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Judgment
Narasimham, J.—This is an appeal against the judgment of the Subordinate Judge, Vijayawada in A. S. No. 102 of 1958 by which the plaintiffs were given partial relief in the matter of a declaration they sought about the levy of enhanced rates charged by the Municipal Council, Vijayawada for consumption of electricity for domestic and industrial uses.
Cross-objections are preferred by the Municipal Council in so far as the judgment struck down the duty of half anna per unit in addition to the usual rates of tariff as illegal for want of sanction of the State Government.
The facts giving rise to this litigation are these: The Municipal Council, Vijayawada, is the licensee for the supply of electric energy under the Indian Electricity Act of 1910 within the municipal limits of Vijayawada under a licence granted by the State Government in its order dated 22-11-1927. The licence was termed as "the Bezwada Electric Licence, 1927, and was subject to the provisions of the Indian Electricity Act, 1910. The licence, a certified copy of which is filed as Ex. B-3, embodies the terms and conditions of the licence which inter alia provided for the limits of the prices to be charged in respect of the supply of energy. An annexure appended to the licence stated the maximum charges. If the licensees failed to comply with the terms and conditions of the licence, the licence is revocable by the State Government. It is pertinent to note the stipulations as to the limits of prices to be charged in respect of the supply, of energy.
Clause 10 relating thereto is in these terms:-
Limits of prices to be charged in respect of the supply of energy. The prices to be charged by the licensees for energy supplied by them shall not exceed those stated in that behalf in the third annexure or in the case of a method of charge approved by the Government of Madras in accordance with the clause X of the Schedule to the Act, such maximum as the Government of Madras may fix on approving the method; nevertheless the licensees may enter into special contracts, subject to sections 22 and 23 of the Act, for the supply of energy.
The main contention relates to these charges. We would scrutinise this provision elaborately in the appropriate context. We would now pass on to the narration of further facts.
The Municipal Council was supplying electricity to consumers at certain rates. The rates which were charged from consumers prior to the enhancement now impugned, had come into effect from 1-4-1940. The Municipal Council had published a booklet, Ex. A-1 entitled "Conditions and Rates of Supply of the Vijayawada Municipal Electricity Department".
Condition No. 15 related to the method of charging for current which is in these terms :
The price and method of charging for current supplied shall be such as may from time to time be fixed by the licensee, in accordance with the provisions of the Act and of his licence, or such as may be made the subject of special agreement between the consumer and the licensee.
While the rates as were embodied in Ex. A-1 were being collected from the consumers, the Municipal Council passed a resolution on 30-4-1956 enhancing the rates payable for domestic and industrial uses, and further levying a duty of 6 pies per unit per month for domestic use and fuel cost surcharge.
The Council''s resolution No. 33 dated 30-4-1956, Ex. A-6 is in these terms :
Read : Resolution of the Budget Committee dated 31-3-1956 and note of the Commissioner revising the Electricity Tariff of Parts II, III and IV of present Booklet of conditions and rates of supply.
A copy of the revised conditions and rates is circulated to the members of the Council separately).
RESOLUTION : The Revision of tariff is approved. The revised tariff to be given effect from the date or dates on which the metre readings are taken for the month of April 1956 i. e., from April 1956 consumption.
As. the Government have already asked the Municipality to revise the tariff and the revised rates are not more than the rates proposed by the Government, the revision may be given effect to in the anticipation of Government''s approval.
O. S. No. 514 of 1956 instituted in the Court of the District Munsif, Vijayawada, is a representative suit filed by certain consumers impugning the said resolution as illegal and invalid. Their case is that the rates originally fixed could not be unilaterally altered and increased to the prejudice of the consumers, that the consumers had no notice of the proposed enhancement, that the revised rates could be effected only with the prior approval of the State Government, which was not obtained, that the levy of duty and the fuel cost surcharge are illegal and that in any event the resolution charging new rates could not be given effect to retrospectively. They prayed for the following reliefs :
a) declaring that the resolution No. 33 dated 30-4-1956 passed by the Municipal Council, Vijayawada, is illegal, invalid and unenforceable in law;
b) Consequently restraining the defendant from collecting charges from the consumers of electrical energy in the licensee''s area at the new rates in pursuance of the said resolution;
c) the costs may be granted to them; and
d) that such other further or other reliefs as this Hon''ble Court may deem fit may be granted.
The Municipal Council refuted the allegations of the plaintiffs and pleaded that they were competent to enhance the rates, provided they did not exceed the maximum rates stipulated under the terms of the licence granted by the State Government, that no prior approval of the State Government was necessary, and that it was also not incumbent on their part to issue notices to the consumers before affecting such enhancement within the maximum rates stipulated. The Municipal Council pleaded in particular that under clauses 4 and 10 of the agreements entered into by the consumers with the Municipal Council, they definitely agreed to pay the current official scales of rates and the enhancement of rates as such could not be questioned.
The material issue tried in the suit was:
Whether the levy at enhanced rates is illegal and unenforceable?
The learned District Munsif dismissed the suit with costs, finding against the plaintiffs.
The plaintiffs carried the matter in appeal to the Subordinate Judge, Vijayawada, who upheld the resolution and the levy of enhanced rates, but held that retrospective effect could not be given to the resolution and the revised rates. He held that the duty sought to be levied was illegal as prior sanction of the State Government was not obtained. So he decreed the plaintiff''s suit in part.
The plaintiffs have come up in second appeal. The Municipal Council has preferred cross-objections with regard to the duty sought to be levied, which was struck down as illegal.
This appeal came up in the first instance before Krishna Rao, J. who referred it to a Division Bench as he considered that the subject-matter involved a sum of Rs. 11/2 or 2 lakhs to the Municipality.
Sri Krishnamurthy has argued in support of this appeal that the learned Subordinate Judge had taken an erroneous view in finding that no prior sanction or approval of the State Government was necessary for revision of rates and upholding the resolution of the Municipal Council for the levy of enhanced rates from 30-4-1956.
The short question is whether as contended by the appellants-plaintiffs the Municipal Council is precluded from revising the rates without the prior sanction and approval of the State Government.
Sri Krishnamurthy relied on section 21 (2) of the Indian Electricity Act which is in these terms :
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 his Act or with his licence or with any rules made under this Act, to regulate his relation with persons who are or intend to become consumers, and may, with the like sanction given after like consultation, add to or alter or amend any such conditions; and any conditions made by a licensee without such sanction shall be null and void.
A reading of this section is sufficient to indicate that this provision has no application. This is not a case where the conditions of the licence granted to the licensee i.e., the Municipal Council, Vijayawada, have been varied. What the Municipal Council purported to do was to act in conformity with the conditions of the licence and revise the rates which, they contend, they were not precluded from doing.
Section 21 which speaks of regulating the relations with consumers has nothing to do with the charges to be made for energy supplied. The section which deals with the charges is Section 23. Vide Burdwan Electric Supply Co. Vs. Srimati Kumud Kumari Choudhury and Others,
On the contrary, it has been expressly provided in the sixth schedule of the Electricity (Supply) Act, 1948 (Act LIV of 1948) thus :
Notwithstanding anything contained in the Indian. Electricity Act, 1910, except sub-section (2) of Section 22-A and the provisions in the licence of a licensee, the license shall so adjust his rates for the sale of electricity whether by enhancing or reducing them that his clear profit in any year of account shall not, as far as possible, exceed the amount of reasonable return :
Provided that such rates shall not be enhanced more than once in any year of account.
Sri Krishnamurthy has urged that even so, Section 58 of the Electricity (Supply) Act has effected a change in the exercise of the right of the licensee to revise the rates.
23a) Section 58 is in these terms :
The Board or where no Board is constituted under this Act, the State Government shall have power to direct the amortisation and tariffs policies of any licensee, being a local authority with respect to his licensed undertaking in such manner as the Board or the State Government, as the case may be, after giving the local authority a reasonable opportunity of being heard, considers expedient for the purposes of the Act; and the licensee, being a local authority, the provisions of any other law or of any rules made or directions given thereunder notwithstanding, shall give effect to any such directions of the Board or the State Government as the case may be:
Provided that the Board shall not issue any directions under this section except after obtaining the prior approval of the State Government''''.
As rightly contended by the learned Advocate General for the Municipal Council, there is nothing in this provision which interdicts any revision of the rates.
The learned Advocate General has rightly pointed out that Section 70 (2) of the Electricity (Supply) Act expressly provides that
''''Save as otherwise provided in this Act, the provisions of this Act shall be in addition to and not in derogation of, the Indian Electricity Act, 1910.
Whilst obviously there is nothing in these provisions to support Sri Krishnamurthy''s contention, he submits that in any event prior sanction or approval is contemplated because the Municipal Council had in fact been obtaining such approvals on prior occasions for the revision of its rates, and as the resolution itself is worded that
The revision may be given effect to in anticipation of the Government''s approval.
He points out that the conditions and rates of supply embodied in the booklet Ex. A-1 are expressed to have had the approval of the State Government in G. O. Ms. No. 173 dated 25-1-1940.
Sri Krishnamurthy''s argument seems to be that as approval of the State Government is indicated and in the resolution Ex. A-6; it must be taken that prior approval was in the contemplation of the Municipal Council and was necessary.
If approval were necessary, it must be with reference to a specific provision. In the absence of any specific provision, if in fact such an approval was sought or obtained or was in the contemplation of the Municipal Council, it cannot be said that such approval was a condition precedent to the revision of rates. It may probably be conventional. But, as the learned Advocate General has pointed out, the State Government itself had communicated to the Municipal Council that no such prior approval was necessary. He refers to Ex. B-22 dated 9-7-1956 which is in these words :
''''Government of Andhra
Memo No. 3442 M/58-1 D/.9-7-56 (P. W. T. Dept.).
Sub : Electricity Vijayawada Municipal undertakings - revision of tariffs - H. T. and L. T. in the licensees area.
From : Commissioner, Vijayawada Municipality Rc./1/8140/58 dated 28-6-1956.
The Commissioner, Vijayawada Municipality is informed that the approval of the Government is not necessary as the licensee is competent to revise the rates under 6th schedule of Electricity (Supply) Act.
This line of challenging the resolution renders the appellants no assistance. We are prepared to accede to the contention of the learned Advocate General that the revision of rates is a matter within the competence of the Municipal Council, the licensee, if the maximum rates indicated in the conditions of the licence are not exceeded.
In the earlier part of this judgment, we have referred to the term of the licence that the prices to be charged by the licensee for electricity supplied by them shall not exceed those stated in the third annexure, etc. (Clause 10 of the licence).
It is not the plaintiffs'' case that the rates now charged exceed the maximum. In fact, they are far beneath the optima indicated in the said annexure.
While considering the conditions and rates of supply as embodied in Ex. A-1, we have referred to condition No. 15 in the conditions of supply under the caption
Method of charging for current
that the
price and method of charging for current supplied shall be such as may from time to time be fixed by the licensee in accordance with the provisions of the Act and of his licence, etc.
These provisions are dear enough to support the submissions of the learned Advocate General supporting the Municipal Council''s action in revising the rates.
He has also referred to the forms of agreement entered into with the Municipal Council by the consumers. He has relied on the form of application for electricity supply by a consumer and the form of agreement executed by a consumer in favour of the licensee. In Annexure A embodied in Ex, A-1, the form of application for electricity supply is indicated, clause (2) whereof is:
I agree to pay for the said energy, service connection and other dues including the deposit of such security as may be demanded in accordance with the scale of rates and the rules of the licensee.
This is an unconditional undertaking to pay according to the scale of rates of the licensee and the rules of the licensee.
Annexure B embodied in Ex. A-1 set out the form of agreement, clause 4 whereof reads thus:
''''The consumer shall pay to the licensee for all electrical energy so supplied at the rates, and in accordance with terms, given in the licensee''s current official scale of rates, and the signing of this agreement is held to imply concurrence with the terms of the said scale of rates.
whilst clause 5 set out
A consumer under this agreement is required to state (see schedule) under which of the rates, set out in the licensee''s official book of rates, he desires to be charged.
This is again a stipulation that the consumer shall pay to the licensee in accordance with the current official scale of rates.
It has been the endeavour of Sri Krishnamurthy to interpret this as meaning the rates which the licensee levied at the time of the agreements entered into with the consumers. Giving this meaning to the term ''''current official scale of rates he argued that the rates could not be enhanced later.
It is not clear to us that such an interpretation is warranted by the expression "licensee''s current official scale of rates".
The learned Advocate General has contended that these words in the context of the agreement between the consumer and the licensee should be understood as the official rates as levied from time to time.
The words have to be given their plain meaning. The term ''''current" is explained in the Oxford English Dictionary as
Accepted or in vogue at the time in question
The term ''''scale'''' is explained in the said Dictionary as
A graduated series, succession or progression.
Giving these terms their plain meaning in the context of rates charged for the supply off electricity, they do not definitely cover or import the concept of a rate fixed for all time with the consumers. On the contrary, the words used are perfectly intelligible as connoting a rate upto a certain maximum which may be varying from time to time.
We are inclined to accept the contention of the learned Advocate General that condition 10 of the licence read with the third annexure and condition 15 of the ''Conditions and Rates of Supply'' as embodied in Ex. A-1 approved by the State Government and clause J of the Sixth schedule of the Electricity (Supply) Act, empowers the Municipal Council to revise the rates.
Clause 2 of the Application form Annexure A referred to supra read with the 4th clause of the form of agreement Annexure B, constitutes an agreement in writing by the consumers to pay the licensee the current official scale of rates, the true meaning whereof, we have discussed supra.
The prior sanction or approval of the Government is not made a condition precedent to such revision as could be effected by the licensee. So, the appellants fail in their contention contra. The resolution, Ex. A-6 cannot therefore be assailed as ultra vires the powers of the Municipal Council or as illegal and unenforceable.
The learned Subordinate Judge has given relief that the resolution could take effect only prospectively. This view of the learned Sub-ordinate Judge has not been assailed before us, and we consider that he is right in giving effect to the resolution prospectively.
The appellants do not appear to have put forward their case about the fuel surcharge. There is no discussion relating thereto in the judgment of the learned Subordinate Judge and no arguments have been addressed to us in that behalf. We are therefore unable to pronounce our view on that matter.
There remains the question of levy of electricity duty at 6 pies per unit per month in addition to the rates payable for consumption. There is no controversy before us that the levy of duty is governed by the Madras Electricity Duty Act, 1939.
Section 7, which is relevant in this context, is in these terms :
(1) Any licensee may, with the previous sanction of the State Government and subject to such conditions as they may impose, recover from any person or class of persons to whom energy is sold at a price of more than two annas per unit, the duty which falls to be paid by the licensee in respect of the energy so sold or any part of it, as may be determined by the State Government''''.
Section 3 has to be read in this context, which is in these terms, in so far as it is relevant :
(i) Save as otherwise provided in sub-section (2) every licensee in the State of Madras shall pay every month to the State Government in the prescribed manner, a duty calculated at the rate of six pies per unit of energy, on and in respect of all sales of energy..................
Manifestly such duty could be levied only with the previous sanction of the State Government. It is an admitted fact that no sanction has been obtained. If so, the duty would be a wrongful levy.
The learned Advocate General, however, attempted to present this case of duty as nothing more than an enhancement of the rate in so far as it is an addition thereto. But we feel that we cannot accede to the assumption that duty in effect forms part of the rate as it is clearly against the provisions of the Statute.
The clear words of a statute cannot be circumvented by any specious interpretation resulting in increasing the burden on the consumer.
Any taxing legislation has to be strictly construed and in favour of the subject.
In Inland Revenue Commissioner v. Duke of Westminister, 1935 All ER 259 at p. 270, Lord Russel has stated :
The subject is not taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and circumstances of his case.
The Supreme Court observed about the taxing legislation, in Commissioner of Sales Tax, Uttar Pradesh Vs. The Modi Sugar Mills Ltd., thus :
In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The Court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed, it cannot imply anything which is not expressed, it cannot import provisions in the statutes so as to supply any assumed deficiency.
It is therefore manifestly incorrect to interpret duty as part of a rate and legalise the levy in contravention of the express statute, to wit, the Madras Electricity Duty Act, 1939. We are definite that the provisions of Section 7 of the Madras Electricity Act, 1939, have to be complied with strictly and where they have not been so complied with, the levy has to be struck down as illegal.
The cross-objections therefore fail. In the result, the appeal and the cross-objections fail and are dismissed with costs.
C. M. P. No. 4195 of 1960 is dismissed.
C. M. P. No. 8085 of 1960 :
The learned Advocate General does not oppose the documents being admitted as additional evidence. The documents are admired as additional evidence.