Minimum charges under an electricity supply contract remain recoverable during discontinuance, but post-winding-up delayed payment charges are disallowed.

An electricity supply contract expressly preserved minimum charges during discontinuance of supply, and those charges remained recoverable while the agreement subsisted, including in winding up; disconnection under the Electricity Act did not by itself terminate the contract. The supplier's minimum charge claim was therefore admissible. Delayed payment charges accruing after the winding-up order were treated as interest or penal interest and were not admissible as a provable debt against the insolvent company. The liquidator's attempted disclaimer did not satisfy the statutory disclaimer procedure, but that did not alter the separate treatment of the post-winding-up charges. The claim succeeded only for the minimum charges component.

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Issues: (i) Whether, under the electricity supply agreement and the governing electricity statutes, minimum charges remained payable during the period when supply was discontinued and up to the termination of the agreement in winding up. (ii) Whether delayed payment charges claimed for the period after the winding-up order were admissible as a debt provable in winding up.

Issue (i): Whether, under the electricity supply agreement and the governing electricity statutes, minimum charges remained payable during the period when supply was discontinued and up to the termination of the agreement in winding up.

Analysis: The agreement expressly provided that if supply was discontinued for consumer default, the consumer would continue to pay minimum charges during the period of discontinuance. Disconnection of supply under the Indian Electricity Act, 1910 was distinct from termination of the agreement. The Board's right to terminate summarily under the agreement arose only upon a winding-up order, while the company's notice of termination operated only from the later contractual date. The statutory scheme and the contractual tariff structure showed that minimum charges were intended to secure a reasonable return on the supplier's capital outlay and plant obligations, and were not rendered unenforceable merely because supply had been cut off.

Conclusion: The claim for minimum charges was payable and admissible in favour of the appellant.

Issue (ii): Whether delayed payment charges claimed for the period after the winding-up order were admissible as a debt provable in winding up.

Analysis: The delayed payment charges operated in substance as interest or penal interest accruing on overdue amounts. After the winding-up order, such additional accruals could not be allowed as a provable debt against an insolvent company. The liquidator's attempted disclaimer did not comply with the statutory procedure for disclaimer of contracts and did not affect the claim, but the post-winding-up delayed payment component still stood on a different footing from the principal minimum charges.

Conclusion: The delayed payment charges were not admissible and were disallowed.

Final Conclusion: The appeal succeeded only to the extent of the minimum charges component, while the delayed payment charges were rejected, leaving the appellant entitled to a partial allowance of its claim.

Ratio Decidendi: Where an electricity supply contract expressly preserves minimum charges during discontinuance of supply, such charges remain recoverable so long as the contract subsists and are provable in winding up, but post-winding-up delayed payment charges in the nature of interest are not admissible as a provable debt.

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