1983 (9) TMI 333 - SC - Indian Laws

Court Allows Haryana Electricity Board to Increase Security Deposits for Energy Bills

Jagdamba Paper Industries (Pvt.) Ltd. and Ors. Versus Haryana State Electricity Board and Ors.

The Court upheld the Haryana State Electricity Board's authority to unilaterally enhance security deposits for energy bills and meters, as long as done ... - Issues Involved:1. Unilateral enhancement of security deposits by the Haryana State Electricity Board.2. Justification for enhancement of security deposits for meters.3. Legal authority of the Board to demand additional security.4. Interest rates on security deposits.5. Appropriate form of security (cash vs. bank guarantee).Detailed Analysis:1. Unilateral Enhancement of Security Deposits by the Haryana State Electricity Board:The primary issue in these writ petitions is the challenge to the unilateral enhancement of security deposits by the Haryana State Electricity Board ('Board'). The Board increased the security deposits for both the meter and the payment of energy dues, effective April 1, 1981. This enhancement was contested by consumers who argued that the increase was unjustified and lacked a change in circumstances to warrant such escalation.2. Justification for Enhancement of Security Deposits for Meters:The petitioners contended that the enhancement of the security amount for meters was without justification, especially for meters installed several years prior. The Board justified the enhancement by citing the need for replacement or substantial repairs due to the high cost of meters. The Court suggested reducing the escalation by 50%, and the Board agreed to revise the demand, limiting it to Rs. 2,500 at the minimum and Rs. 5,000 at the maximum for industrial meters.3. Legal Authority of the Board to Demand Additional Security:The petitioners argued that the Electricity (Supply) Act, 1948, and the Rules made thereunder did not contemplate provisions for security for timely payment of energy charges. They cited decisions from the Allahabad and Bombay High Courts, which held that such demands were not authorized by the Act. However, the Court accepted the view of the Andhra Pradesh High Court, which supported the Board's authority to demand sufficient security under Clause VI of the Schedule to the 1910 Act. The Court concluded that the Board had the statutory power under Section 49(1) of the Act to determine the conditions of supply, including the demand for security.4. Interest Rates on Security Deposits:Initially, the interest rate on security deposits was 4% per annum, which had been enhanced to 8%. The Court suggested that the interest rate should be aligned with the rates for fixed deposits of Scheduled Banks, proposing an increase to 10%. The Board's counsel agreed to enhance the interest rate to 10% effective from October 1, 1983.5. Appropriate Form of Security (Cash vs. Bank Guarantee):The petitioners argued that the security should be in the form of a bank guarantee rather than cash. However, given the agreement to enhance the interest rate on cash security deposits to 10%, the Court found that the argument for bank guarantees did not require further consideration.Conclusion:The Court upheld the Board's authority to unilaterally revise the conditions of supply, including the enhancement of security deposits, provided the power was not exercised arbitrarily or unreasonably. The Board's demands for higher security for payment of energy bills and meter security were deemed justifiable. The Court's suggestions led to a reduction in the enhanced security for meters and an increase in the interest rate on security deposits, ensuring a fair balance between the Board's financial interests and consumer protection. The Board was directed to implement the new formula for meter security and the revised interest rate from October 1, 1983. No order was made as to costs.