The Amalgamated Electricity Co. Ltd vs N.S. Bhathena And Another

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeals Nos. 590/591 of 1963

Decision Date: 30 March 1964

Coram: A.K. Sarkar, K.C. Das Gupta, N. Rajagopala Ayyangar

The Supreme Court of India delivered its judgment in the matter of The Amalgamated Electricity Co. Ltd versus N.S. Bhathena and another on the thirtieth day of March, 1964. The opinion was written by Justice A.K. Sarkar and the bench was comprised of Justices A.K. Sarkar, K.C. Das Gupta and N. Rajagopala Ayyangar. The petitioner in the proceeding was the Amalgamated Electricity Co. Ltd and the respondents were N.S. Bhathena and another individual. The case was reported in the 1964 Annual Report of Indian Cases at page 1598 and also appears in the 1964 Supreme Court Reports (7) 503, with a later citation in 1969 Supreme Court Reports 1225 (11). The statutory framework that formed the basis of the dispute included the Electricity Supply Act of 1948, specifically sections 57, 57A, and 70 together with Schedule VI, as well as the Indian Electricity Act of 1910, section 3.

The factual background recorded by the Court showed that the Amalgamated Electricity Co. Ltd had been supplying electricity under a licence that the Government of Bombay had issued in 1932 pursuant to the Indian Electricity Act of 1910. That original licence fixed the maximum prices that the company could charge its customers. However, on the thirtieth of December, 1942 the Government issued an order under paragraph XI of the Schedule to the 1910 Act, altering the price limits. The alteration permitted the licensee to levy an additional surcharge not exceeding one‑third of the existing charges because of the extraordinary circumstances created by the Second World War.

Subsequently, the Bombay Electricity (Surcharge) Act of 1946 was enacted on the thirtieth of September, 1946, extending the authority to impose the surcharge for a further three‑year period. Although that Act expired on the thirtieth of September, 1949, the Amalgamated Electricity Co. Ltd continued to charge its consumers rates that incorporated the surcharge. The company attempted to justify the continuation of the surcharge by relying on the Electricity Supply Act of 1948, which had come into force on the tenth of September, 1948.

On the twenty‑fifth of September, 1958 the company gave notice to its customers that, effective from the first of November, 1958, it would charge them at new rates. The customers objected, asserting that the proposed rates were illegal and unauthorised because they exceeded the maximum rates prescribed in the Government order dated 30 December 1942. As a result, the consumers instituted suits challenging the legality of the rates that the company had levied beyond the prescribed maximum.

The company defended its position by contending that the rates it charged were fully within the limits set by the Electricity Supply Act of 1948. According to the company, the 1948 Act introduced a radical change in the method for determining a reasonable rate, thereby completely superseding the rates and maxima that had been fixed under the Electricity Act of 1910. The Court also considered whether, in view of sections 57 and 57A of the 1948 Act, a civil court possessed jurisdiction to entertain a suit that questioned the legality of the rates imposed by the licensee.

The judgment held, in its first part, that the maxima prescribed by the State Government, which bound the licensee under the Indian Electricity Act of 1910, remained relevant to the determination of the lawful rates.

The Court observed that once the Electricity Supply Act 1948 became effective, the licence holder was no longer restricted to a fixed maximum charge. The Act conferred upon the licence holder a statutory authority to revise its rates in accordance with Part 1 of Schedule VI of that legislation. Consequently, when a party contested the legality of the rates on the basis that they violated the provisions of Schedule VI, the Court held that the licence holder bore no obligation to demonstrate that the rates fell within the limits specified in the Schedule. Instead, the onus rested upon the party seeking relief to establish that the rates were unlawful. In the opinion of Justice Sarkar, the respondents were not permitted to raise in a civil court the issue of whether the licence holder’s rates exceeded the ceiling prescribed in paragraph 1 of Schedule VI to the 1948 Act. The Court further stated that a civil court could not declare the rates illegal merely because they caused the licence holder’s clear profit to surpass a reasonable return. The Court clarified that any relief for such an excess could be obtained only under specific circumstances: either the Government would establish a rating committee, a refund would become payable under the last proviso to paragraph 1 of Schedule VI, or relief would be available pursuant to paragraph II(1) of the same schedule.

Justice Das Gupta and Justice Rajagopala Ayyangar, speaking for themselves, laid down several principles. First, they held that a licence holder could unilaterally adjust its rates, provided that the adjustment did not result in a return exceeding the reasonable return defined by the statute. When the reasonable return was exceeded, paragraph II of Schedule VI would be triggered, and any surplus over the reasonable return would have to be distributed according to the method set out in that paragraph. Second, they observed that the statutory scheme for handling complaints about a licence holder receiving more than a reasonable return, as contemplated by Schedule VI, meant that a deliberate decision not to fine‑tune the rates to match a previously charged rate did not constitute a failure to adjust rates as required by paragraph 1. Third, they noted that there was no explicit prohibition on the jurisdiction of civil courts; therefore, the jurisdiction of such courts could not be considered excluded for matters that were not assigned by section 57A of the 1948 Act to the rating committee, or for matters where the rating committee could not provide the consumer with relief against an alleged breach of a statutory provision. The judgment proceeded under the civil appellate jurisdiction for Civil Appeals Nos. 590 and 591 of 1963, which were appeals from the judgment and decree dated 6 February 1963 of the Mysore High Court in Second Appeals Nos. 471 and 472 of 1960. The appellant was represented by counsel for the Solicitor‑General together with other counsel, while the respondents were represented by a team of counsel.

The judgment dated 30 March 1964 was pronounced by Justices Gupta and Ayyangar, with Justice Ayyangar delivering the main opinion and Justice Sarkar providing a separate opinion. The case involved an appeal filed by the appellant, which was a company engaged in the business of supplying electricity within a specified area of the State of Bombay, against two respondents named Bhathena and Tendulkar, who were identified as consumers receiving electrical energy from the appellant.

The appeals concerned disputes over the legality of the charges levied by the appellant for the electricity it supplied. The Court noted that the supply of electrical energy was governed by two principal statutes: the Electricity Act of 1910 and the Electricity (Supply) Act of 1948. The Court indicated that the legal questions to be resolved would arise from the interpretation and application of these two statutes. It first turned its attention to the provisions of the Electricity Act of 1910.

Under Section 3 of the 1910 Act, the Government possessed the authority to grant a licence to any party that wished to supply electrical energy within a defined area, and the licence could include specific limits on the price that the licencee might charge for its supply. The section further stipulated that, unless the Government directed otherwise, the provisions contained in the Schedule to the Act would be deemed to be incorporated into the licence. Paragraph XI of that Schedule expressly prohibited a licencee from charging more than the price limits fixed in the licence. Nevertheless, that same paragraph authorized the Government, upon the recommendation of an Advisory Board appointed pursuant to Section 35 of the Act, to modify those price limits.

The Court observed that reference to the remaining provisions of the 1910 Act was unnecessary for the present dispute. It recorded that the appellant had been operating under a licence issued in 1932 by the Government of Bombay pursuant to the 1910 Act. The original licence set the maximum prices that the appellant could charge, but those limits were subsequently altered by a Government order dated 30 December 1942, issued under the authority of Paragraph XI of the Schedule. The order established the following price structure: for lighting and fan usage, a rate of annas 5 (equivalent to 31 naira paise) per unit; for motive power, a rate of annas 1 (approximately 0.06 naira paise) per unit for engines up to four brake horsepower, together with a standing charge of rupees 2 per month for each brake horsepower connected; and for engines exceeding four brake horsepower, a rate of 19 pies (approximately 0.05 naira paise) per unit, again with a standing charge of rupees 2 per month per brake horsepower.

The Court further noted that, because of conditions created by the Second World War, various orders had been issued from time to time permitting licencees to add a surcharge not exceeding thirty‑three and one‑half per cent to the existing charges. Subsequently, on 30 September 1946, the Bombay Legislature enacted the Bombay Electricity (Surcharge) Act, 1946, hereinafter referred to as the Surcharge Act. This Act continued the wartime surcharge for a period of three years and consequently expired on 30 September 1949. The Court recorded the allegation that, even after the expiry of the Surcharge Act, the appellant continued to charge its consumers rates that included the surcharge prescribed by that Act, thereby charging amounts in excess of those fixed by the 30 December 1942 order.

In this case the appellant argued that the charges it imposed after the expiry of the Bombay Electricity (Surcharge) Act were justified under the Electricity Act of 1948, whose relevant provisions became effective on 10 September 1948. The appellant referred to this later‑enacted legislation as the basis for continuing its tariff structure. The respondent, N S Bhathena, began taking electricity from the appellant in 1954. Shortly thereafter he contested the legality of the charges levied for motive‑power consumption exceeding four brake horsepower. In 1955 Bhathena filed a suit seeking a refund of amounts he claimed had been collected illegally, alleging that the appellant had charged an excess standing charge of 0.69 nP per brake horsepower per month and an excess unit charge of 0.01 nP per unit, both amounts exceeding the limits fixed by the Order dated 30 December 1942. That suit remained pending, and the present judgment does not address the issues raised therein.

On 25 September 1958 the appellant issued a notice to its customers stating that, effective 1 November 1958, it would charge for motive power at a rate of 0.09 nP per unit together with a standing charge of Rs 2.69 per brake horsepower per month. The unit charge specified in the notice exceeded the rate prescribed by the 30 December 1942 Order by 0.04 nP per unit. There was no dispute that the notice altered the unit charge in force at that time, but it did not increase the standing charge that was then applicable. The notice gave rise to further disputes, and consequently two suits were filed against the appellant on 31 March 1959 in the court of the Civil Judge, Belgaum. The first suit was filed by the respondent, Bhathena, on his own behalf and on behalf of all other consumers who obtained electricity from the appellant for motive‑power purposes exceeding four brake horsepower. The reliefs sought in that suit were twofold: first, a declaration that the standing charge of Rs 2.69 per brake horsepower per month and the additional unit charge of 0.04 nP per unit of energy consumed for motive power, whether the supply was connected or not, were illegal, unauthorised, inoperative and ultra‑vires of the appellant company, and that the plaintiff was not bound to pay such charges; further, that the appellant had no authority to control or interfere with the supply of electric energy or its use, and that the restrictions imposed by the notice dated 25‑September‑1958 were illegal and void. Second, an injunction was sought restraining the appellant, its servants, agents or representatives from levying and recovering the excess and illegal charges, including the standing charge and the unit charge of 0.04 nP, by any coercive measures and from interfering with the electric supply to the plaintiff.

The suit filed by the respondent identified as Tandulkar, acting in a representative capacity, challenged the charge of 0.37 nP per unit imposed for electricity supplied for lights and fans, and it sought two specific remedies. First, the suit requested that this Honorable Court declare that the excess amount of 0.06 nP per unit of energy consumed for lights and fans was unauthorized, inoperative, and ultra vires of the Defendant‑Company, and therefore the plaintiff should not be bound to pay that excess. Second, the suit asked for an injunction restraining the Defendant‑Company, its servants, agents, or any representatives from levying or recovering the excess and illegal charge of 0.06 nP per unit of consumed energy from the plaintiff by any coercive means, and also from interfering with or controlling the electric supply.

Subsequently, several other individuals joined the proceedings as plaintiffs on their own applications. The trial court originally granted decrees in favour of the plaintiffs, but this decision was reversed on appeal by a District Judge. On a second appeal, the High Court of Mysore set aside the District Judge’s reversal and restored the trial court’s decree. The present appeals therefore contest the judgment pronounced by the High Court.

The Court first examined the suit concerning the charges for motive power. It was clarified that the suit did not contest any charge that had been levied before the date on which the suit was filed. The reliefs claimed consisted of a declaration and an injunction; an injunction cannot, by its nature, apply to a period that has already elapsed, and consequently the declaration sought must be limited to future charges only. Moreover, because the declaration was sought with respect to the charges as revised by the notice effective from 1 November 1958, the suit did not raise any issue regarding the legality of charges that were imposed prior to that date.

The dispute in the motive‑power suit centred on two particular charges: the unit charge of 0.09 nP per unit fixed by the notice dated 25 September 1958, and the standing charge of Rs 2.69 per B.H.P. per month. The Court first addressed the controversy surrounding the unit charge. It noted that it is not disputed that a licensee may increase his charges up to the maximum limit prescribed in the licence or as otherwise fixed by the Government. The real point of contention was whether the licencee possessed the authority to raise the charges beyond that prescribed limit. The judgment therefore confined its discussion to the legality of such an enhancement. While it was undisputed that under the Electricity Act of 1910 the licencee could not exceed the statutory limit, the Defendant‑Company based its claim of authority to increase the charge on the Electricity (Supply) Act of 1948, as amended by Act 10 of 1956, which came into effect on 30 December 1956. The Court observed that this amendment was in force at the relevant time.

When the revised rate took effect under the notice dated September 25, 1958, the Court observed that the applicable provisions of the amended Act were those set out in Section 57, which provided that “The provisions of the Sixth Schedule and the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee, not being a local authority‑ (a) in the case of a licence granted before the commencement of this Act, from the date of the commencement of the licensee’s next succeeding year of account; and, (b) in the case of a licence granted after the commencement of this Act, from the date of the commencement of supply, and as from the said date, the licensee shall comply with the provisions of the said Schedules accordingly, and any provisions of the Indian Electricity Act, 1910 (9 of 1910), and the licence granted to him thereunder and of another law, agreement or instrument applicable to the licensee shall, in relation to the licensee, be void and of no effect in so far as they are inconsistent with the provisions of section 57A and the said Schedules”. The Court further noted that Section 57A stated that “(1) Where the provisions of the Sixth Schedule and the Seventh Schedule are under section 57 deemed to be incorporated in the licence of any licensee, the following provisions shall have effect in relation to the said licensee, namely: (a) the Board or where no Board is constituted under this Act, the State Government‑ (i) may, if satisfied that the licensee has failed to comply with any of the provisions of the Sixth Schedule; and, (ii) shall, when so requested by the licensee in writing, constitute a rating committee to examine the licensee’s charges for the supply of electricity and to make recommendations in that behalf to the State Government; (c) a rating committee shall report to the State Government making recommendations regarding the charges for electricity which the licensee may make; (d) within one month after the receipt of the report under clause (c), the State Government may make an order in accordance therewith fixing the licensee’s charges for the supply of electricity and the licensee shall forthwith give effect to such order”. In addition, the Court reproduced the first paragraph of the Sixth Schedule, which reads: “Notwithstanding anything contained in the Indian Electricity Act, 1910 (9 of 1910), and the provisions in the licence of a licensee, the licensee shall so adjust his rates for the sale of electricity whether by enhancing or reducing them that his clear profit in any year of account shall not, as far as possible, exceed the amount of reasonable return;”. The Court explained that this paragraph clearly conferred upon a licensee the authority to vary his rates, including to increase them, but that such increase was limited by the requirement that the licensee’s clear profit should not, as far as possible, exceed a reasonable return. The Court further observed that the Schedule also specified the methods for calculating “clear profit” and “reasonable return”, although it did not need to discuss those methods in detail for the present purpose.

In this case, the Court observed that clauses (2) and (9) of paragraph XVII of the Schedule dealt with the methods of determining “clear profit” and “reasonable return,” but it was unnecessary to discuss their details. The Court then explained that paragraph 1 of the Sixth Schedule authorised a licencee to increase rates “Notwithstanding anything contained in the Indian Electricity Act, 1910 (9 of 1910), and the provisions in the licence of a licencee.” Consequently, nothing in the 1910 Act or in the licence could render such an enhancement illegal. The Court held that the authority granted by paragraph 1 of the Sixth Schedule therefore permitted a licencee to raise rates beyond those fixed by the licence or by any Government order, and that this interpretation was straightforward. The Court recalled that paragraph XI of the Schedule to the 1910 Act had prohibited a licencee from charging a rate higher than the maximum fixed by the licence; however, that provision was repealed by Act 101 of 1956. The repeal was clearly intended because paragraph 1 of the Sixth Schedule to the 1948 Act made the earlier prohibition ineffective. Further, section 70(1) of the 1948 Act provides that “No provision of the Indian Electricity Act, 1910 (9 of 1910), or of any rules made thereunder or of any instrument having effect by virtue of such law or rule shall, so far as it is inconsistent with any of the provisions of this Act, have any effect.” This clause reinforced the view that the power to enhance rates under the 1948 Act was not limited by any provision of the 1910 Act or by the licence issued under it. The respondents’ counsel then argued that a licencee could not raise rates unilaterally and must first invoke section 57A of the 1948 Act to have the Government constitute a rating committee. The Court found this contention wholly unfounded. While a licencee may indeed request the Government to form a rating committee under section 57A, and if the Government does so and fixes rates based on the committee’s recommendations the licencee is bound by those rates, there is no provision in section 57A or elsewhere in the 1948 Act that obliges the licencee to wait for such a committee before increasing rates. To impose such a requirement would render paragraph 1 of the Sixth Schedule ineffective. Moreover, there is no inconsistency between section 57A and paragraph 1, as section 57A merely confers upon the licencee the power to call for the constitution of a rating committee.

In the present case the Court observed that a licensee who chooses to request the constitution of a rating committee does so in order to avoid the danger of fixing a higher rate on his own and later being compelled to refund the amounts that have already been collected. The Court explained that this avoidance of the risk of repayment is essentially the only reason why the statute confers on the licensee the right to ask for a rating committee. However, the Court added that if the licensee is prepared to bear that risk, there is nothing in the Act of 1948 that obliges him to obtain a rating committee before he proceeds to raise the rates himself.

The respondents’ counsel then relied upon subsection (2) of section 70 of the Act of 1948, which provides that “Save as otherwise provided in this Act, the provisions of this Act shall be in addition to, and not in derogation of, the Indian Electricity Act, 1910.” He argued that this wording required the two statutes to be read in harmony and therefore the power to increase rates granted by the 1948 Act should be limited to the maximum amounts specified either in the licence or in an order of the Government. The Court rejected that contention. It pointed out that subsection (1) of section 70 expressly states that, in the event of an inconsistency between the two Acts, the earlier Act shall not have effect. The Court noted that “harmonisation” can arise only when there is no inconsistency; when an inconsistency exists, subsection (1) dictates that the later Act displaces the earlier one, not that the statutes be blended. Moreover, subsection (2) merely says that, except where the later Act provides otherwise, it is not to be read as derogating the earlier Act. Consequently, when the 1948 Act does provide otherwise, it may indeed derogate from the 1910 Act. The Court further observed that section 57 of the 1948 Act and paragraph 1 of its Sixth Schedule expressly state that the provisions contained therein override the provisions of the earlier Act. To therefore attempt to harmonise the rate‑enhancement power granted by the 1948 Act with any provision of the licence or with the 1910 Act would be contrary to the express terms of the 1948 Act.

Finally, the respondents’ counsel cited the decision in Babulai Chaganlal Gujerathi v. Chopda Electric Supply Co. Ltd. (1) to support the view that, under paragraph 1 of the Sixth Schedule, a licensee could increase rates only up to the maximum limits fixed in the licence or by a Government order. The Court explained that the cited authority was decided on the basis of the wording of paragraph 1 as it stood prior to the 1956 amendment. Before that amendment the paragraph did not contain the words “Notwithstanding anything contained in the Indian Electricity Act, 1910 (9 of 1910) and the provisions in the licence of a licensee.” The Court held that the insertion of those words after the amendment caused a material change in the provision, and consequently the earlier decision could not be used to interpret the present wording of paragraph 1. The Court therefore concluded that the earlier case offered no assistance in construing the amended paragraph, and it did not need to express an opinion on whether the earlier decision was correctly decided under the pre‑amendment wording.

In that earlier decision the court had held that a licensee could increase rates only up to the maximum limits prescribed in the licence or by a Government order. That conclusion was reached because the decision relied on paragraph 1 of the Sixth Schedule as it existed before the 1956 amendment. Before the amendment, the paragraph did not contain the words “Notwithstanding anything contained in the Indian Electricity Act, 1910 (9 of 1910) and the provisions in the licence of a licensee.” The insertion of those words by the amendment produced a material change in the provision. Consequently, the wording now makes it impossible to say that the power to enhance rates is confined to the limits fixed in the licence or by any Government order. For this reason the earlier decision does not assist in interpreting paragraph 1 of the Sixth Schedule as it stands after the 1956 amendment. Whether the case of Chhaganlal was correctly decided under the pre‑amendment wording is not a question for determination in the present proceedings, and no opinion is expressed on that point. The court is of the view that, on the terms of paragraph 1 of the Sixth Schedule to the 1948 Act as it existed at the time the notice was issued, a licensee possessed a power to raise rates and that power was not limited to an increase up to the limits fixed by the licence or by any Government order.

The question of whether, under paragraph 1 of the Sixth Schedule to the 1948 Act, a licensee could raise rates beyond the limits fixed by the Government or by the licence was decided by the High Court in the same manner as expressed above. The High Court held that the respondents could not obtain relief merely on the ground that the rates charged exceeded those limits. However, the High Court also observed that the appellant had failed to demonstrate that it had revised its rates in accordance with the 1948 Act before the amendment of 1956, and therefore concluded that the appellant must be deemed to have illegally continued the surcharge it was levying under the Surcharge Act, 1946 after that surcharge had expired on 1 October 1949. Those observations are somewhat difficult to comprehend. As previously noted, the legality of any charge made before the suit, or at any time before 1 November 1958, does not arise for determination in the present case. Accordingly, even if the appellant had not revised its charges prior to the amendment, no grievance based on that fact can be raised in the plaint on which the present suit is based. Moreover, the burden of proving that the charges were duly revised under the 1948 Act before the amendment should not fall on the appellant. The trial Court did not frame any issue on this question, and the plaint itself does not allege that the appellant continued an illegal charge.

In this case the Court observed that the question of whether the charges levied before 1 November 1958 were illegal does not arise for decision. The notice dated 25 September 1958 had revised the unit charge, and therefore, even if the earlier charge had been illegal, there was no continuation of that illegal charge. The High Court had held that, under the Act of 1948, the appellant was statutorily required to adjust its rates so that its clear profit would not exceed a reasonable return. The High Court further found that the appellant had not shown that it had made such an adjustment after the amendment of the Act, nor had it proved that the increase announced in the 25 September 1958 notice would not cause the clear profit to exceed the reasonable return. Additionally, the High Court stated that “even otherwise the enhancement is the continuation of the illegal charges and that by itself is invalid.” On the basis of these conclusions the High Court decided in favour of the respondents. The Court could not agree with the High Court on any of these points and therefore set out to examine them in detail.

The Court began by addressing the High Court’s last point concerning the alleged continuation of an illegal charge. It expressed uncertainty about what was meant by the enhancement being a continuation of the illegal charge, noting that the respondent’s own pleading admitted that the rates had been revised by the notice of 25 September 1958. Even if that revision raised the rates to the amounts that had been permissible under the expired Surcharge Act of 1946, the mere identity of those figures does not render the enhancement illegal so long as the rates were authorized under the amended Act of 1948. Because a genuine revision had taken place, there was in fact no continuation of a previous charge, and this contention was therefore rejected. The Court then considered the other basis on which the High Court had decided the case—whether the appellant had established that the revised rate would not cause its clear profit to exceed a reasonable return. The plaint acknowledged the revision of the unit charge by the 25 September 1958 notice, and it was not disputed that, after the amendment of paragraph 1 of the Sixth Schedule, the appellant had indeed altered its unit charge. The Court could not accept that the burden of proving that the revision did not lead to an excessive clear profit should rest on the appellant. Instead, the Court held that the burden must lie with the respondents, who were the ones alleging that the rates fixed by the defendant exceeded the reasonable return. This objection was regarded as a serious flaw in the High Court’s reasoning.

The Court observed that a civil court did not possess the authority to examine whether increased rates were illegal because they caused the licensee’s clear profit to exceed the amount of reasonable return, nor could such a court grant any relief on that basis. The Court explained that paragraph 1 of the Sixth Schedule to the Act of 1948 unequivocally prohibited a licensee from raising rates beyond a level that would make the clear profit surpass the reasonable return. At the same time, the Act prescribed the consequences of a breach of this prohibition. Accordingly, the fourth and final proviso of paragraph 1 of the Sixth Schedule provided that if the rates of supply fixed pursuant to the recommendations of a rating committee constituted under section 57A were lower than those notified by the licensee in accordance with the preceding proviso, the licensee was required to refund to the consumers the excess amount that had been collected from them. Thus, the immediate consequence of breaching the prohibition was a liability to refund the difference between the enhanced rate that had to be notified under the third proviso and the rate fixed by the rating committee. However, the Court noted that a rating committee might not have been constituted, because a committee could be formed only when the licensee desired it or when the Government exercised its power to constitute one under section 57(1) of the Act of 1948. In situations where no rating committee existed, the liability to refund did not arise; instead, the provisions of paragraph II of the Schedule became applicable, and these applied equally whether there was an enhancement of the charge under paragraph 1 or whether there was none. Paragraph 11(1) of the Schedule read as follows: if the clear profit of a licensee in any accounting year exceeded the amount of reasonable return, one‑third of such excess, subject to a ceiling of five per cent of the reasonable return, could be used at the discretion of the undertaking. Of the remaining excess, half was to be appropriated to a reserve called the “Tariffs and Dividends Control Reserve,” and the other half could either be distributed as a proportional rebate on the amounts collected from the sale of electricity and meter rentals or be carried forward in the licensee’s accounts for later distribution to consumers, as directed by the State Government. This provision demonstrated that when a revised rate exceeded the limit prescribed in paragraph 1, a consumer might receive a refund of only a part of the excess, and even that was subject to the Government’s discretion. The Court stressed that the consumer had no inherent right to any refund in such circumstances. Moreover, the Court reasoned that if a civil court were empowered to order a full refund of the entire excess as determined by that court, the statutory scheme set out in paragraph 11 would become meaningless, rendering the entire regulatory framework ineffective.

In this case, the Court observed that if a civil court found that a charge had exceeded the statutory limit and was therefore illegal, that court could also order a refund of the amount that had been illegally obtained. However, the Court explained that the question of whether the first part of paragraph 1 of the Sixth Schedule had been breached was not meant to be decided by a civil court. The Court held that a civil court possessed no authority to determine that question, nor could it grant any relief relating to it. The Court warned that allowing such jurisdiction would lead to anomalous consequences. It pointed out that if a civil court could decide whether an enhanced rate caused the licensee’s clear profit to exceed the amount of reasonable return, different courts might reach different conclusions based on the material before them, thereby destroying the uniformity of rates that a licensee could charge. The Court stressed that such a result could not have been intended.

The Court further noted that the Electricity Act of 1948 did not give consumers the right to have a rating committee constituted. This omission, the Court explained, was deliberate because permitting every consumer to demand a rating committee to examine the rates would make the operation of a public utility such as an electric supply business impossible. The Court warned that a continual succession of rating committees would prevent any fixed rate structure and would be inconvenient for all parties. Consequently, the Act vested only the Government with the power to act when a licensee committed a breach of its obligations.

Accordingly, the Court concluded that the High Court had erred in requiring the appellant to demonstrate that the rate enhancement did not cause its clear profit to exceed the reasonable return, and in ruling in favour of the respondents on that basis. The Court held that the respondents were not entitled to raise, in a civil court, any question concerning whether a licensee’s rates exceeded the limit prescribed in paragraph 1 of the Sixth Schedule to the 1948 Act. A civil court could not declare the rates illegal merely because they caused the licensee’s clear profit to surpass the reasonable return. The Court explained that if such an excess existed, relief could be obtained only if the Government established a rating committee, a refund became due under the last proviso to paragraph 1 of the Sixth Schedule, or relief was available under paragraph 11(1) of that Schedule.

The Court also addressed the contention that the revision notice dated 25 September 1958 was invalid. It noted that under the third proviso to paragraph 1 of the Sixth Schedule, a revision of rates could not be made unless the licensee gave a written notice of its intention to enhance the rates either to the Government or to the State Electricity Board. The Court observed that no such notice had been given, rendering the revision notice defective.

The Court observed that the third proviso to paragraph 1 of the Sixth Schedule plainly required a written notice of the intention to enhance rates to be given by the licence‑holder to the Government or to the State Electricity Board. The contention that such a notice had not been served was therefore untenable, and the Court proceeded to demonstrate that the notice had indeed been dispatched. Exhibit 62, a copy of a letter received by the appellant from the Secretary of the State Electricity Board, referred to a letter numbered AMAL/BEL/C‑2 dated 7‑8‑1958, which had been written by the appellant to the Board. The letter identified as Exhibit 60 constituted the appellant’s notice to the Board, expressly stating its intention to revise the rates. From these documents the Court concluded that a proper notice of the proposed enhancement had been given to the Board, a point that appeared to have been overlooked by the High Court. The appellant further argued that the notice was defective because it failed to specify that the standing charge was being raised from Rs 2 to Rs 2.69 per BHP per month. The Court rejected this argument, noting that the notice did not purport to increase the standing charge at all. The plaint itself, in paragraph 5, affirmed that prior to 1 November 1958 the appellant was already levying a standing charge of Rs 2.69 per BHP per month; consequently there was no enhancement of that charge and no requirement to give a notice of such an increase.

The Court also addressed the allegation that the notice to consumers indicated a restriction of power supply to certain hours while the notice to the Government omitted any reference to such a restriction. The notice to consumers indeed mentioned that the revised unit charge would apply to restricted hours of supply, but the Court found this allegation to lack substance because there was no evidence on the record that any actual restriction of supply had been imposed. No pleading in the plaint, nor any documentary evidence, showed that the supply was limited. Accordingly, the failure to inform the Government of a non‑existent restriction was immaterial. Moreover, the Court could not locate any statutory provision, including paragraph 1 of the Sixth Schedule, that imposed a duty to give the Government notice of a supply restriction. Accordingly, the Court held that there was no legal basis to deny the appellant the right to levy the charge mentioned in its notice dated 25 September 1948. Turning to the standing charge of Rs 2.69 per BHP per month, the Court reiterated that, as with the other charge, it would not entertain questions concerning the legality of that charge for any period before the commencement of the suit.

In this case there was no allegation that the rate mentioned in the notice had been increased, and consequently the Court found no evidence of any complaint that the appellant had raised the rate by notice. The Court also observed that a Civil Court could not examine whether a charge was illegal merely because it had been revised to an amount exceeding the limit specified in paragraph 1 of the Sixth Schedule to the Act of 1948. The sole ground on which the charge was contested appeared in paragraph 23 of the plaint, which stated that the combination of standing charges and the usual unit charges amounted to a double charge, thereby violating equity and law and enriching the defendants. No other ground was raised to challenge the legality of the standing charge.

The Court explained that when a charge is authorized by a statute, a court of law cannot entertain a claim that the charge is inequitable, nor can it consider whether the charge exceeds the statutory limit. Accordingly, the respondents were not permitted to question the legality of the standing charge in this proceeding. Having decided the issue of the rates charged for the supply of motive power, the Court concluded that the appeal concerning those rates must be allowed.

Regarding the appeal relating to the charges for light and fans, the Court indicated that it could be resolved on substantially the same basis as earlier discussed. The High Court had also decided that matter on the identical ground used for the other issue. The only contention in this part of the case was that the appellant had charged a rate that exceeded, by 0.06 nP per unit, the limit fixed by the order dated 30 December 1942. The plaintiffs sought a declaration that the excess charge was illegal and an injunction to restrain the appellant from levying it. The Court noted that the appellant had given no notice of any increase in the charge, so there was no question of illegality arising from an enhancement. The sole grievance was that the charge exceeded the government‑fixed limit.

The Court reiterated that, under paragraphs 1 and 11 of the Sixth Schedule to the Act of 1948, a licensee may charge any amount provided that the clear profit does not exceed a reasonable return. If the licensee exceeds that limit, only the consequences specified in those paragraphs apply, and a consumer cannot obtain relief in a civil court on the basis that the licensee has exceeded the limit. Therefore, the respondent could not obtain any relief in this civil action for the alleged excess charge. As with the earlier issue, the Court confined its consideration to the legality of charges made after 31 March 1959 and declined to examine the legality of any charges that preceded the filing of the suit.

In this matter, the Court observed that the question of whether the rates imposed after 31 March 1959 were lawful had to be examined under the provisions of the 1948 Act as amended in 1956. Consequently, the respondents could not derive any benefit from the decision in Babulal Chhaganlal (1), even if that decision had been correctly decided. The Court therefore concluded that the present appeal was also successful. Accordingly, it ordered that both appeals be allowed and that the costs of the proceedings be awarded to the successful parties in their entirety.

The two appeals before the Court arose by way of special leave granted by this Court and challenged a common judgment of the High Court of Mysore rendered in two second appeals filed by the respective respondents. The central issue in each appeal concerned the legality of certain tariffs that the appellant‑company, a licensed electricity supplier, had imposed on the respondents for the supply of electricity used for power and for lighting and fans. The appellant‑company operated as a licensee engaged in the distribution and supply of electricity in the town of Belgaum and surrounding areas. The original licence for electricity supply in Belgaum had been granted in 1932 by the Government of Bombay to two individuals, B. S. Ankle and A. S. Ankle. Those individuals subsequently assigned the licence to a concern known as the Belgaum Electricity Co. Ltd., and a further assignment transferred the licence to the present appellant, which now carried on the distribution and supply of electricity in Belgaum. The licence had been issued under section 3 of the Indian Electricity Act of 1910 (referred to as the “Electricity Act, 1910”), a statute whose provisions would be relevant later. Under the Electricity Act, the Government fixed both maximum and minimum rates that a licence holder could charge its consumers, while the licencee retained the discretion to set the actual rates within those prescribed limits. Exercising that authority, the Government of Bombay issued an order on 30 December 1942 fixing the maximum rates applicable to licencees, and those rates were to become effective on 1 February 1943. The order stipulated that the maximum rate for electricity supplied for lights and fans was five annas per unit. For electricity supplied for power purposes, the maximum rate was one anna per unit for consumption up to and including four brake horsepower (B.H.P.), together with a standing charge of rupees 2 per month for each B.H.P. connected. Where consumption exceeded four B.H.P., the maximum rate was set at three‑quarters of an anna per unit, again with a standing charge of rupees 2 per month for each B.H.P. connected. Following the issuance of that order, the appellant levied and collected charges from its consumers at the maximum rates that had been permitted.

On March 11 1943 the Government of Bombay issued a notification pursuant to rule 81(2)(b) of the Defence of India Rules, which relaxed the maximum rates that could be charged by a licensee under the Electricity Act. The notification allowed such licensees to levy amounts not exceeding thirty‑three and one‑half per cent above the rates that had been previously fixed as maximum. Subsequently the surcharge created by that notification was withdrawn, and at the same time a charge described as the “War Costs Surcharge” was authorised to be levied; however this substitution made no practical difference because the permitted increase over the maximum rate remained identical.

The War Costs Surcharge remained in force until 1946, when the Government of Bombay enacted the Bombay Electricity (Surcharge) Act of 1946, which became effective on September 30 1946. This legislation was expressly temporary; under subsection (4) of section 1 it was to remain in operation for only three years, and consequently it ceased to have effect on October 1 1949. Section 3 of the Act granted the Provincial Government the power to fix rates of surcharge, and section 5 declared that the existing War Costs Surcharge would be deemed a surcharge fixed under the authority of section 3. As a result, although the original licence issued under the Electricity Act 1910, which empowered the Government to determine the maximum rates for supply of energy, was based on the order of December 30 1942, from essentially the moment that order took effect a surcharge of thirty‑three and one‑half per cent was permitted to be added by the licensees, and this arrangement persisted until the expiry of the 1946 Act on October 1 1949.

Notwithstanding the lapse of the 1946 Act, the appellant continued to demand and collect charges that were almost the same as those collected during the period when the Act was in force, with only a slight modification concerning the supply of power. In the case of power supply, the standing charges were levied at the maximum amount allowed by the December 30 1942 notification, together with the applicable surcharge, but the unit charge was increased beyond that figure by invoking provisions of the Electricity Supply Act 1948 (Central Act 54 of 1948), hereinafter referred to as the Supply Act. The legality of the continued imposition of the surcharge on the standing charge from and after October 1 1949, and of the further increase in the unit rate beyond the authorized maximum, were contested in the suit that gave rise to Civil Appeal 590 of 1963. In the case

In this case, the Court observed that the charge for supplying electricity used for lighting and fans had not been altered since 30 September 1949; however, the maximum charge had been increased by a rate of thirty‑three and one‑third percent, and that increase continued to be applied. The legality of maintaining the surcharge in that circumstance was challenged in Civil Appeal No 591 of 1963. The appellant justified the levy and the rates that were contested by citing the provisions of the Supply Act, and the Court noted that a detailed reference to those provisions would be made later in the judgment.

The Court then turned to the background of the Supply Act, explaining that the Act had been enacted to provide for the rationalisation of the purchase and supply of electricity and, more generally, for measures conducive to electrical development. The Act had come into force on 10 September 1948. The principal issue for determination in the appeals concerned the effect of the Supply Act, 1948, and its provisions on the rates that had been fixed by licencees under the Electricity Act, 1910. The Court indicated that this matter would be examined in its proper place. A reference was made to section 70 of the Supply Act, which provides that no provision of the Indian Electricity Act, 1910, or any rule made thereunder, shall have effect to the extent that it is inconsistent with any provision of the Supply Act. The section further states that, save as otherwise provided in the Supply Act, the provisions of that Act are to be read as additions to, and not as derogations of, the Indian Electricity Act, 1910. By highlighting this provision, the Court sought to illustrate the relationship between the two statutes.

Subsequently, the Court briefly narrated the procedural history that led to the present appeals. Two representative suits had been filed by consumers of electrical energy in Belgaum, who obtained their supplies from the appellant, before the Civil Judge, Belgaum, both suits being filed under Order 8 of the Civil Procedure Code. The first suit, identified as suit No 133 of 1959, concerned the supply of electricity for power. In the plaint, it was stated that, before 1 November 1958, the appellant charged the plaintiffs a standing fee of Rs 2 1⁄11 per brake‑horse‑power per month, together with a unit charge of one anna for each unit of energy consumed. The plaint further alleged that the appellant, by a notice dated 25 September 1958, proposed to raise the unit charge from one anna per unit to one and a half anna, or to nine naye paise per unit, effective from 1 November 1958. The plaintiffs had protested the proposed increase and had addressed letters to the Government of Mysore—Belgaum having become part of that State under the State Reorganisation Act—but obtained no result. The appellant had justified the increase by referring to the Supply Act, particularly after the Act had been amended by Central Act 101 of 1956. The material averment upon which relief was claimed was that the revision effected by the September 25, 1958 notice was illegal because it exceeded the maximum rate prescribed by the Government of Bombay in its order of 30 December 1942, which the appellant claimed still bound it. Accordingly, the plaintiffs sought a declaration that any increase beyond the rates fixed by the 1942 notification was illegal, and also a declaration that the standing charge was illegal to the extent of the excess of 0.69 naye paise per brake‑horse‑power over the amount of two rupees.

In the first suit the plaintiffs objected to a notice issued by the appellant on 25 September 1958 that proposed to raise the unit charge for electricity from one anna to one and a half anna, which corresponded to nine naye paise per unit. The plaintiffs recorded that they had protested the proposed increase and had written letters to the Government of Mysore – Belgaum having become part of that State under the State Reorganisation Act – but that their representations had produced no result. The appellant, in its defence, cited the provisions of the Supply Act, and in particular the amendment made by Central Act 101 of 1956, as the basis for the increase. The plaintiffs averred that the revision effected by the notice of 25 September 1958 was illegal because it went beyond the maximum rate that the Government of Bombay had prescribed in its order dated 30 December 1942, an order which, the plaintiffs argued, continued to bind the appellant. Accordingly, the plaintiffs sought a declaration that any increase beyond the rates fixed by the 1942 notification was unlawful. They also asked for a declaration that the standing charge was illegal to the extent of an excess of 0.69 naye paise per B.H.P. over the fixed rate of two rupees, and that the additional increase of four naye paise per unit of energy consumed was likewise unlawful. Finally, the plaintiffs prayed for an injunction restraining the appellant from levying or collecting these alleged illegal and excessive charges.

The second suit, filed as suit no. 135 of 1959, concerned the supply of electricity for lights and fans. In that plaint the plaintiffs pointed out that, under the Government of Bombay order of 30 December 1942, the appellant was permitted to charge only five annas per unit, which after the introduction of decimal coinage amounted to thirty‑one naye paise. The plaintiffs alleged that the appellant had taken advantage of wartime surcharges permitted under the Bombay Electricity (Surcharge) Act 1946 and had been charging six annas per unit, which after decimalisation became thirty‑seven naye paise per unit. The principal argument advanced by the plaintiffs was that, with the coming into force of the Bombay Electricity (Surcharge) Act 1956 on 30 September 1959, the appellant’s right to charge any amount above thirty‑one naye paise per unit ceased, yet the appellant continued to levy the higher rates without any legal authority. On that basis the plaintiffs prayed for a declaration that any charge beyond thirty‑one naye paise per unit was invalid, and for an injunction preventing the appellant from imposing such illegal excesses. The appellant defended its position by relying on the provisions of the Supply Act 1948, contending that the charges it continued to levy or intended to levy under the 25 September 1958 notice were wholly within the limits prescribed by that Act, and therefore the plaintiffs were not entitled to any relief. The learned trial Judge, after examining the provisions of both the Electricity Act and the Supply Act together with their schedules, held that even after the Supply Act had come into force, the maximum limit of charge fixed by the Government under the earlier legislation remained applicable.

In the first instance, the trial court observed that the Electricity Act of 1910 continued to prescribe the ceiling on rates that could be authorised, and it found that the rates that the appellant either charged or threatened to charge exceeded those statutory ceilings. Consequently, the court granted the plaintiffs in each of the two suits the declaration of invalidity of the excess charges and the injunction that they had sought. The appellant subsequently appealed to the district judge, contending that the Supply Act of 1948 had introduced a fundamentally new method of determining a reasonable rate and that, as a result, the rates and maximum limits fixed under the Electricity Act of 1910 were wholly displaced. The appellate court accepted this argument, allowed the appeals and ordered the dismissal of the suits. Unsatisfied, the plaintiffs then lodged second appeals before the High Court of Mysore. The single judge of that court, while hearing the appeals, accepted in part the appellant’s submission that the maximum rates authorised by the Government under the powers conferred by the Electricity Act of 1910 ceased to operate upon the commencement of the Supply Act. However, the judge held that the appellant had not complied with the procedural requirements laid down in the Supply Act of 1948 for fixing the rates to be charged by licencees. Because the prescribed procedure had not been observed, the judge concluded that the appellant could not sustain the claim that the charges levied, or intended to be levied, were lawful. On that basis, the judge allowed the appeals, set aside the appellate court’s order and restored the trial‑court decrees in both suits. The present appeals arise from those High Court judgments and have been brought before this Court by way of special leave. Before addressing the arguments presented on behalf of the appellant, it is necessary to examine the statutory provisions that underlie the controversy. The appellant, as noted earlier, had become the transferee of a licence that had originally been issued under the Electricity Act of 1910. Section 3 of that Act empowers the State Government, upon receiving an application, to grant any person a licence to supply energy within a specified area. Sub‑section (2) of the same section sets out “the provisions which shall have effect on licences granted under the Act.” For the purposes of this case, the relevant provisions are contained in clauses (d) and (f). Clause (d) provides that a licence may prescribe the limits and conditions within which the supply of energy is to be compulsory or permissive, may set the limits of price to be charged for the supply of energy, and may address any other matters that the State Government considers appropriate. Clause (f) declares that the provisions contained in the Schedule are deemed to be incorporated into every licence granted under this Part, except where they are expressly added to, varied, or excepted by the licence, and that, subject to any such modifications, they apply to the authorised undertaking.

In this case the Court explained that the provision allowing the State Government to impose any conditions, variations or exceptions on a licensed undertaking was to be read together with the clause that the State Government is empowered to make such changes. The clause also contained a proviso, but the Court noted that the proviso was omitted from the discussion because it was not relevant to the matters before it. Section 23 of the Electricity Act, 1910 was then cited. That section obliges a licensee not to give undue preference to any person and provides that, subject to the earlier requirement, the licensee may charge for the supply of energy only amounts that have been agreed upon and that do not exceed the limits set by the license. The Court turned to the schedule referred to in subsection 3(2)(f), which is headed “Provisions to be deemed to be incorporated with, and to form part of, every licence granted under Part II, so far as not added to, varied or excepted by the licence.” Within that schedule Paragraph XI was identified as the paragraph that mattered for the present issue. Paragraph XI states that, except as provided by clause IX (a saving that the Court said was not now relevant), the prices charged by a licensee for energy must not exceed the maximum amounts fixed by the licence; if a method of charge is approved by the State Government, the maximum is the amount that the State Government fixes when it approves that method. The Court then observed that, exercising the powers conferred on it by section 3(2), the State Government issued a notification dated 30 December 1942, which fixed the charges for the supply of energy. The factual record, as already set out, showed that the maximum rate fixed by that notification applied to all supplies of energy, whether for power, lights or fans, and that the notification became effective on 1 February 1943. Subsequently, by virtue of a notification issued under the Defence of India Rules, a later War‑costs surcharge and finally under the Bombay Act of 1946, the maximum rate was raised by one‑third (33 ⅓ per cent) of the rate originally specified in the 30 December 1942 notification. Those increased rates continued to be lawfully charged by the appellant up to 30 September 1949, when the Bombay Act of 1946 ceased to operate. The question before the Court was whether it was lawful for the appellant to continue charging at that higher rate after 30 September 1949, in excess of the maximum prescribed by the 30 December 1942 notification. To answer that, the Court said it was necessary to examine the Supply Act of 1948 and to interpret its provisions and their effect on the limitations imposed by the earlier law. The Court had already referred to section 70 of the Supply Act, 1948, which provides that if any inconsistency arises between the two Acts, the Supply Act, 1948 will prevail, and that only to the extent that the two statutes do not address the same subject matter will the provisions of the Electricity Act, 1910 continue to apply.

In this case, the Court examined the provision that governs how a licensee may determine the rates charged for the supply of energy. The relevant provisions of the Supply Act are found in sections 57 and 57A, read together with Schedule VI to the Act. The Court noted that certain provisions of the Supply Act of 1948 were later altered by Central Act 101 of 1956, and that section 57 was among those amended. however, the Court observed that the original wording of section 57 was substantially the same as the wording that appears after the amendment in the combined sections 57 and 57A. Consequently, the Court concluded that the amendment did not bring about any material change that would affect the present appeal. For the sake of clarity, the Court reproduced the text of sections 57 and 57A as they stood when the present proceedings began. Section 57 provides that the provisions of the Sixth Schedule and the Seventh Schedule shall be deemed to be incorporated in the licence of every licensee that is not a local authority; for licences granted before the commencement of the Act, the incorporation takes effect from the date of the next accounting year, and for licences granted after the commencement, it takes effect from the date supply begins. From that date the licensee must comply with the schedules, and any provisions of the Indian Electricity Act 1910, any licence issued thereunder, or any other law, agreement or instrument that are inconsistent with section 57A and the schedules, shall be void and of no effect. Section 57A(1) states that where the schedules are deemed incorporated under section 57, the following provisions shall apply to the licensee: the Board, or where no Board exists, the State Government, may, if satisfied that the licensee has failed to comply with any provision of the Sixth Schedule, and, upon a written request from the licensee, may constitute a rating committee to examine the licensee’s electricity charges and to make recommendations to the State Government. The provision further requires that a rating committee cannot be formed on the ground of non‑compliance with the Sixth Schedule unless the licensee receives a written notice of at least thirty clear days, which period may be extended as circumstances require, to show cause against the proposed action. Additionally, a rating committee shall not be constituted if the alleged failure gives rise to a dispute or difference concerning the interpretation of the Sixth Schedule that has already been referred to arbitration under paragraph XVI of that schedule before the notice is given, or if such a dispute is referred within the notice period.

In this judgment the Court explained that a rating committee could not be formed when the licensee’s failure to obey any provision of the Sixth Schedule gives rise to a dispute or difference as to the meaning of those provisions or any matter arising from them, and the licensee has already referred that dispute to the arbitration of the Authority under paragraph XVI of the Schedule before the notice referred to in the preceding proviso was issued, or when the licensee makes such a reference within the period specified in that notice. The Court further added that, even in those circumstances, a rating committee could not be constituted for the same licensee for a period of three months from the date on which the committee had reported on that licensee, unless the State Government declared that, in its opinion, circumstances had arisen which rendered the orders based on the earlier committee’s recommendations unfair to the licensee or to any of its consumers. The provision also required that, within one month after receiving the report under clause (e), the State Government had to cause the report to be published in the Official Gazette, and could simultaneously issue an order fixing the licensee’s charges for the supply of electricity. That order could take effect on a date not earlier than two months and not later than three months after the publication of the report, as specified in the order, and the licensee was required to give immediate effect to such an order. The Court noted that the other sub‑sections from (2) to (8) of the Schedule were omitted from consideration because they were not material to the issues before it. The Court then observed that Schedule VI, referred to in sections 57 and 57A, had been amended by the amendment effected by Act 101 of 1956, and that certain arguments depended upon those changes. For clarity, the Court set out paragraph 1 and paragraph 11 of the Schedule as they stood at the time of original enactment and as they read after amendment. As originally enacted paragraph 1 provided that the licensee must adjust his rates for the sale of electricity by periodic revision so that his clear profit in any year would not, as far as possible, exceed the amount of reasonable return, and that the licensee would not be deemed to have failed to adjust rates if the clear profit did not exceed the reasonable return by more than thirty per cent of that amount. Paragraph 11 originally stated that if the clear profit of a licensee in any year exceeded the reasonable return, one‑third of the excess, not exceeding 7 1/8 per cent of the reasonable return, would be at the disposal of the undertaking; the balance of the excess would be divided equally between a reserve called the Tariffs and Dividends Control Reserve and a proportional rebate or forward carry‑forward for distribution to consumers, as directed by the State Government.

The judgment noted that, where a licensee generated an excess of clear profit over the amount of reasonable return, the surplus could be used for the benefit of consumers. Specifically, one half of the surplus, after allocating a portion not exceeding five percent of the reasonable return to the undertaking, was to be placed in a reserve called the Tariffs and Dividends Control Reserve. The other half of the surplus could be either given back to consumers as a proportional rebate on amounts collected from the sale of electricity and meter rentals, or it could be carried forward in the licensee’s accounts for future distribution to consumers in a manner directed by the State Government. The reserve could be drawn upon by the licensee only to the extent that the clear profit in a particular accounting year fell short of the reasonable return. Furthermore, if the undertaking was purchased under the terms of its licence, any balance that remained in the Tariffs and Dividends Control Reserve at the time of purchase had to be transferred to the purchaser, who was required to maintain it as the Tariffs and Dividends Control Reserve.

The Court then explained that these provisions were revised by an amendment made in 1956. The amendment stipulated that, notwithstanding any other provision of the Indian Electricity Act, 1910, except for subsection (2) of section 32A and the terms of a licence, a licensee was required to adjust its rates for the sale of electricity—either by increasing or decreasing them—so that its clear profit in any accounting year would, as far as possible, not exceed the amount of reasonable return. The amendment further provided that rates could not be increased more than once in any accounting year, and that a licensee would not be considered to have failed in adjusting rates if the clear profit exceeded the reasonable return by no more than fifteen percent of that amount. Before any rate increase, the licensee had to give a written notice of at least sixty days to the State Government and the Board, stating its intention to raise rates. If the rates recommended by a rating committee under section 57A were lower than those subsequently notified by the licensee, the licensee was obligated to refund to consumers the excess amount that had been collected. The amended text retained the rule that, when a clear profit exceeded the reasonable return, one‑third of the excess, not exceeding five percent of the reasonable return, was to be retained by the undertaking; the remaining excess was to be split equally between the Tariffs and Dividends Control Reserve and a proportional rebate or forward carry‑forward for future consumer distribution, as directed by the State Government. The reserve could be used by the licensee only when the clear profit was below the reasonable return, and any balance left in the reserve at the time of a licence‑based purchase had to be handed over to the purchaser and maintained as such.

The Court observed that any balance remaining in the Tariffs and Dividends Control Reserve must be transferred to the purchaser and retained as a Tariffs and Dividends Control Reserve. Paragraph 17 of the Schedule sets out the definitions used in the scheme, including the term “clear profit,” which appears in paragraphs 1 and 11. Because the method of calculating “clear profit” described in paragraph 17 does not affect the substantive issues before the Court, the Court did not feel it necessary to discuss those details. The matters placed before the Court fell into three principal questions. First, the Court had to determine the effect of the Supply Act of 1948 on the maximum rates that the Government could fix under section … of the Electricity Act of 1910, rates that a licensee was permitted to charge. The appellant had argued, and the High Court had accepted, that any alteration a licensee might make under section 57 of the Supply Act read with paragraph 1 of Schedule VI, in order to achieve the reasonable return allowed by those provisions, must still remain within the Government‑prescribed maxima fixed under the Electricity Act of 1910. Second, assuming the appellant’s view on the first point was correct, the Court needed to decide whether the charges demanded by the appellant‑company from the respondents were lawful and authorized by the Supply Act. The learned Single Judge of the High Court had supported the respondents on this issue. Third, the Court considered the scope of a civil court’s jurisdiction to provide relief to consumers who alleged that licensees were demanding excessive charges. Regarding the first issue – whether the maxima set by the Government under the Electricity Act of 1910 continued to bind a licensee after the Supply Act came into force – the Court expressed no doubt in endorsing the appellant’s submission, which had also been accepted by the High Court. Section 57 of the Supply Act of 1948, both as originally enacted and as amended in 1956, expressly provides that the provisions of the Fifth Schedule are deemed to be incorporated into every licensee’s licence and that “the provisions of the Indian Electricity Act, 1910 and the licence granted thereunder and any other law, agreement or instrument applicable to the licensee shall be void and of no effect to the extent that they are inconsistent with the provisions of this section and the said Schedule.” Reading this in conjunction with section 70 of the Supply Act, the Court concluded that if any restriction contained in the licence granted under the Electricity Act of 1910 conflicted with the rate a licencee could charge under paragraph 1 of Schedule VI of the Supply Act, the earlier restriction would be superseded to the extent of the inconsistency, and the provision of the Supply Act would prevail. Paragraph 1 of Schedule VI, as it originally stood, therefore governs the rate‑adjustment power of the licencee.

Section 57(1) of the Electricity (Supply) Act, 1948, as amended, authorised the licence‑holder “to adjust his rates, so that his clear profit in any year shall not, as far as possible, exceed the amount of reasonable return.” The Court indicated that it would examine the meaning of the phrase “so adjust his rates” at a later stage, but it was clear that the adjustment power was unilateral and that the licence‑holder possessed a statutory right to vary his rates provided he complied with the condition that the charged rate must not generate a profit exceeding a reasonable return. Consequently, the Court found the conclusion inevitable: the maximum rates imposed by the State Government under the Electricity Act, 1910 no longer constrained the amount a licence‑holder could charge after the Supply Act, 1948 became operative, because the concepts of “clear profit” and “reasonable return” were to be calculated on a basis that differed fundamentally from the criteria applied under the Electricity Act. To support the argument that, despite the Supply Act, the State‑government‑prescribed maxima remained binding and that any adjustment within paragraph 1 of Schedule VI must stay within those maxima, the Court referred to the Bombay High Court decision in Babulal v. Chopda Electricity Supply Co. The headnote of that decision was summarised: Section 57(1) of the Electricity (Supply) Act, 1948, or clause 1 of the Sixth Schedule, does not give a licence‑holder an unrestricted right to alter the terms and conditions of electricity supply to consumers in the supply area irrespective of the restrictions contained in the licence and the Indian Electricity Act, 1910. Moreover, section 57(1) imposes an obligation on the licence‑holder to comply with the provisions of the Sixth Schedule and the table appended to the Seventh Schedule, and the first clause of the Sixth Schedule further obliges the licence‑holder to make periodic revisions and to adjust profits so that his profits in any year do not, as far as possible, exceed a reasonable return on his investment. The decision further held that there is nothing in section 57 or in the first clause of the Sixth Schedule that expressly or by implication amends the provisions of the Indian Electricity Act, 1910 contained in section 3(2)(d) or section 21(2) of that Act, nor the rates and methods of charging fixed by the licence. The provision in section 3(2)(d) of the Indian Electricity Act, 1910, which requires the State Government to prescribe the terms and conditions under which the supply of energy is to be made, is not affected by the Electricity (Supply) Act, 1948. The right to

The right to amend a licence was conferred by the Indian Electricity Act, 1910 upon the State Government, and that right was held not to be affected by the Electricity (Supply) Act, 1948. The appellant, while expressing great respect for the learned judge, stated that it could not agree with that conclusion. In its view, the provisions of the Supply Act, 1948 that had been highlighted were too strong to allow a construction that the maxima prescribed under the Electricity Act of 1910 continued to operate as a limitation on the licence‑e e’s rights under paragraph 1 of the Fifth Schedule. The appellant argued that even if any argument could be made on the basis of paragraph 1 of Schedule VI as originally enacted, the amendment made by Act 101 of 1956 to the Fifth Schedule removed that possibility, since the opening paragraph of the amendment began with the words “notwithstanding anything … contained in the Indian Electricity Act and the provisions in the licence of a licence‑e e”. Consequently, the appellant considered that the first submission of counsel for the appellant—that the limit imposed by the maxima prescribed by the State Government ceased to be operative after the Supply Act of 1948 came into force—was well founded.

The next issue for consideration was whether the appellant‑company’s continuance of the rates it was permitted to charge under the War Cost (Surcharge) Rules and the Bombay Electricity (Surcharge) Act, 1946, namely an addition of 33 ⅓ per cent to the maxima authorized by the notification of 30 December 1942, was lawful. This question was crucial for Civil Appeal 591 of 1963, which concerned the unit charge for light and fans for domestic consumption, and also for the legality of the standing charges for the supply of power raised in Civil Appeal 590 of 1963. The appellant pointed out that in those cases it had merely continued the charges it had been levying before 30 September 1949, and that no variation in the rates had occurred after that date. On 1 October 1949, the Bombay Act of 1946 had lapsed by operation of time, and the earlier charge—being 33 ⅓ per cent above the permitted maxima—could not be continued unless the provisions of paragraph 1 of Schedule VI of the Supply Act of 1948 were invoked. The appellant further observed that there was no suggestion that, on or before that day, it had consciously determined (a) the “clear profit” as formulated in Schedule VI, and (b) an adjustment of its rates so as not to exceed the reasonable return permitted by paragraph 1 of that Schedule. In this context, there had been debate in the lower courts regarding the date on which the appellant’s licence came to be governed by the provisions of section 57(1) and the Fifth Schedule.

In this case the Court examined whether the appellant’s licence was to be governed by section 57(1) of the Supply Act together with the Eleventh Schedule. Section 57(a) prescribed that any licence which was already in force would become subject to Schedule VI from “the commencement of the licence‑eede’s next succeeding year of account”. A dispute therefore arose as to the exact date that marked the commencement of the appellant’s next succeeding year of account. Two possible constructions of the provision were advanced. The first construction, urged on behalf of the respondents, held that because the appellant’s year of account corresponded with the financial year, the Act became applicable to the appellant from 1 April 1949. The second construction, asserted by the appellant, placed the effective date at 1 April 1950. The Court observed that, for the matters before it, the precise year made little practical difference. Even if the provisions of section 57 and the Supply Act 1948 were taken to apply only from 1 April 1950, the same issue would still arise: whether, at the beginning of that year, the appellant had complied with the requirements of paragraph 1 of the Eleventh Schedule.

The Court noted that paragraph 1 of Schedule VI contained the words “The licencee shall so adjust his rates”. A ordinary reading of those words suggested that the licencee must make a conscious adjustment of rates, because the Act and the Schedule, for the first time, set out the method for calculating the maximum profit a company could earn and gave detailed formulas for determining “clear profit” and “reasonable return”. Nevertheless, the Court recognized an alternative reading. Under that view, the adjustment obligation would arise only in those circumstances where it was necessary to increase or decrease the charge in order to ensure that the licencee either obtained a reasonable return or that the profit did not fall below or exceed the amount defined as a reasonable return. In other words, if no change in rates was needed, the licencee might be presumed not to be required to make any adjustment.

The Court further considered the regulatory scheme provided for complaints where a licencee derived a profit exceeding a reasonable return as contemplated by the Eleventh Schedule. It concluded that a failure on the part of the licencee to consciously work out the details of the rates so as to arrive at exactly the same rates that had previously been charged did not constitute a failure to “adjust the rates” within the meaning of paragraph 1. Having reached that conclusion, the Court identified two further questions for resolution. First, assuming that the licencee had fulfilled the adjustment requirement of paragraph 1 and was now charging the rates that resulted from that adjustment, could the rates presently charged for (a) lights and fans and (b) standing charges for the supply of motive power be successfully challenged as not complying with the Eleventh Schedule? Second, closely related to the first question, the Court needed to consider the implications of that assessment for the broader statutory framework under sections 57 and 57A of the Supply Act, including the jurisdiction of a civil court to entertain the suit brought before it.

In the third question previously identified, the Court examined whether, in view of sections 57 and 57A of the Supply Act, a civil court possessed jurisdiction to entertain a suit seeking the reliefs set out in the present plaints. Beginning with the issue of charges for lights and fans – and noting that the standing charges for the supply of power would be governed by the same principles – the Court held that the appellant must be regarded as having adjusted his rates under paragraph 1 of the VIth Schedule when, after the Bombay Act of 1946 had lapsed, he continued to levy the same charges. Accordingly, the adjustment that is said to have been made in 1949 or 1950 falls within paragraph 1, which authorises such an adjustment but includes a proviso that the Court recalled: “Provided that the licensee shall not be considered to have failed so to adjust his rates if the clear profit in any year of account has not exceeded by more than 30 per cent of the amount of the reasonable return.” The proviso employs a double negative; expressed positively, it means that if the licensee adjusts his rates and the resulting clear profit exceeds the reasonable return by more than 30 per cent, the adjustment cannot be said to have been made. In other words, an adjustment that leads to a profit margin exceeding that limit is not an adjustment at all within the meaning of paragraph 1. Paragraph 2 of the VIth Schedule proceeds on the assumption that an adjustment within paragraph 1 has occurred – that is, the rate charged yields a clear profit which does not exceed the reasonable return by more than 30 per cent. Only on that basis can the percentages specified in paragraph 2 be correctly understood. Paragraph 2 directs that the excess over the reasonable return be divided by three; one‑third of that portion may be allotted to the licensee, but not to exceed 7.5 per cent. The remaining half of the excess is to be placed in the Tariffs and Dividend Control Reserve, and the other half is to be returned to consumers through proportional rebates. When the percentage stipulated in the paragraph is read together with the absolute prohibition against a rate that would yield more than 30 per cent over the reasonable return, it becomes clear that the lawfully adjusted rate contemplated by paragraph 1 is one where the clear profit does not exceed the “reasonable return” by more than the specified maximum of 30 per cent. The other paragraphs of the VIth Schedule deal with the creation and disposal of certain funds and reserves, matters that need not be addressed here. Consequently, the Court concluded that a licensee may make a unilateral adjustment of rates, but such an adjustment must not result in a profit exceeding the reasonable return by more than the prescribed 30 per cent.

In this case the Court explained that a licensee could not set a rate that yielded a profit exceeding the reasonable return by more than thirty percent, and that this thirty‑percent ceiling constituted an absolute limitation on the power to “adjust.” When a rate produced a profit above the reasonable return, the Court held that paragraph two of the schedule became applicable, and the surplus over the reasonable return had to be distributed according to the method prescribed in that paragraph. The Court then turned to the amendment of paragraph one of the VIth Schedule effected by Central Act 101 of 1956, which lowered the maximum permissible profit margin for a licensee from thirty percent to fifteen percent over the reasonable return. The Court observed that this amendment necessarily required licensees to make a further adjustment of their rates so that the new pattern could be observed.

The Court noted that a further question arose as to whether a deliberate readjustment was required after the amendment. Applying the rule of construction previously explained in relation to the term “adjustment” in the 1949 and 1950 periods, the Court concluded that if the previously charged rate yielded a profit of fifteen percent or less over the reasonable return, no additional readjustment was necessary. Conversely, if the charged rate generated a profit exceeding that fifteen‑percent threshold, a readjustment became obligatory. Consequently, the Court stated that unless the plaintiff could demonstrate that the rate charged by the appellant for lights, fans, and the standing monthly charge for power supply produced a profit exceeding fifteen percent over the reasonable return, the appellant would be deemed to have adjusted the rates properly in accordance with the provisions of the Supply Act as amended by Act 101 of 1956.

Proceeding to the issue of jurisdiction, the Court indicated that it would examine, in a separate part of its judgment, whether a civil court possessed the authority to entertain suits concerning alleged violations by licensees of their obligations under paragraph one of the VIth Schedule. In that discussion the Court also planned to consider which party bore the burden of proof in establishing that a rate adjustment—whether actual or inferred from the continuation of a pre‑existing rate—contravened the statutory requirements.

Turning to the specific matter of the unit charge for electricity supply, the Court described the impugned rate as one that had been increased from the rate that had been in force before September 1949. The increase had been effected in compliance with the third proviso to paragraph one of Schedule VI as amended by Act 101 of 1956. The Court recorded that the licensee had notified consumers on 25 September 1958 of its intention to raise the unit rate for power supply. Prior to that consumer notice, the licensee had, in accordance with the third proviso, issued a written notice to the State Government indicating its intention to enhance the rate. Following the governmental notice, the consumers received notification of the rate increase. The Court observed that the third proviso to paragraph one required a notice to the State Government before the licensee could effect any rate enhancement.

The provision required that the licensee give a notice to the State Government stating its intention to increase the rates. Accordingly, on 7 August 1958 the appellant communicated to the Government of Mysore a detailed statement showing the clear profit it had realised in the financial year 1957‑58, the projected working position for 1958‑59, and its purpose to raise the unit rate for the supply of power from six nP to nine nP per unit. Following that communication, on 25 September 1958 the appellant issued a notice to its consumers indicating that, beginning on 1 November 1958, it would levy the revised unit rate together with the standing charges that had previously been in force, namely Rs 2.69 per brake‑horse‑power per month. The respondents contended that the notice sent to the Government was invalid because it did not specifically inform the Government that the standing charges were also being increased, and therefore the notice was defective. The Court found no merit in that objection. The standing charge of Rs 2.69 had been in effect before the notice and, as held earlier, that amount should be treated as an adjusted rate which the appellant was authorised to charge under the original Schedule VI. Consequently, the continued imposition of the same standing charge after the amendment of the Schedule could not be characterised as a new enhancement. The Court noted, however, that a further circumstance required attention. It observed that the rate applicable before the Supply Act 1948 and continued thereafter would be lawful only if the profit remaining for the licensee did not exceed thirty per cent above the reasonable return. That was the rule when the Supply Act 1948 came into operation. By virtue of the amendment effected by Act 101 of 1956, the permissible profit margin was reduced to fifteen per cent, so that any adjusted rate would be valid only if it fell within that lower limit. Unless the rate adjusted before the 1956 amendment already exceeded the fifteen‑per‑cent ceiling prescribed by the first proviso to paragraph 1, the continued application of that rate could not be treated as an enhancement nor as a breach of paragraph 1 of Schedule VI. The Court reserved for later determination the issue of who bears the burden of proving this requirement and whether that burden had been discharged in the present cases. Subject to that reservation, the Court concluded that, with respect to the unit charge, the appellant had complied with the third proviso to paragraph 1. Accordingly, there was no illegality or invalidity attached to the notice issued to the Government under that proviso, and the respondents’ contention on that ground had to be rejected. The Court then turned to the next question, namely whether the Civil Court possessed jurisdiction to entertain the suits from which these appeals arose and to grant the reliefs sought therein, referring to section 57 of the Supply Act 1948, which incorporates Schedule VI.

In this case the Court noted that the licence granted to every licensee imposes a duty on the licensee to observe the provisions contained in the Schedule. The Court then turned to Section 57‑A, which provides that where a Board exists, or where there is no Board the State Government, may, if it is satisfied that a licensee has failed to comply with any provision of the Vlth Schedule, constitute a Rating Committee when the licensee makes a written request. The Court observed that it was not necessary to recount the detailed procedural rules governing the Rating Committee; it was sufficient to recall that the Committee is empowered to determine the rates that may be charged by licensees and that it is charged with recommending a rate that will give the licensee a clear profit sufficient to secure a reasonable return as defined in the Vlth Schedule for the next three years of accounts.

The Court further explained that the provisions of Section 57‑A must be read together with the last proviso to paragraph 1 of the Vlth Schedule. That proviso states that when rates are fixed in accordance with the recommendations of the Rating Committee and such rates are lower than those that the licensee has previously adjusted under the Schedule, the licensee must refund to the consumers the excess amount that was collected from them. The Solicitor‑General argued that because Section 57‑A created a special mechanism for fixing a proper rate to be charged by a licensee to its consumers, a civil suit filed by a consumer seeking the same relief was implicitly barred.

The Court set out the procedure prescribed by Section 57‑A as follows: first, if a consumer complains that a charged rate is excessively high, the consumer must approach the Board, or where no Board exists, the State Government; second, the Board or State Government must consider the complaint and be prima facie satisfied that the complaint is reasonable, after which it may, at its discretion, appoint a Rating Committee; third, if the Board or State Government decides that appointing a Rating Committee is unnecessary, the matter ends. However, if a Committee is appointed, the Committee will take evidence and, applying the provisions of the Act and the Schedules, will determine a rate that will yield the licensee an amount not less than the reasonable return prescribed for the licensee under the Act.

The Court recorded that it was submitted that this procedure was wholly incompatible with the continued jurisdiction of civil courts to decide whether a licensee had failed to comply with the requirements of Schedule VI, particularly with regard to the reasonableness of the rate charged. The Court also noted that attention was drawn to the last proviso to paragraph 1 of the Vlth Schedule, which provides for a refund to consumers in cases where an excess amount has been collected beyond the reasonable rate fixed by the Rating Committee.

The Court noted that when a licensee collects an amount from consumers that exceeds the reasonable rate fixed by the Rating Committee, the statutory provisions prescribe a clear procedure for dealing with such violations of the requirements of Schedule VI. The Court observed that these provisions do not contain an express prohibition against the jurisdiction of the Rating Committee, nor do they imply a broader limitation that would bar any other forum. However, the Court made it clear that any limitation on jurisdiction cannot extend beyond the scope and limits of the Rating Committee’s authority. In other words, the jurisdiction of a civil court is not excluded for matters that are not assigned to the Rating Committee by section 57A, or for matters where the Rating Committee is unable to provide the consumer with relief against a statutory infraction that has caused the consumer injury.

Before examining the facts of the present case to determine whether the respondents could obtain a declaration and an injunction from a civil court, the Court turned to the principal argument raised by the learned Solicitor‑General. The Solicitor‑General contended that a civil suit could not be instituted for any breach by a licensee of its obligations under Schedule VI. That position was based on the language of section 57A‑(1)(a)(i), which authorises the Board or the State Government to appoint a Rating Committee when it is satisfied that “the licensee has failed to comply with any of the provisions of the Sixth Schedule.” The Solicitor‑General further argued that the provisions of section 57A are wholly inconsistent with a consumer’s right to approach a civil court for a refund of amounts that the licensee has illegally collected, even when the licensee is prohibited from charging such amounts. He drew the Court’s attention to the refund provision contained in the last proviso to paragraph 1 of Schedule VI and submitted that the scheme of section 57A could not have contemplated a situation where one consumer obtains a refund by approaching a civil court, which determines that the rate charged to that particular plaintiff is illegal and orders a specific restitution, while another consumer seeks redress through the Government‑appointed Rating Committee and receives a different amount of refund. The Court accepted that this argument is serious and warrants careful analysis. In support of this submission, the Solicitor‑General emphasized the phrase “the licensee has failed to comply with any of the provisions of the Sixth Schedule” found in section 57A‑(1)(a)(i) and argued that every default by the licensee must be referred to the Board or the Government and cannot be resorted to civil courts. However, the Court observed that the language of the provisions does not, in its view, lead to the conclusion that the jurisdiction of a civil court is completely barred with respect to every obligation imposed on a licensee by Schedule VI.

The Court observed that the language of section 57A did not necessarily exclude the jurisdiction of a civil court in every instance where a licensee breached an obligation imposed by Schedule VI. The Court explained that, at most, any limitation on civil‑court jurisdiction would be co‑extensive with the powers that the Rating Committee possessed under section 57A and with the types of relief that the Committee was authorised to grant. To illustrate this point, the Court considered several specific prohibitions contained in Schedule VI. The first proviso to paragraph 1 stated that rates could not be increased more than once in any accounting year. If a licensee were to contravene this rule and raise rates more than once, the statute provided no mechanism for the Rating Committee to intervene, because section 57A contained no provision allowing the Committee to regulate a licensee who had violated such a positive prohibition. The Court found it would be anomalous to leave the affected consumer without any remedy merely because the Government might choose not to appoint a Rating Committee, which, as the Court had earlier noted, lacked authority to provide redress in that circumstance. Consequently, the Court held that the civil court retained the power to issue a declaration and an injunction to prevent the illegal increase, and that, where the unlawfully increased rate had already been collected, the court could order its refund. The Court then turned to a second example involving the third proviso, which required a licensee to give notice of any intended rate increase to both the Government and the Board. When a licensee enhanced rates without providing the requisite notice, the Rating Committee again did not have a role in preventing the continued collection of the unlawful rates. The Court therefore concluded that the civil court’s jurisdiction to grant declaratory and injunctive relief could not be displaced by the provisions of section 57A in such a case. From these considerations, the Court derived the principle that, notwithstanding the broad language of section 57A(1)(a)(i) referring to a licensee’s failure to comply with the requirements of the Sixth Schedule, there exist certain categories of “failures” for which the jurisdiction of a civil court remains clearly available and is not barred. The Court next examined whether the same principle would apply to a breach of the second proviso, which prohibited a licensee from setting rates that would yield a profit exceeding fifteen per cent over a reasonable return. The proviso imposed an absolute limitation on the licensee’s permissible profit margin, creating a statutory prohibition against fixing an excessive rate. Accordingly, the Court indicated that a violation of this absolute limit would likewise fall within the domain of civil‑court jurisdiction to grant appropriate injunctions and other relief, even though the offending party might also approach the Board or the State Government for the appointment of a Rating Committee.

In this case, the Court explained that if a licensee set a rate that would produce an excessively large profit, such a rate would not be authorised by the Fifth Schedule or by any power granted under that Schedule. Consequently, the licensee would fall within the jurisdiction of the civil court, which could issue an injunction to stop him from charging the prohibited rate. The Court also noted that the proviso expressly required compliance with the main part of paragraph 1, and that a licensee who set a rate in breach of that proviso would be failing to meet that requirement. From this, the Court inferred that when a licensee adjusts his rate in a way that breaches the proviso, an aggrieved consumer could approach either the Board or the State Government to have a Rating Committee appointed. However, the Court declined to hold two propositions. First, it refused to say that the act of charging a prohibited rate was any less an illegality not sanctioned by the statute. Second, it refused to accept that the existence of such an illegality automatically removed the civil court’s power to grant relief. The Court added that, without expressing a final view on a question not directly involved in the present appeals, it was possible to limit the court’s jurisdiction to granting a declaration that the rate adjustment was invalid and to granting an injunction against the statutory violation, without extending that jurisdiction to ordering a refund. The Court pointed out that the relief sought in the two suits was limited to a declaration that the rates charged were invalid and an injunction preventing the appellant from continuing to charge those rates. Accordingly, the Court was satisfied that the mere existence of section 57A, standing alone and without reference to any specific violation alleged against the licensee, did not bar the civil court’s jurisdiction, and therefore rejected the extreme argument advanced by the Solicitor‑General. The Court then turned to the remaining issue, namely whether the respondents had proved that the appellant had contravened any provision of the Supply Act, especially those contained in Schedule VI, paragraph 1 of that Act. The Court recalled that it had already considered the objection that no rate adjustment had occurred in 1949 or 1950. It further noted that it had previously held that, with respect to the unit rate for power—where only an enhancement was made—a valid notice had been issued to the Government as required by the third proviso to paragraph 1. In the facts of the present case, the Court observed that the sole basis on which the respondents could have been entitled to the declaration and injunction they claimed was the establishment that the rate imposed by the appellant infringed the second proviso because it yielded a profit exceeding fifteen per cent of the reasonable return. The learned Judge

In the proceedings before the High Court, the trial judge held that the burden of demonstrating that the rate imposed by the appellant fell within the statutory limit rested upon the appellant itself. Because the appellant did not adduce any evidence to satisfy that burden, the trial judge consequently granted the plaintiffs the declaration and injunction that they had requested. The Supreme Court, however, concluded that the trial judge erred in assigning the burden in that manner. The Court explained that there is no presumption that a rate charged by a licence holder automatically violates the statutory prohibition; rather, the party seeking relief must establish the factual basis for such relief. Accordingly, the plaintiffs bore the responsibility to prove, by presenting evidence before the court, that the rate charged by the appellant contravened the relevant statutory provision. The Court observed that the plaintiffs themselves admitted that they had failed to meet this evidentiary requirement. Consequently, the Court held that the plaintiffs were not entitled to the declaration and injunction that the High Court had awarded. On that basis, the Court allowed the appeals filed by the appellant, ordered the dismissal of the suits, and directed that the appellant be awarded its costs in both the present proceedings and the High Court, including one hearing fee. The appeals were therefore allowed.