Electricity licence arbitration clause did not bind consumers, so a refund suit was not stayed under the Arbitration Act.

Clause XVI of the Sixth Schedule, incorporated into a licence by section 57 of the Electricity (Supply) Act, 1948, formed part of the arrangement between the Government and the licensee, but it did not itself create a statutory arbitration mechanism binding consumers who were not parties to the licence. As the consumer's refund dispute was not shown to arise from a contractual arbitration agreement binding both sides, section 46 of the Arbitration Act, 1940 could not support a stay under section 34. The article concludes that such a consumer suit was not referable to arbitration under clause XVI and was not liable to be stayed.

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Issues: Whether a consumer's civil suit for refund of alleged excess electricity charges was liable to be stayed under section 34 of the Arbitration Act, 1940 on the basis of clause XVI of the Sixth Schedule to the Electricity (Supply) Act, 1948.

Analysis: The licence issued to the electricity supplier under section 3 of the Indian Electricity Act, 1910 was governed by section 57 of the Electricity (Supply) Act, 1948, under which the Sixth Schedule was deemed incorporated into the licence. The arbitration clause in clause XVI was therefore part of the engagement between the Government and the licensee. It did not, by itself, create a statutory arbitration mechanism binding every consumer or covering disputes between the licensee and persons who were not parties to that licence. Since the dispute with the consumer was not shown to arise from a contractual arbitration clause binding both parties, section 46 of the Arbitration Act, 1940 could not be invoked to secure a stay under section 34.

Conclusion: The dispute was not referable to arbitration under clause XVI as against the consumer, and the suit was not liable to be stayed. The appeal failed.

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