1. SHAFIUR RAHMAN, J.-- Leave to appeal was granted in six separate matters to examine the following questions of law arising out of a consolidated judgment of the Sind High Court dated the 22nd November, 1982 whereby a number of Constitutional Petitions were dismissed with no order as to costs- "(i) Whether in view of the amendments effected in the Electricity Act, 1910 by means of Ordinance No. LXII of 1979 in terms whereof the power to disconnect the electricity which previously was given in cases in which security had become invalid or insufficient was now restricted only to cases in which it had become invalid, it was open to K.E.S.C. To discontinue the supply of electricity on the ground that the security had become insufficient?
(ii) Whether clause 10 of the Agreement between the parties provides justification in law to K. E. S. C.
2. To enable it to demand additional security?
(iii) Whether in any event the provisions of clause 10, as interpreted by K . E. S. C . Can prevail over the statutory provisions?
(iv) Whether section 24 of the Electricity Act, 1910 has been correctly interpreted by the High Court in holding that this provision supports the impugned action of the K.E.S.C.? "
3. The appellants in all these appeals are Textile Mills, consumers of electricity and the contesting respondent No.1 is the licensee under Section 3 of the Electricity Act, 1910 (hereinafter referred to as the Act). The appellants in all these cases entered into contracts with the respondent No. 1, the licensee, for the supply of electricity for running their industries. The earliest contract, in point of time, appears to be that of Star Textile Mills Ltd (Civil Appeal 31-K of 1983) entered into on 2-9-1957 and twice amended. The other appellants entered into similar contracts for the supply of electricity between the period 1969 to 1974. The contract had a smooth running till middle of 1979 when a demand was made by the respondent-licensee for enhanced security deposit which varied from case to case but the printed reason given in all of them was the same and one such notice (Civil Appeal No. 36-K of 1983 was in the following terms- "Dear Sir, Due to rise in the cost of fuel and other commodities during the last several years, we were compelled to increase the rates of electricity charges as well. On account of the difference in the old and new rates of electricity charges, the amount of your Security Deposit held by us has become insufficient as per provisions of rate schedule duly approved by the government. As such additional Security Deposit amounting to Rs.628620.00 is payable by you.
4. You are, therefore, requested to pay the additional Security Deposit within 30 days from the date of issue of this letter. For your convenience payment voucher with necessary particulars has been printed at the bottom of this letter which may be presented in any of the National Bank of Pakistan Booth attached to our Nazimabad Societies, Garden & Electric House Zonal offices at the time of payment.
5. We hope you will extend your co-operation in the matter".
6. The appellants individually as well as through their Association objected to the demand and its calculations. While the respondent No.1 impressed that the demand was in accord with the contract for the supply of electricity, the appellants denied it and also objected to the calculations made and to its demand in cash. It appears, the appellants were prepared to offer the required security in forms other than cash. Not getting a favourable response, they all instituted Constitutional Petitions. Their contention was that the respondent No. l could not in view of amendment of Schedule VI to the Act introduced by Ordinance LXII of 1979, extend the threat of disconnection of the supply on their failure to furnish the enhanced Security Deposit as was required under the impugned notices. They also objected to the enhancement of the Security Deposit, which according to the appellants, was not covered by Clause 10 of the Contract for the supply of electricity nor under any other provision of the Act. The appellants objected, in particular, to the demand of the additional security in the form of cash. They went further and contended that this security and its enhancement was not for protection against default and delays in the payment of bills by the appellants but a device for generating funds for development, a purpose alien and collateral to the purpose for which the security could in fact be demanded.
7. The respondent No.1 in its reply and in contesting the constitutional Petitions, took up the position that it was authorised under the law to get security deposit enhanced and to have it furnished in cash. The exact case set out was in the following words, as appearing in the counter-affidavit:- "Under the terms and conditions of supply, under the Agreement and amendment thereto under the Order of the Governor of West Pakistan dated 31st January, 1970 passed in pursuance of the provision of the first proviso to clause XI of the Schedule annexed to the Electricity Act 1910 and clauses (b) and (c) of Sub-section (1) of section 3 of the Karachi Electricity Control Act, 1952 (Act No. LVII of 1952) (published in the Gazette of West Pakistan Extraordinary dated 9th February 1970 at page 279-283 read with approved schedule of new Rates, Electricity Rules Order, 1979 and also of 1980, the respondent No.1 Corporation is entitled to demand and receive security deposit not exceeding the amount of average bills for a period of two months and a half from the consumers of different categories (The printed/ cyclostyled copies of the Karachi Electric Licence alongwith relevant Notification, duly approved Schedule of new Rates, 1970 applicable to petitioner.
8. Notification dated 1-7-1979 with the relevant Tariff of K.E.S.C. Ltd. Of 1979 and Notification dated 1st November, 1980, with Tariff of the KESC dated 1-11-1980 are attached herewith".
9. The High Court did not specifically examine as to under what provision of law the initial security in cash was asked for and got deposited from the appellants but it proceeded to examine the case of the appellants as if it was a security under Clause VI of the Schedule of the Act and the effect on it of the amendment in its second proviso by Ordinance LXII of 1975 and recorded the following finding- "As the legislature has excluded. The word "insufficient" from the amended second proviso (a) of Clause VI sub para 1 of the schedule it seems clear that the intention is that if the security becomes insufficient the liceneee while invoking its power under the license is not entitled to discontinue the supply of energy".
10. That was not, however, the end of the matter. The learned Judges in the High Court considered the provisions of Section 24 of the Act as amended by the same Ordinance and came to the conclusion on the basis of its history and the use of expression 'any sum' therein that the power of disconnection for insufficient security was covered by it.
11. As regards the inter-play of the. Act, the schedule and clause 10 of the agreement, the High Court observed as follows:-- "The schedule presupposes the existence of a security or furnishing of security by the consumers. It does not restrict to licencee's right to demand additional security. In order to keep the security effective and achieve the object underlying it the respondent No. 1 are entitled to demand additional security to make up the deficit. This right does not derogate from the provisions of the schedule. Under the schedule the licensee is not permitted to discontinue energy where the security has become insufficient. No such power has been given to the respondent No. 1 under Cl.10 of the agreement to demand additional security which without prejudice to other remedies are available to the respondents No.1. It therefore seems clear that under the agreement no independent power to discontinue the energy has been conferred on the respondent No. 1 except which they are otherwise entitled to exercise".
12. The contention of the appellant that security need not be asked for in cash was rejected and the enhancement was justified as hereunder- "Under clause (G) of the licence, the respondents No.1 are entitled to charge security deposit not exceeding the amount of average bill for a period of two months and a half. Since 1957 charges for supply of energy have been enhanced and therefore on the basis of the enhanced charges the respondent No. 1 have demanded additional security deposit, to make up the deficiency".
13. Finally, the High Court found no discrimination against the appellants and finding the demands made to be not in contravention of law or in derogation of lawful authority possessed by the respondent No.1 dismissed all the constitutional petitions with no order as to costs.
14. Mr. Khalid Anwar, Advocate, the learned counsel for the appellants, contended that prior to promulgation of Ordinance LXII of 1979, there were two provisions, one specific and the other general relating to disconnection for default. Invalidity or insufficiency of the security was specifically covered by clause VI of the schedule to the Act and discontinuance was the penalty prescribed for it in the second proviso. The general provision was contained in Section 24 where consumer neglects to pay any charge for energy or any sum, other than a charge for energy, entitling the licensee to cut off the supply. Recourse could then be had to the more specific provision and not to the general provision for disconnecting the supply on account of insufficiency of the security deposit. However, as the second proviso underwent a material change by Ordinance LXII of 1979 and it was no longer possible to disconnect the supply of electricity for insufficiency of security, resort to the general provision of Section 24, as was taken by the High Court, was not permissible because it manifestly defeated the intention of the Legislature and the purpose of the legislation.
15. The other contention of the learned counsel for the appellants was that the enhancement in the rates under the orders of the government had been taking place in terms of clause XI of the Schedule which provided for the maximum charges. The notification issued by reference to this clause had fixed only the ceiling and the licensee was not obliged to charge the same nor to revise its current agreements to bring the charges in line or equal to the maximum charges. Whatever security had been asked for and provided in terms of clause X of the agreement, was good enough during the currency of the agreement and could not be unilaterally enhanced as no party had the right to do so. Further, it was contended that the word "replenish" and "renew" used in clause 10 of the agreement did not justify enhancement of the Security Deposit. It was also contended that this condition of the contract did not specifically provide for disconnection nor could it so provide if such a power was not possessed by the licensee under the Act itself.
16. The first question which should have received attention in the case was whether the security which was in dispute between the parties, was at all the one covered by operative clause VI of the Schedule or not. The respondent No.1 had specifically denied that it was so. The appellants' case was entirely based on the second proviso and the amendments suffered by Ordinance LXII of 1979.
17. Clause VI of schedule has a scheme of its own. It refers to a requisition made by the owner or occupier of any premises to which the licensee is required to supply electricity and the corresponding duty of the licensee to supply normally within one month of such a requisition energy in accordance with the requisition.
18. The exception to this duty is spelt out in the following words in the first proviso- "Provided, first, that the licensee shall not be bound to comply with any such requisition unless and until the person making it:-
(a) within fourteen days after the service on him by the licensee of a notice in writing in this behalf, tenders to the licensee a written contract, in a form approved by the Provincial Government, duly executed and with sufficient security, binding himself to take a supply of energy for not less than two years to such amount as will produce, at current rates charged by the licensee, a reasonable return to the licensee, and (b)
19. The second proviso thereafter provided as follows:-- "Provided, secondly, that the licensee shall be entitled to discontinue such supply
(a) if the owner or occupier of the property to which the supply is made has not already given security, or if any security given by him has become invalid or insufficient, and such owner or occupier fails to furnish security or to make up the original security to a sufficient amount, as the case may be, within seven days after the service upon him of notice from the licensee requiring him to do, or (b)
20. (c)
21. (d)
22. This was the position before the amendment of these provisos by Ordinance No. LXII of 1979.
23. It is clear from examination of the clauses of the Contract under which the security was deposited or enhanced demand was made that the security in dispute is not the one covered by first proviso because it is to be tendered within fourteen days after the service on the consumer by the licensee of a notice asking for a written contract in a form approved by the Provincial government along with sufficient security binding himself to take a supply of energy for not less than two years to such amount as will produce at current rates charged by the licensee, a reasonable return to the licensee. The nexus which is established between security and the written contract and the rate of return all show unmistakably that the security which is the subject matter of dispute had nothing to do with the security dealt with in Clause VI of the Schedule before its amendment or after its amendment. Hence the Ordinance LXII of 1979 so far as it alters the language of Clause VI is wholly irrelevant and inapplicable. The case set out by the appellants also shows that the security in dispute is different from the one dealt with in Clause VI of the schedule. For example, in Civil appeal No.31-K of 1983 it has been mentioned that:- "The demands for additional security are being made by K. E. S. C. On a continuing basis since the bills are continuously enhanced under guise of a fuel adjustment charge, which however ought properly speaking to be disregarded".
24. This will show that the security demanded has something to do with the actual consumption.
25. This conclusion finds further support from the impugned demand notice already reproduced in extenso. What we find on record is a notification of the Government of West Pakistan dated the 31st of January, 1979 and the opening operative part of it reads as hereunder: - "No, PR AB-1-20/69.--Whereas the Governor of West Pakistan in exercise of the powers conferred by section 35 of the Electricity Act, 1910 (Act I X of 1910) , was pleased to constitute an ad hoc Advisory Board (hereinafter referred to as the 'Board'), vide Irrigation and Power Department Notification No. SOPP.3/16-65, dated the 9th March, 1957, for overhauling and rationalising the rate structure of all Electric Supply Undertakings in West Pakistan, including Water and Power Development Authority.
26. And whereas the Board recommended the revision of the charges fixed under Clause I of the third Annexure to the Karachi Electric License 1913 (hereinafter referred as the License); Now, therefore, in pursuance of the provisions of the first proviso to Clause XI of the Schedule annexed to the Electricity Act, 1910 and Clauses (b) and (c) of subsection (1) of section 3 of the Karachi Electricity Control Act, 1952 (Act No. LVII of 1952), and in supersession the former Government of Sind Amended Order No. 5483/1-S, dated the 14th May, 1948 and the Karachi Electricity Rates Order 1953 Governor of West Pakistan is pleased to order that the charges contained in clause I of the Third Annexure attached to the said license shall stand altered in accordance with the schedule annexed to this notification and that all bills for meter readings recorded on or after Ist February, 1970 shall be issued accordingly."
27. It is followed at the end of it by Clause G which reads as follows: - "G. Consumer's Security Deposit. Security Deposit not exceeding the amount of average bill for a period of two months and a half shall be recovered from the consumers of different categories"
28. The contention of the learned counsel for the appellants with regard to this notification is that it only fixed the maximum under Clause XI of the Schedule to the Act and does not enjoin the licensee to charge from the consumer at that rate necessarily. In any case, according to the learned counsel for the appellants, the contracted rates could not get altered for the period the contract remained valid and binding merely on the strength of such a notification. This argument has a sound basis so far as reference to Clause XI of the schedule is concerned but is of no avail to the learned counsel because the opening words of the notification itself show that the rates are not the maximum which have been fixed but there is a direction that "all bills for meter readings recorded on or after Ist of February, 1970 shall be issued accordingly". The fixed rates have been notified for the licensee and it has to adjust its demand accordingly. As it happens to be a statutory instrument, it will take over and govern the contract between the parties if at all there be a conflict.
29. It was in the background of this notification that the existing contracts were amended and a Clause 10 with regard to security was introduced therein where it was not existing and in the tariff rates that were printed and duly signed by the appellants, clauses to that effect were introduced showing a minimum adjustable to charges of two months and a half average consumption of electricity by the appellants. Hence, the demand of additional security where the rates for consumption have been periodically rising would be legally justified on the strength of the statutory instrument irrespective of the contrac4 between the parties.
30. The contention of the learned counsel was that in working out the average, incorrect consumption figures have been adopted and not of the whole year but only of six months to arrive at an inflated and exaggerated amount. We find that the respondent No.1 in reply to the Constitutional Petitions, conceded that though the calculations had been made correctly, but if there was any doubt, it could be re-examined by associating the appellants. This aspect of the case appears from the counter-affidavit (Para 15) in the following words:- "That the contents of para 17 of the petition are denied. It is submitted that under the law and the agreement between the parties, the petitioner is liable to pay the Additional Security Deposit amount as demanded. It is submitted that the sufficiency of security deposit is directly related to the consumption of energy at the consumers' premises. The calculations made by the respondent No.1 Corporation through the computer system are correct. However, the petitioner is always welcome to show any mistake in calculation, which if found correct, shall be readily corrected by the Respondent No.1."
31. The notification referred to (Clause G) makes it clear that the Security Deposit had to be an amount not exceeding the amount of average bill for a period of two months and a half and it had to be recovered from the consumers of different categories. This leaves no manner of doubt that cash security was intended. In any case, it could not be urged that by demanding cash security the authorization, the license or the mandate is being exceeded and such a demand is unlawful.
32. Where that is not the case, the constitutional jurisdiction will not be of avail to intermeddle in the matter.
33. The two main contentions of the learned counsel for the appellants, namely, the availability of clause VI before its amendments for dealing with such securities and its diversion to other purposes after obtaining in cash came up before Courts in India. The first question was dealt with in Modi Industries v. UPSE. Board AIR 1979 All. 375 in the following words:-- "The security contemplated under the proviso to Clause VI of the Schedule is for the purpose of binding the consumer to take supply of energy for not less than two years. The extent of security shall be such which will assure to the licensee an annual revenue not exceeding 15 per cent of the cost incurred in laying the service-line in order to comply with the requisition. It has nothing to do with the security that may be taken by the licensee under the agreement entered into with the consumer for payment of the bills for consumption of energy.
34. Cl. (a) of the second proviso also cannot be pressed into service in support of the demand for additional security made by the Board. That provision is attracted only when the owner or occupier of the property to which the supply is made has not already made the security contemplated by cl.
(a) of the first proviso or if the security given by him has become invalid or insufficient and such owner or occupier fails to furnish security or to make up the original security to a sufficient amount, as the case may be, within the specified time after service upon him of a notice from the licensee requiring him so to do. We are not prepared to read this provision as empowering or authorising the Board to demand an additional security if the security furnished by the consumer under the agreement with the Board for any reason becomes insufficient to safeguard the, financial interest of the Board for supply of energy to the consumer" .
35. The second question was considered in depth in the case of Kistna Cement Works v. Secy. APSEB, Vidyut Soudha (A.I.R. 1979 Andhra Pradesh 291) and decided in the following words- "From the above reasoning, it follows that Sri Srinivasamurthy's contention that the consumer should have an option in respect of the payment of electricity charges and that he should no: be insisted upon to deposit cash of three months' average consumption charges cannot be accepted.
36. As has been pointed out, cash deposit is necessary in order to run the Board's affairs on a sound commercial basis" .
37. Where Clause VI of Schedule to the Act is not clearly applicable to the case, where the damand of enhanced security in cash is found to be in accord with law, the provisions of Section 2 of the Act would definitely be available notwithstanding the use of the word "assessed against him" by the licensee because the direction to charge Security Deposit not exceeding the amount of average bill for a period of two months and a half involves on the part of the licensee an assessment and a determination of the security and such a demand is in respect of supply of energy to his premises and, therefore, covered by Section 24.