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Every agreement after the Initial Agreement between the State Electricity board and Consumer is supplementary or an Extension: Supreme Court

On a dispute regarding the interpretation of Jharkhand State Electricity Regulatory Commission Regulations, 2005 it was decided that as per the code, every agreement between the board and consumer is not a fresh one rather only an extension or supplementary to the First agreement. This Judgment was passed by the Hon’ble Supreme Court in the case of Jharkhand State Electricity Board and others vs. M/S Ramakrishna Forging Limited [C.A. No. 6145/2010] by a Double Bench consisting of Hon’ble Shri Justice Dinesh Maheshwari and Hon’ble Shri Justice Vineet Saran.

The facts of the case are that the respondent is a small-scale industry and for its functioning, it had entered into a contract demanding or sanctioning a load of 4000 KVA from the appellants. When the respondent requested to reduce the load to 1325 KVA it was rejected. Following this, the respondent filed a writ before the Jharkhand High Court which was allowed. Aggrieved by the judgment of the High Court the appellant preferred an appeal before the Hon’ble Supreme Court.

The sanction for the load was increased gradually from 325 KVA to 4000 KVA, from 2004 to 2007. It happened vide 4 contracts which were drafted from scratch every time the sanction for load increased from the respondents. The respondents alleged that they requested a decrease since they suffered major tripping and continuous shedding which affected the machinery. The appellants rejected the order stating that the agreement was valid for 3 years and under clause 9B the agreement could not be determined before the first three years. Furthermore, it also stated that the respondents will have to pay the said charges in case it terminated the contract.

While the first contract between the respondents and appellant came into force in 2004, the Jharkhand state regulatory commission regulations came into force in 2005. The respondents contended that the contract may be technically fresh but was an extension to the previous contracts changing only the desired load. Placing reliance on Regulations 2(I), 9.1, and 9.2 of Regulations of 2005; the counsel contended that the 2007 agreement needs to be treated as an extension from the first agreement and thus be allowed.

The Hon’ble Supreme Court held that while the consumer has the liberty to get the load enhanced under Regulation 9.1 they can also pray for a reduction under Regulation 9.2. On an analysis of the regulations and the agreements between the parties, the Supreme Court was of the opinion that as per Regulation 9.2.6 for both the increase in load and decrease in load, any agreement after the first one, shall be considered as supplementary agreements. It went on to hold that in all fairness while the regulations state that the increase or decrease in load can be done vide a written communication, the agreements are only supplementary to the first agreement.

The Hon’ble Supreme Court held that “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.”

Click here for the Judgment.

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