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JUDGMENT P.N. Shinghal, J.
1. As both the Courts below have dismissed the suit of the plaintiff, he has preferred the present second appeal which arises from the appellate judgment and decree of the District Judge of Udaipur dated August 9, 1960, in the following circumstances.
2. The plaintiff is the ruler of the former Udaipur State. He raised the present suit on April 14, 1955, with the allegation that the Maharana Bhopal Electric Supply Company Limited. Udaipur, Defendant No 1 (herein-
after referred to as "the Company") was constituted in 1950 to generate and supply electricity, which was the responsibility of the firm of Messrs. Bhandari Iron and Steel Company. The Company has been discharging that responsibility. It was pleaded in paragraph 6 that an agreement was made with the aforesaid firm of Messrs. Bhandari Iron and Steel Company on October 10/11, 1946 (Ex. 11) according to which electricity was to be supplied to the Maharana on the following condition:
"Free power to palaces up to a maximum of 2000 units per month. For power consumed above these units, concession rates will be charged which should not exceed fifty per cent of the general rates for lights, fang and power respectively."
According to the plaintiff, this agreement was accepted as binding by the Company when it was formed by the owners of Messrs. Bhandari Iron and Steel Company. Thereafter the former State of Mewar merged into the former United State of Rajasthan and that Government reiterated the aforesaid condition of the agreement dated October 10/ 11, 1946 in the document dated December 31, 1948. This was in fact notified in the form of a licence which was issued in favour of the Company by the successor State of Rajasthan on August 26, 1950. The plaintiff further pleaded that the Company supplied electricity to him from 1946 up to February 1954 in accordance with the above mentioned agreement, but that it wrote to the plaintiffs Master of Household on February 10, 1954 that if the plaintiff did not pay the bill which, according to the plaintiff, was not in conformity with the terms of the agreement, up to February 13, 1954, the Company would stop the supply of electricity.
The supply was in fact disconnected on March 4, 1954 and it was not resumed in spite of all efforts of the plaintiff. The Company however re-started tho supply from April 2, 1955 on a temporary basis but as the plaintiff apprehended that it would be discontinued in a few days, he instituted the present suit alleging that as he himself had not committed a breach of the agreement with the Company and was always prepared to make the payment in accordance with it, a decree may be passed granting an injunction against the Company that it shall continue to make the supply of electricity in accordance with the agreements dated October 10/11, 1946 and December 31, 1948, and that the supply will not be disconnected as long as the plaintiff continued to pay for it in accordance with those agreements.
3. The Company filed a written statement and admitted that an agreement was made earlier, but pleaded that the plaintiff was not a party to it and was not entitled to the rights and the benefits thereof. Further, it pleaded that the agreement had become nugatory. The Company also pleaded that the Indian Electricity (Supply) Act came into force in Rajasthan with effect from April 1, 1951, so that Section 57 and Schedules VI and VII thereof became parts of the licence of the Company. On this basis it was stated that the Rajasthan Government appointed a Rating Committee to fix a proper rate for the supply of electricity for the consumers living in Udaipur city, and that the Government thereafter determined the new rates for the supply of electricity in accordance with the recommendations of that committee, and the concession received by the plaintiff earlier came to an end as it was illegal.
It was therefore pleaded that the bill which had been prepared for the period after July 1, 1953 was in accordance with the rates fixed by the State Government and that the plaintiff's electric supply connection was disconnected because it was not paid in full. It was also pleaded that any contract, or licence, or instrument which contravened the provisions of the Electricity (Supply) Act, was void. So also, it was pleaded that the Rajasthan State had terminated the earlier concession and made a new agreement with the Company and it was not open to the plaintiff to challenge it.
4. The State of Rajasthan filed a separate written statement in which the plaintiff's claim was denied and it was pleaded that he had no right to enforce the agreement. It was also pleaded that while an agreement was made on December 31, 1948, it made it quite clear that the expression "Government of United State of Rajasthan at Udaipur" and the word "Government" shall include their successors in office, administrators and assigns, and it was therefore, contended that the State of Rajasthan was entitled to all the rights and advantages then accruing to the Government of the United State of Rajasthan at Udaipur. In this connection it was also pleaded that on the date on which the agreement was made, the Maharana of Udaipur was the Rajpra-mukh of the United State of Rajasthan and that the agreement was made "for the benefit of its own Head."
It was therefore, contended that on account of the constitutional changes, the State of Rajasthan was entitled to demand 2,000 units of electric energy from the Company for the bona fide use of its public offices and officers, while the plaintiff was not entitled to any such advantage because he was BO longer the Head of the State.
5. Issues were framed on the questions whether the plaintiff was entitled to enforce the above-mentioned terms for the supply of free and concessional electricity and whether the agreement which incorporated that term became void after the enforcement of Electricity (Supply) Act with effect from April 1, 1951. Issues were also framed on the questions whether the plaintiff was entitled to enforce the terms ot the agreement even though he was not the "head of the State" and there was no privity of contract between him and the defendants.
6. The trial Court, as has been stated, dismissed the suit and as its judgment has been confirmed on appeal by the learned District Judge as aforesaid, the plaintiff has filed the present second appeal.
7. It may be mentioned here that when the case came up for hearing on April 27, 1967, it was reported that Parts 'R', 'C', and 'D' of the file of the trial Court had been weeded out, so that only part 'A' was available. An order was, therefore, made directing the parties to take steps for the recon-stitution of the record. It is admitted that the record has been reconstituted with the consent of the learned counsel for the parties. As a result of the reconstitution, exhibits 1 to 8 and 11 to 15 have been placed on the record and the learned counsel are in agreement that all these documents may be read in evidence along with the following gazette notifications and that the case may be decided on then: basis,--
1. Commerce & Industries Department notification No. F. 8 (201) C. I./M. P./50, dated August 21, 1950, appearing in the State gazette, Part I, dated August 26, 1950;
2. Public Works Department notification No. F. (149) P. W. E. M./51, dated September 14, 1953, appearing in Part I of the State gazette dated September 26, 1953; 3. Public Works Department notification No. F. 6 (149). P. W. E. M./51, dated October 24, 1953, appearing in Part I of the State gazette, dated October 31, 1953.
8. It is clear from the pleadings that one of the important points in controversy between the parties was whether the plaintiff was entitled to enforce the terms mentioned in the initial agreement dated October 10/11, 1946, in spite of the above-mentioned order dated October 24, 1953 of the State Government to the contrary, notified in Notification No. F. 6 (149) P. W. E. M./51, dated October 24, 1953. This was the subject matter of Issue No. 1. As I shall presently show, the fate of the case depends upon the finding on this issue.
9. It is admitted that the original agreement (Ex. 11) dated October 10/11, 1946 was re-iterated in the letter (Ex. 1) of the Director of Industries and Supplies of the former United State of Rajasthan, Udaipur, dated October 22, 1948 inasmuch as the Director took notice of the clause providing for the free and concessional supply of electricity to the palaces of His Highness the Maharana of Udaipur. It is also admitted that the State executed an agreement with the Company on December 31, 1948 on the lines of the original agreement Ex. 11, dated October 10/11, 1946. This agreement is on the record as Annexure 2 of the State Government's letter Ex. 3. Further, it is admitted that ultimately a licence was issued to the Company and it was notified under notification No. F. (201) C. I. M. P./50, dated August 26, 1950.
A perusal of the notification shows that the licence was issued on the lines of the agreement dated December 31, 1948 and this was specifically stated to be so while defining the term "agreement" in Clause 2 (7) of the licence. It was further stated in Clause 11 that the licence would be subject to the terms and conditions of the said agreement. It is therefore, quite apparent that Clause 6 of agreement Ex. 11 which provided for the free and concessional supply of electricity to the Maharana, became a part of the licence issued to the Company. The plaintiff specifically pleaded in paragraph 8 of the plaint that this was so, and both the defendants took the same stand. There can therefore, be no doubt that the initial agreement Ex. 11 or the subsequent agreement Ex. 3 merged in the licence, and this is the case of the parties also.
10. The question then is whether the clause providing for free and concessional supply of electricity to the Maharana, continued to be in force on the date of the suit. It may be mentioned that it was clearly stated in the licence that it had been granted to the Company by the State Government under the Indian Electricity Act, 1910, as applied to the United State of Rajasthan by the United State of Rajasthan Electricity Ordinance, 1948. Further, it was stated in the interpretation clause of the licence that the expression "Act" in the licence shall mean "the Indian Electricity Act, 1910 as applied to the United State of Rajasthan." The licence of the Company was, therefore, for all practical purposes, a licence under Section 3 of the Indian Electricity Act, 1910. It could therefore, be revoked or amended only in accordance with the provisions of Section 4 of that Act as it was then in force.
It has however, been clearly admitted by all the learned counsel that the licence was not revoked or amended under that section. Besides, it is also admitted by the learned counsel that the Indian Electricity (Supply) Act, 1948 came into force in Rajasthan in the meantime and that it was under the provisions of that Act that the Government appointed a Rating Committee which gave its report Ex. 2 on which the Government made the order dated October 24, 1953 referred to above.
11. When these are the admitted facts, it would follow that Section 57 of the Indian Electricity (Supply) Act applied to the licence of the Company for Sub-section (1) of that section made the following provision :--
"57, Licensees' charges to consumers.--(1) The provisions of the Sixth Schedule and the Table appended to the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee, not being a local authority, from the date of the commencement of the licensee's next succeeding year of account, and from such date the licensee shall comply therewith accordingly and any provisions ot such licence or of the Indian Electricity Act, 1910 (IX of 1910), or any other law, agreement or instrument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of the section and the said Schedule and Table."
The Sixth Schedule of the Indian Electricity (Supply) Act provides the financial principles on which the rates of a licensee are to be adjusted for the sale of the electricity. According to it the rates have to be so adjusted by periodical revision so that the clear profit of the licensee in any year may not, as far as possible, exceed the amount of "reasonable return". The expression "reasonable return" has been difined in the Schedule which provided for its calculation and the determination of the rates for the sale of electricity by every licensee. It therefore, became the duty of the licensee to adjust the rates by periodical revision in accordance with the procedure laid down by Section 57 of the Indian Electricity (Supply) Act.
12. The Company actually applied for a revision of the rates. It is not in dispute that on May 12, 1953 the Company applied to the State Government for revision and removal of the concession in favour ot the Maharana of Udaipur. The State Government accordingly appointed a Rating Committee under Section 57 of the Indian Electricity (Supply) Act by a notification published dated June 21 , 1952 and the terms of reference of the committee were, as follows,--
"To examine the charges of the said company for the supply of electric energy and to recommend thereon to the said Government separately for the period commencing on the 1st February, 1951, and ending on the 30th June, 1952, and for the period commencing on the 1st July, 1952 onwards."
The Rating Committee went into the matter and its report has been published in notification No.F. (149) P. W. E. M./51, dated September 14, 1953, appearing in Part 1 of the State Gazette dated September 26, 1953. The Committee took into consideration the existing agreement with the Company and before recommending the rates for different classes of consumers, it considered it necessary to examine the concessional charges which were made by the Company in favour of the Maharana of Udaipur under the agreement dated December 31, 1948. It reached the conclusion, inter alia, that the Electricity Act did not contemplate any free supply of energy and recommended, as follows, --
"The Electricity Act does not contemplate any free supply of energy and now when the rates of supply of energy to the consuners are being revised in conformity with the Act it would be unfair to place the extra burden of this concession on the general body of consumers. We consider this concession as one of the causes of losses to the licensee and the concession, if continued, can only be made by proportional increase in the rates to be charged from the general body of consumers tor which we find no Justification. If there is any implied agreement between the Government and H. H, the Maharana in regard to the supply of free energy to the palaces, as part of their maintenance, it is for the Government to consider the way out of the difficulty but the consumers of the licensee cannot be unfairly burdened on that account. We would, therefore, recommend the concession should be cancelled and the general rates of supply to the consumers should be applicable to the palaces also."
On the basis of this recommendation, the Rating Committee went on to consider what would be the "reasonable return" to the Company in accordance with the considerations and the criteria laid down in the Indian Electricity (Supply) Act and made its recommendation for the revised charges for the sale of electricity by the Company.
13. It is therefore clear that the Rating Committee based its recommendation regard-ng the new rates on the withdrawal of the oncessional rate in favour of the Maharana of Udaipur and, as has been stated, in readiing that conclusion the Rating Committee took notice of the fact that the Electricity Act did not-contemplate any free supply of energy. It has not been disputed that the Committee formed this view on account of the provisions o£ Section 23 of the Indian Electricity Act which provides that a licensee shall not, in making any agreement for the supply of energy, ' show undue preference to any person". It is in fact fairly well settled that undue preference and discrimination is not permissible in fixing the tariff for the supply of electricity so that those concerned cannot show undue preference to any person or exercise undue discrimination against any person.
A similar provision existed in the Electric Lighting Act, 1882 in England and it was held in Attorney-General v. Long Eaton Urban District Council, 1915-1 Ch 124, that any differentiation in the rates of supply was a breach of that provision. A similar view has been taken in Attorney-General v. Wimbledon Corporation, 1940-1 Ch 180. There can therefore be no doubt that the Rating Committee was justified in taking a similar view.
14. The report of the Rating Committee went to the State Government and, as has been stated, it was notified in the State Gazette dated September 26, 1953. The State Government thereupon made an order which was notified in notification No. F. 6 (149) P. W. E. M./51, dated October 24, 1953, which appeared in Part of the State gazette dated October 31, 1953. It was clearly stated in the notification that His Highness the Rajpramukh had approved the rates for the supply of electricity as recommended by the Rating Committee. The notification mentioned the rates, and it is significant that it did not provide for the supply of electricity to anyone free of charge, or at half the rate, so that the earlier provision regarding the supply of electricity free of charge and at concessional rate to the Maharana of Udaipur ceased to be applicable on, the enforcement of the new rates under the orders of the State Government.
As has been stated, it was an intrinsic part of the report of the Rating Committee that the concession admissible to the Maharana of Udaipur should be cancelled and that the general rates of supply to the consumers should be applicable to his palaces because, in the opinion of the Rating Committee, it would be "unfair to piace the extra burden of this concession on the general body of consumers." In accepting the Rating Committee's report the Government, therefore, undoubtedly accepted this recommendation for the abolition of the concession.
15. It appears however that the Maharana felt aggrieved by the decision of the State Government on the report of the Rating Committee and his Master of Household made a representation to the State Government that the concession regarding the supply of electricity to His Highness was a "privilege" granted in His Highness's favour, which was maintained in the covenant and safeguarded in the Constitution. As will appear from the State Government's order dated November 19, 1953 (Ex. 15), it consulted the Law Department and took the view that, under the law, His Highness could not "benefit under the licence" and that the concession was revocable. It was further stated in that document that in the private property settlement the concession ot free electricity was not agreed upon in the case of the ruler of Udaipur. All concerned were therefore informed that the Government had ordered that the Company could not be compelled to continue the concession of free supply of 2,000 units of electricity per mensem to the ruler of Udaipur if the Company did not find it economical and that the Company was free to discontinue the concession or reduce it after negotiation with the ruler.
16. It therefore appears that the State Government adhered to its order which was notified under notification No. F. 6 (149) P. W. E. M./51, dated October 24, 1953, and saw no reason to revise it. The order of the State Government having been made in accordance with the provisions of Section 57(2)(c) of the Electricity (Supply) Act, it was final and binding on all concerned and no grievance can be made if the Company has refused to continue the free or concessional supply of electricity to the disadvantage of the Maharana. It is well settled that the object of the Electricity (Supply) Act and of the Sixth Schedule thereto is to statutorily rationalise and regulate the rates chargeable for the energy supplied, in the interest of the public and for electrical development, as has been held by their Lordships of the Supreme Court in Poona Electric Supply Co. Ltd., Bombay v. Commissioner ot Income Tax Bombay City I, Bombay, AIR 1966 SC 30, and there is no force in the argument that the licence which was published on August 26, 1950 providing for the free and a concessional rate of supply of electricity to the Maharana of Udaipur should continue to prevail in spite of the order made in accordance with Section 57 of the Electricity (Supply) Act.
17. In the view I have taken, there is no force in the claim of the plaintiff in the present suit, except that there is justification for the submission that the new rates fixed by the State Government on the recommendation of the Rating Committee could not be made applicable with retrospective effect from July 1, 1953 in view of the provisions of Section 57(2)(c) of the Electricity (Supply) Act. The State Government made its order on the approved rates recommended by the Rating Committee on October 24, 1953 and, in accordance with the provisions of the section, the effective date could not be earlier than two months after the date of publication of the report. As the report was published on September 26, 1953, the new charges could not be effective earlier than two months thereafter so that the plaintiff will be liable to pay according to the revised rates after the expiry of the period of two months from the date of publication of the report. While therefore the appeal fails and is dismissed, it is clarified that the revised rates would be payable from the date mentioned above. In all the circumstances of the case, I do not think it is necessary to make any order as to the costs.