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Judgment
Challenge by the petitioner is to the order dated 27.12.2016 by which the respondentÂauthority has held that the petitionerÂcompany is not entitled
to remission of the Demand Charge and the Guaranteed Energy Charge under ClauseÂ4 of the bilateral agreement, for the period between
03.09.2005 to 27.10.2005.
This case has a chequered history of litigation. The petitionerÂM/s Gautam Ferro Alloys, a unit of M/s Bihar Foundry and Casting Ltd., is engaged
in manufacture of Silico Manganese and Ferro Alloys. It was granted electric connection for a contract demand of 3000 KVA for which a bilateral
agreement was entered between the parties on 25.02.2003. On the allegation of violation of certain statutory provisions, the Jharkhand State Pollution
Control Board (JSPCB) vide its order dated 20.12.2004 directed closure of the petitioner's unit, and on 03.09.2005 its factory premises was sealed by
JSPCB. The petitioner came to this Court in W.P.(C) No.5033 of 2005 challenging the impugned action of the respondentÂJSPCB and by an interim
order dated 25.10.2005 the Pollution Control Board was directed to remove its seal from the factory premises of the petitionerÂcompany within three
days, and in compliance of the said order JSPCB removed its seal on 27.10.2005. Now, this period between 03.09.2005 to 27.10.2005 became a bone
of contention, igniting series of litigation between the parties.
Raising a grievance against the Energy Bill issued in the month of October, 2005, the petitioner came to this Court in W.P.(C) No.5870 of 2009.
Specific plea raised by the petitioner was that on account of circumstances beyond its control which would attract the Force Majeure clause as
incorporated under ClauseÂ4 to the bilateral agreement dated 25.02.2003 it is not liable to pay the Demand Charge and the Guaranteed Energy
Charge to the respondentÂDVC. The petitioner by that time had succeeded before the revisional authority. The Member, Board of Revenue,
Jharkhand by an order dated 05.12.2006 quashed the order passed by the Chairman, Jharkhand State Pollution Control Board holding that the Pollution
Control Board had issued the impugned order in breach of the 2nd proviso to Section 21(4) of the Air (Prevention and Control of Pollution) Act, 1981.
This order by the Board of Revenue was one of the defences raised by the petitioner before this Court in W.P.(C) No.5870 of 2009. This Court
accepting the contention raised on behalf of the petitioner, that the issue of Force Majeure has been decided by the order of Board of Revenue,
Jharkhand, by an order dated 29.03.2011 remanded the matter to the respondentÂDamodar Valley Corporation to decide the claim of the petitioner
regarding adjustment of the Energy Bill for the period between 03.09.2005 to 27.10.2005 visÂaÂvis ClauseÂ4 of the bilateral agreement. This order
of the writ Court was taken in appeal by the Damodar Valley Corporation in LPA No.283 of 2011. The Letters Patent Appeal was confined only to
the finding recorded by the writ Court in its order dated 29.03.2011 by which the learned Single Judge has held that the question of closure of
petitioner's unit on account of Force Majeure has already been decided by the Member, Board of Revenue. This part of the writ Court's order was
interfered by the Letters Patent Court and LPA No.283 of 2011 stood disposed of by an order dated 12.03.2012, in the above term. Thereafter, claim
of the petitioner, on remand, was rejected by the Deputy Chief Engineer (Commercial) by a cryptic order dated 18.03.2013. By simply observing that
the petitionerÂM/s Gautam Ferro Alloys has not been able to establish its claim as per the law, its claim was rejected. Aggrieved, the petitioner came
to this Court in W.P(C) No.2408 of 2013. The writ petition stood allowed by an order dated 10.09.2015 by which the impugned order dated 18.03.2003
was quashed by the writ Court and the matter was remanded back to the Deputy Chief Engineer (Commercial) to pass a fresh order. Impugned order
dated 27.12.2016 is the order passed in purported compliance of the writ Court's order dated 10.09.2015.
Heard.
Contending that the closure of petitioner's factory premises on 03.09.2005 by the respondentÂJSPCB which is a statutory authority is a fact which
does not require any investigation on facts, insofar as, cessations of work and nonÂutilisation of the electric supply in the petitioner's unit during the
period in question is concerned, Mr. Nitin Kumar Pasari, the learned counsel for the petitioner submits that ClauseÂ4 of the bilateral agreement is
attracted in all its dimensions and merely because the petitioner did not inform closure of its factory premises in time it would not alter the position in
law on applicability of ClauseÂ4 as obtaining on 03.09.2005, nor take away the benefit accrued to the petitioner under ClauseÂ4 of the bilateral
agreement. It is submitted that it is not that the petitioner alone is responsible for ensuring compliance of the terms and conditions under the bilateral
agreement, it was also for the respondentÂDamodar Valley Corporation to ensure full utilisation of the agreement between the parties. The learned
counsel for the petitioner has relied on decision in “Industrial Finance Corporation of India Ltd. vs Cannanore Spinning And Weaving Mills Ltd.
And others†reported in (2002) 5 SCC 54.
As against the above, Mr. Srijit Choudhury, the learned counsel for the respondent ÂDVC has reiterated the stand of the respondentÂDVC as
reflected in the impugned order dated 27.12.2016. It is contended that the petitioner which has failed to intimate closure of its factory premises on
03.09.2005 and did not ask DVC for disconnection of electric supply cannot seek exemption from paying Demand Charge and Guaranteed Energy
Charge for the period between 03.09.2005 to 27.10.2005.
Before referring to ClauseÂ4 to the bilateral agreement, it is pertinent to record that order passed by the Board of Revenue on 05.12.2006 has
attained finality is an admitted position. In the previous proceeding in its order dated 29.03.2011 the writ Court has dealt with this issue in detail. In
none of the proceedings either before the respondentÂDVC or in this Court it has been denied that the factory premises of the petitioner was sealed
by the respondentÂJSPCB on 03.09.2005 and only when this Court passed an order on 25.10.2005 in W.P(C) No.5033 of 2005, JSPCB's seal from
the factory premises of the petitionercompany was removed; in fact it could not have been denied. It is not a case pleaded by the respondentÂDVC
that during the period between 03.09.2005 and 27.10.2005 the petitioner has utilized electric connection at its factory premises or on account of
continued electric supply in the petitioner's premises the respondentÂDVC has suffered losses. Specific stand of the respondentÂDVC appearing
from the impugned order dated 27.12.2016, in paragraph nos. 9 and 10 reads as under:
“9. Furthermore, it shall be imperative to note that the Unit had informed DVC of the sealing of its factory premises by way of a letter dated 30
September, 2005, being the last day of the month of September while the order for such sealing was passed by JSPCB on 3 September 2005.
Additionally, upon perusal of the received copy of the said letter dated 30 September 2005, I have observed that the same was received by DVC only
on 4 October 2005. The Unit, being the consumer, itself had not informed DVC of the contingency till the last day of the month. The delay occasioned
by the Unit in duly informing DVC of the event is purely an act of negligence on its part. Even though the Unit had preferred a Writ before the
Hon'ble High Court of Jharkhand challenging the sealing of the factory and had reasonable grounds to believe that the Writ would succeed and such
an order of sealing would be held to be illegal, which it did, I fail to see any reason as to why they waited till the end of the month to intimate DVC of
its situation. The entire month of September had passed before the sealing of the factory premises was brought to the knowledge of DVC. Therefore,
I observe that DVC was within its rights as per the Agreement to levy electrical energy charges for the month of September 2005.
 10. On a thorough perusal of the said letter dated 30 September 2005 I note that there is no specific prayer for disconnection of supply of electrical
energy by the Unit. In the said letter, the unit had expressed its inability to utilize the electrical energy while the factory was sealed. Hence, this letter
cannot be treated as a request by the Unit to DVC to disconnect or discontinue supply of electrical energy to the factory. It shall be pertinent to
consider that as per the Electricity Act, 2003, disconnection of supply of electrical energy can only be done by the licensee in the events of theft of
electricity, interference with meters or due to default of payment of energy bill. Additionally, the (Electricity Supply Code) Regulations, 2005, bearing
Notification No.JSERC/Regulation/64/268, dated 28 July 2005, issued by the Jharkhand State Electricity Regulatory Commission ('JSERC'), a licensee
can disconnect the supply of electrical energy on account of nonÂpayment of charges by the consumer. Neither did the Unit, being the consumer,
apply to DVC to disconnect supply of energy to its premises, nor did the other aforementioned circumstances arise, given the factual matrix of the
present case. Hence DVC had no statutory right to disconnect the supply of electrical energy to the factory premises of the Unit. Since no
disconnection was occasioned, the raising of energy bills by DVC on the Unit for the electrical energy supplied by it to the Unit has per the terms of
the Agreement is not unreasonable.
ClauseÂ4 of the bilateral agreement is extracted hereunder:
 “Both the parties shall ensure compliance with the terms of this agreement. However, no party shall be liable for any claim for any loss, damage
or compensation whatsoever arising out of the failure to carry out the terms of this agreement or shortage of power supply to the extent that such
failure or shortage is due the ForceÂMajeure on account of the events such as strike, lockÂout, fire, accident, cyclone or any other act of God beyond
the control of any party or due to any restraint or regulation of the State Govt. or Central Govt. or any other statutory authority. But any party claiming
the benefit under this clause shall satisfy the other party of the existence of such a ForceÂMajeure and shall make the best endeavour to perform its
normal obligations as per terms of this Agreement as soon as possible after the cessation of such ForceÂMajeure. If at any time the consumer is
prevented from receiving or using the electrical energy to be supplied under this agreement either in whole or in part or if the Corporation is prevented
from supplying or unable to supply such electrical energy owing to any one of the aforesaid reasons, then the Demand Charge and the Guaranteed
Energy Charge as set out in ScheduleÂII annexed hereto payable by the consumer shall be reduced in proportion to the ability of the consumer to take
or the Corporation to supply such power.
 Provided that the failure of the consumer to use the electrical energy under this agreement either in whole or in part due to planned shutÂdown
and/or breakdown of machinery or plant in course of normal operation or shutdown of machinery or plant due to nonÂavailability of raw materials or
similar other reasons shall not be ground for the aforesaid reduction in Demand Charge and the Guaranteed Energy Charge.â€
A glance at the above provision would make it apparent that ClauseÂ4 breaks into three parts; the first part is in the nature of an exclusion clause,
the second part deals with obligation of the party seeking benefit under ClauseÂ4 and the third part explains the incidents in which benefit under
ClauseÂ4 is available to a party. The first part relates to claim for any loss, damage or compensation by any of the party to the agreement arising out
of failure to carry out terms of the agreement or shortage of power supply to the extent that such failure or shortage is due to Force Majeure on
account of the events such as strike, lockÂout, fire, accidents, cyclone or any other Act of God beyond the control of any party or due to any restraint
or regulation of the State Government or Central Government or any other statutory authority. It has been made explicitly clear that no party shall be
liable for any claim for any loss, damage or compensation in the above circumstances. The second part of ClauseÂ4 deals with a claim by a party to
the agreement claiming benefit under ClauseÂ4. The party claiming benefit is required to satisfy the other party of the existence of Force Majeure,
besides making its best endeavour to perform its normal obligation as per the terms of the agreement as soon as possible after the cessation of such
Force Majeure. The third part of ClauseÂ4, which is relevant for deciding legality of the impugned order dated 27.02.2016, provides that if at any time
the consumer is prevented from “receiving†or “using†the electrical energy to be supplied under this agreement either in whole or in part or if
the Corporation is prevented from supplying or unable to supply such electrical energy owing to any one of the aforesaid reasons, then the Demand
Charge and the Guaranteed Energy Charge as set out in ScheduleÂII annexed to the agreement payable by the consumer shall be deducted in
proportion to the ability of the consumer to take or the Corporation to supply such power.
Proviso to ClauseÂ4 is in the nature of an explanation expanding the scope of nonÂadmissibility of benefit under ClauseÂ4.
The issue raised by the petitioner is, “whether closure of its factory premises by an order of the respondentJSPCB, which has been found
illegal by the Board of Revenue, as a result of which it was prevented from utilising the electrical supply at its unit would entitle it to claim benefit
under ClauseÂ4?â€
Under ClauseÂ4 to the bilateral agreement, the expression Force Majeure has been explained to mean any event which is beyond the control of
the parties such as, strike, lockÂout, fire, accident, cyclone or any Act of God. This expression has further been expanded by including an order of
restraint or regulation of the State Government or Central Government or any other statutory authority. ClauseÂ4, apparently, is very wideworded; it
encompasses within its fold almost all the circumstance beyond the control of the parties. Jharkhand State Pollution Control Board is a statutory
authority and closure of the petitioner's factory premises on 03.09.2005 would amount to restraint by a statutory authority, in my opinion, cannot be
disputed. The expressions “receiving†and “using†in ClauseÂ4 are relevant. Benefit under ClauseÂ4 on account of any of the reasons
indicated in ClauseÂ4 is available to the consumer, even if it was prevented from receiving or using the electrical energy supplied, in part. On account
of closure of its factory premises on 03.09.2005 the petitioner was prevented from using the electrical supply at its factory premises, is a matter of
record. The facts pleaded by the petitioner; notice issued by Jharkhand State Pollution Control Board on 20.12.2004 directing it to close down its unit,
closure of it's factory premises by 03.09.2005, order dated 25.10.2005 passed in W.P.(C) No.5033 of 2005 and removal of seal of JSPCB on
27.10.2005 by its authorities, all stand admitted. Closure of its factory premises on 03.09.2005 which continued till 27.10.2005 was not on account of
any act or omission on the part of the petitioner, nor the reason for the closure is attributable to the petitioner. In fact, this is not the case pleaded by
the respondentÂDVC that due to closure of its factory premises during the aforesaid period the petitioner was not prevented from utilizing electric
supply at its factory premises. Order dated 20.12.2004 pursuant to which petitioner's factory premises was sealed on 03.09.2005 has been held illegal
by a quasiÂjudicial authority. In view of the aforesaid uncontroverted facts, any delay or even negligence on the part of the petitionerÂcompany in
communicating closure of its factory premises on 03.09.2005, or immediately thereafter, would not alter position of the parties in law, on applicability
of ClauseÂ4 to the bilateral agreement which is a statutory contract. Delay may in a case be a bar in seeking remedy and it may be a ground to resist
enforcement of a right, may be under an agreement, but it cannot be a ground to hold that ClauseÂ4 of the bilateral agreement is not applicable in this
case. To resist benefit under ClauseÂ4 to the bilateral agreement on the ground of delay is one thing, but in the absence of any clause in the bilateral
agreement requiring invocation of ClauseÂ4 immediately on occurrence of the events mentioned thereunder, to say that ClauseÂ4 on account of delay
in communication of closure of the factory premises would render ClauseÂ4 inapplicable is different. In the facts of a case while the plea of delay on
enforcement of ClauseÂ4 may succeed, it cannot be pleaded that on account of delay in communication ClauseÂ4 to the bilateral agreement has been
rendered inapplicable. The respondentÂDVC has not pleaded any fact which may deny the petitioner benefit under ClauseÂ4 on account of delay in
communication of closure of its factory premises on 03.09.2005.
It needs to be indicated at this stage that the respondentÂauthority has recorded that the order of Board of Revenue passed on 05.12.2006 is
“irrelevantâ€. Every judicial/ quasiÂjudicial authority must display judicial restraint and discipline. All that could have been done by the
respondentauthority was to record a finding on the claim of the petitioner visaÂvis order of the Board of Revenue, and not to label order dated
05.12.2006 as an irrelevant one.
Apparently, the respondentÂauthority has adopted a procedure, for arriving at a conclusion that the consumer is liable to pay Demand Charge and
Guaranteed Energy Charge, which apparently was erroneous and, therefore, the impugned order dated 27.12.2016 has been rendered unsustainable.
The impugned order dated 27.12.2016 is quashed and it is held that the petitionerÂcompany is not liable to pay Demand Charge and the Guaranteed
Energy Charge for the period between 03.09.2005 to 27.10.2005.
Another prayer in the writ petition is for payment of interest on the Demand Charge and Guaranteed Energy Charge paid by the petitioner for the
period between 03.09.2005 to 27.10.2005. Contending that a consequential relief on quashing of the Energy Bill for the months of September and
October, 2005 was sought in W.P.(C) No.5870 of 2009, Mr. Nitin Kumar Pasari, the learned counsel for the petitioner submits that in view of
Regulation 11.10.3 of Jharkhand State Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2005 payment of interest, on the
excess payment made by the petitioner, at the rate DPS is charged by the respondentÂDVC, is the consequential relief sought by the petitioner.
After removal of the seal from its factory premises on 27.10.2005 when the petitioner found that Energy Bill for the month of September and
October, 2005 was also raised by including the Demand Charge and the Minimum Guarantee Energy Charge, it made a claim for remission in terms of
ClauseÂ4, however, it was rejected by an order dated 01.08.2006. This rejection was protested by the petitioner vide letter dated 08.08.2006 and the
matter was reÂexamined by the DVC; by letter dated 01.11.2006 the petitioner was communicated that this objection has been rejected. On
17.11.2006 the petitioner preferred an appeal before the Chairman, Damodar Valley Corporation which was followed by letters dated 18.12.2006 and
05.04.2007. On 03.05.2011, pursuant to order dated 29.03.2011 passed in W.P.(C) No.5870 of 2009, the petitioner submitted its claim vide letter dated
03.05.2011 in which it raised a claim for interest at the rate of 15% per annum compounded quarterly. After disposal of L.P.A No. 283 of 2011, the
petitioner again submitted its claim on 17.04.2012 in which it claimed simple interest at the rate of 15% per annum (DPS charge). However, by order
dated 18.03.2013 the Dy. Chief Engineer (Commercial), DVC while rejecting remission for the period between 03.09.2005 to 26.10.2005 declined
interest on the amount paid by the petitioner towards Demand Charge and the Minimum Guarantee Charge for the aforesaid period.
By an order dated 13.10.2017, the respondents were permitted to file response to the writ petition and when this writ petition was listed for hearing
on 05.02.2018, on instruction of Mr. Rajeev Goswami, Deputy Chief Engineer (Commercial), the learned counsel for the respondentÂDVC made a
statement that the writ petition may be finally disposed of on the basis of the materials on record. The respondentÂDVC has not filed its response to
the prayer for grant of interest on the amount of Demand Charge and Guaranteed Energy Charge paid by the petitioner to the DVC.
Under Clause 11.10.3 of Jharkhand State Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2005 which is pariÂmateria to
Clause 10.7.4 of Jharkhand State Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2015, a distribution licensee is required to
pay interest on the excess payment, at the rate delay payment surcharge is charged from the consumer. Regulation 10.7.4 reads as under:
 If the consumer has paid any excess amount, it shall be refunded to the consumer within 15 days or, if consumer opts, be adjusted within two
subsequent bills. The Distribution Licensee shall pay to the consumer interest charges at the rate equivalent to the delay payment surcharge as per
tariff on the excess amount outstanding on account of such wrong billing from the date of payment till the date of refund or adjustment in subsequent
bills.
As held in the preceding paragraphs the petitioner was not liable to pay Demand Charge and Guaranteed Energy Charge for the period between
03.09.2005 to 27.10.2005 and, therefore, payment by the petitioner of the above charges becomes excess payment in terms of Clause 11.10.3 (new
10.7.4). On quashing of the impugned order dated 27.12.2016, the petitioner becomes entitled for interest in terms of Clause 10.7.4 of 2015
Regulations on the amount of Demand Charge and Guaranteed Energy Charge from the date it was paid to the DVC, till this amount with interest is
actually paid to it.
The writ petition stands allowed in the aforesaid terms.