Contractual electricity rates fixed from time to time did not require prior State sanction for municipal enhancement.

The expression "current official scale of rates" in a consumers' electricity agreement was construed, in context, to mean the rates prevailing from time to time during the agreement period, not only the rates in force when the contract was executed. On that reading, consumers were bound to pay enhanced rates fixed by the Municipality under the existing contractual scheme. Because the revision operated under an already agreed term and did not alter the agreement's conditions, previous sanction of the State Government was not required under section 21(2) of the Indian Electricity Act, 1910. The municipal rate enhancement was therefore treated as consistent with both the contract and the statutory framework.

---

---

Issues: (i) Whether the expression "current official scale of rates" in the consumers' agreement meant the rates prevailing only when the agreement was executed or the rates from time to time fixed by the Municipality; (ii) Whether enhancement of rates by the municipal resolution required previous sanction of the State Government under section 21(2) of the Indian Electricity Act, 1910.

Issue (i): Whether the expression "current official scale of rates" in the consumers' agreement meant the rates prevailing only when the agreement was executed or the rates from time to time fixed by the Municipality.

Analysis: The expression "current" was held to be ambiguous and was construed in the setting of the agreement as a whole and the surrounding circumstances. The agreement incorporated the licence and the Act, the administrative practice showed that the Municipality fixed official rates from time to time, and the contractual scheme distinguished between the official scale of rates and the specific purpose-wise energy rates. Read in that context, the phrase "current official scale of rates" was taken to mean the scale of rates current or prevalent from time to time during the currency of the agreement.

Conclusion: The consumers were contractually bound to pay rates fixed from time to time, including the enhanced rates under the impugned resolution.

Issue (ii): Whether enhancement of rates by the municipal resolution required previous sanction of the State Government under section 21(2) of the Indian Electricity Act, 1910.

Analysis: Once the agreement was construed as obliging the consumers to pay the rates fixed from time to time, the enhancement did not amount to an alteration of any condition of the agreement. The change in rates operated in terms of the existing condition and not in derogation of it. On that basis, no sanction under section 21(2) was necessary for the rate revision.

Conclusion: Previous sanction of the State Government was not required, and the challenge based on section 21(2) failed.

Final Conclusion: The municipal enhancement of electricity rates was upheld as consistent with the contractual terms and the statutory framework, and the consumers' challenge was rejected.

Ratio Decidendi: Where an agreement to supply electricity requires payment at the "current official scale of rates", the expression may, on the document as a whole and the surrounding circumstances, mean rates fixed from time to time; an increase made in accordance with that term does not alter the contract condition and does not attract prior governmental sanction under section 21(2).

---