the manufacturers using arc/induction furnaces could havesuch variation in the consumption of electricity, as indicated in the tabulatedstatement, except to suggest that there was large scale pilferage of electricity.It is not easy to accept that induction furnaces having sanctioned loads of more than 1000 Kw consuming electricity, if converted into aporoximatenumber of hours worked in a month at the maximum load, being as little as18,1 hours especially when there were instances of other induction furnacesconsuming far more number of units per month. The respondents had tokeep in readiness the supply of energy as per the sanctioned load of variousconsumers and were incurring expenditure for the generation, supply orpurchase of the same. When the consumers were not paying for it, therespondents obviously had no option but to revise the minimum demandcharges so as to cover up and make good the generating and supply costs.',
	(int) 38 => '<p>(29) Apart from that the fixation of tariff is a legislative function and the only challenge to the fixation of such levy can be on the ground ofunreasonableness or arbitrariness and not on demonstrative grounds in thesense that the reasons for the levy of charge must be disclosed in the orderimposing the levy or disclosed to the Court, so long as it is based on objectivecritaria.',
	(int) 39 => '<p>(30) In the present case .the respondents themselves have placedfigures to demonstrate the formula on the basis of which the rate of Rs. 340.00per Kva has been fixed. The formula shows that if 60/o of the loadsanctioned is utilised then there is no unreasonableness or excessiveness in thetariff. It was explained that if the furnaces in question work for 24 hours aday for 25 days in a month at a load Factor of 60% the consumption againstI Kw would be equal to 1 x 24 x 25 x .60== 360 units. Over .all energyconsumption rate (demand charges proportionate to one unit + per unitenergy rate) is Rs. 1.10 per unit. The total amount per K.W per month =360+1.10==Rs. 396.00. Again the consumption per Kva at the rate of 0.85(power factor) would come to 306 units and a total amount per K.VA permonth at the rate of Rs. 1.10 per unit would come to Rs. 336.60 ps. i.e.rounded to Rs. 340.00 for the purpose of minimum consumption guarantee charges.',
	(int) 40 => '<p>(31) We are thus satisfied that the recommendations of the D.E.S.C.were justified on facts and were rightly accepted by the D.M.C. in raising the minimum consumption guarantee charges to Rs. 340.00 per Kva per monthfor the first 1,000 Kva which are neither unreasonable nor arbitrary.',
	(int) 41 => '<p>(32) Coming to the plea of discrimination it will be noticed that asbulk consumers belonging to L.I.P. category the consumers of arc/inductionfurnaces are of a class by themselves and in any case the revision is as perthe agreement between the licensee and the consumers which is neitherunreasonable nor arbitratry and thus the plea of discrimination has nomerit.',
	(int) 42 => '<p>(33) The tariff was fixed by D.E.S.C. with the approval of theD.M.C. in view of the power conferred under Section 783 of the Corporation Act. Again in view the proviso to Section 277 of the Corporation Act noarguments were addressed on various Clauses of the Schedule to the IndianElectricity Act, 1910.',
	(int) 43 => '<p>(34) There is thus no merit in these appeals and the same are accordingly dismissed with costs.<p>',
	(int) 44 => '<p>'
)
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Subject	Electricity
Court	Delhi High Court
Decided On	Jan-12-1993
Case Number	Civil Appeal No. 1478 of 1990
Judge	J.S. Verma,; Yogeshwar Dayal and; N. Venkatachala, JJ.
Reported in	49(1993)DLT630; 1993(27)DRJ95
Acts	Municipal Corporation Act, 1957 - Sections 283; Delhi Electricity Act, 1910 - Sections 22; Constitution of India - Article 14
Appellant	Ashok Soap Factory and anr.
Respondent	Municipal Corporation of Delhi and ors.
Cases Referred	Ashok Soap Factory & Anr. v. M.C.D.

Ashok Soap Factory and anr. Vs. Municipal Corporation of Delhi and ors. - Court Judgment