Execution of a supplementary agreement for reduction of contract demand of consumer-Regulation 9.2.6

Regulation 9.2.6 of the Regulations of 2005 provides for execution of a supplementary agreement for reduction of contract demand/sanctioned load of the consumer. Similarly, for enhancement of load also, even if a fresh agreement may have been executed between the parties, the same could be treated as nothing but a supplementary agreement of the initial agreement by which the electricity connection was granted for a particular load. Clause 2(l) of the Regulations also defines “contract demand” to be demanded mutually agreed in the agreement or agreed through other written communication, meaning thereby that for variation of the contract demand execution of a fresh agreement is not essential and the same can be done otherwise also by mere written communication. (Para 14)

JHARKHAND STATE ELECTRICITY BOARD AND OTHERS VS M/S RAMKRISHNA FORGING LIMITED.

CIVIL APPEAL NO.6145 OF 2010

30 April, 2021

The Hon’ble Supreme Court consisting of Justice L. Nageswara Rao and Justice Vineet Saran held in this case that the consumer has the liberty of getting its load enhanced under Regulation 9.1, the reduction of contract demand/sanctioned load can also be prayed for and decided in terms of Regulation 9.2. The proviso to Regulation 9.2.1, no doubt, provides that no reduction of load shall be allowed before expiry of the initial period of agreement, which is three years in the present case. The question would be whether the initial agreement is to be considered for such purpose, or the subsequent agreements. A detailed note has been made after hearing the arguments of both parties.

The respondent is a small-scale industry. For running its industry, it had a contract demand/sanctioned load of electricity of 4000 KVA from the appellants­ Jharkhand State Electricity Board (for short ‘the Board’). The request of the respondent for reduction of such sanctioned load to 1325 KVA having been refused, the respondent filed a writ petition before the High Court of Jharkhand, which has been allowed. Aggrieved by the said judgment of the High Court, this appeal has been preferred by the Board. The brief facts, relevant for the present case, are that the respondent, which is a small-scale industry, had entered into an agreement with the Board on 14.04.2004 for High Tension (H.T.) connection of 325 KVA load. The respondent thereafter applied for enhancement of load from 325 KVA to 1325 KVA, which was allowed by the General Manager­cum­Chief Engineer of the Board on 14.03.2006. The respondent again applied for enhancement of load from 1325 KVA to 3500 KVA, which was sanctioned by the Board on 26.12.2006. On a further request of the respondent, the load was again enhanced by 500 KVA to 4000 KVA.

For each enhancement of load, fresh agreements to that effect were entered into between the respondent and the Board, the last one being on 07.07.2007 for supply of 4000 KVA load. The respondent alleges that after the 3 enhancement of load, it was facing major tripping’s as well as continuous load shedding which was affecting the costly machineries and, therefore, the respondent decided to reduce the load from 4000 KVA to 1325 KVA. Accordingly, the respondent filed an application, on 20.09.2007, before the authority of the appellants Board for such reduction. Vide its order dated 08.11.2007, the Electrical Superintending Engineer rejected the said application of the respondent for reduction of load from 4000 KVA to 1325 KVA informing the respondent that from the date of enhancement of supply of load, an agreement (dated 07.07.2007) would be enforced for a period of three years and treating it to be a case of determination of agreement, and quoting the Clause 9B of the agreement, it was provided that the agreement could not be permitted to be determined prior to the completion of initial period of three years from 07.07.2007 and that the respondent will have to pay the minimum guarantee charges and other charges, even if the respondent decides to terminate the agreement.

The case involved Shri Anup Kumar, learned counsel appearing for the appellants and Shri N.P. Singh, learned Senior Counsel appearing for the respondent, assisted by Shri Devashish Bharuka, Advocate ­on­ Record for the respondent. The learned counsel for the appellants stated that, in terms of Regulation 9.2.1 of the Regulations of 2005, which relates to the reduction of contract demand/sanctioned load, no reduction of load could be allowed before the expiry of the period of agreement which, according to the appellants, would be 6 07.07.2007 when a fresh agreement was executed for enhanced load of 4000 KVA. Learned counsel for the appellants, thus submitted that the application for reduction of load filed by the respondent on 20.09.2007, which was well within the period of three years from 07.07.2007, was rightly rejected by the Board vide its order dated 08.11.2007, as it was in conformity with the provisions of the Regulations of 2005.

In return, learned Senior Counsel appearing for the respondent submitted that the agreement was initially entered into on 14.04.2004 and thereafter even though technically fresh agreements may have been executed for enhancement of load of the respondent, but the same were only extension/amendment of the initial agreement dated 14.04.2004, and the terms of each of these agreements were identical, with the only change being that of the increased contracted load. It has been contended by the learned Senior Counsel for the respondent that the Regulations does not permit execution of a fresh agreement in case of enhancement of load, and the enhancement agreements would merely be supplementary agreements in continuation of the initial agreement dated 14.04.2004 and cannot be treated as fresh agreement because it is the same electricity connection, which was granted by the agreement dated 14.04.2004, in which there have been amendments from time to time for increase of load, and merely executing a fresh agreement for enhancement of load cannot be termed as fresh agreement for the purpose of Regulations of 2005. It has, thus, been submitted that the application of the respondent for reduction of load dated 20.09.2007 has to be treated as after a period of three years from the date of initial agreement dated 14.04.2004 and thus, the application of the respondent ought to have been allowed and/or should be deemed to be allowed in terms of the provisions of Regulations of 2005. In this regard, reliance has been placed on Regulations 2(l), 9.1 and 9.2 of the Regulations of 2005.

After hearing the arguments of both the parties the court stated that “ From perusal of the communication dated 08.11.2007, it is clear that the application of the respondent for reduction of load has been rejected in terms of Clause 9(B) of the agreement, treating the date of commencement of the agreement to be 7/12.07.2007 and only by considering the provision of determination of the agreement, which could not have been without giving notice of less than 12 calendar months. It is clear that the said communication/order does not consider the provisions of the Regulations of 2005 with regard to reduction of load, but only treats the application for reduction of load to be an application for determination of the agreement. Chapter 9 of the Regulations of 2005 deals with the enhancement and reduction of contract demand/sanctioned load. Regulation 9.1 deals with enhancement of contract demand/sanctioned load, whereas Regulation 9.2 deals with the reduction of contract demand/sanctioned load.” (Para 11 and 12)

Further the court held that, “the consumer has the liberty of getting its load enhanced under Regulation 9.1, the reduction of contract demand/sanctioned load can also be prayed for and decided in terms of Regulation 9.2. The proviso to Regulation 9.2.1, no doubt, provides that no reduction of load shall be allowed before expiry of the initial period of agreement, which is three years in the present case. The question would be whether the initial agreement is to be considered for such purpose, or the subsequent agreements. Regulation 9.2.6 of the Regulations of 2005 provides for execution of a supplementary agreement for reduction of contract demand/sanctioned load of the consumer. Similarly, for enhancement of load also, even if a fresh agreement may have been executed between the parties, the same could be treated as nothing but a supplementary agreement of the initial agreement by which the electricity connection was granted for a particular load. Clause 2(l) of the Regulations also defines “contract demand” to be demanded mutually agreed in the agreement or agreed through other written communication, meaning thereby that for variation of the contract demand execution of a fresh agreement is not essential and the same can be done otherwise also by mere written communication.” (Para 14)

Concluding the court held that;

“While dismissing the appeal, we are not going into the question as to whether the provisions of Regulation 9.2.1 are discriminatory, arbitrary and against the public policy, as has been held by the Jharkhand High Court vide its judgment dated 23.07.2008. The application of the respondent dated 20.09.2007 for reduction of contract load/sanctioned load from 4000 KVA to 1325 KVA would be deemed to have been allowed under the provisions of Regulation 9.2 of the Regulations of 2005, and the respondent shall be entitled to all consequential benefits.” (Para 19 and 21)

The appeal was dismissed according, with no costs to order.

View/ Download judgment: JHARKHAND STATE ELECTRICITY BOARD AND OTHERS VS M/S RAMKRISHNA FORGING LIMITED.

Aaron Varughese