CHAIRMAN, ELECTRICITY WAPDA, LAHORE Versus CH. MUHAMMAD SHAFI, ADVOCATE

1. SALAHUDDIN AHMED, J.‑This appeal by special leave of this Court is from an order of a learned Single Judge of the Lahore High Court accepting Civil Revision No. 411 of 1973 filed by Ch. Muhammad Shafi, respondent herein. The respondent is a consumer of electrical energy supplied by West Pakistan Water and Power Development Authority, hereinafter called WAPDA, to his tube‑well for agricultural purposes. In the year 1962 he entered into an agreement with WAPDA for the supply of electricity for a period of 10 years under the Minimum Consumption Guarantee Condition.

2. During the subsistence of this period WAPDA on the 1st of July 1969, introduced the now Schedule of Traiffs refixing the power rates and doing away with the Minimum Consumption Guarantee Condition. Under the new Tariffs a fixed charge of Rs. 8 poi KW of connected load per month plus 4 paisas per unit for actual consumption of energy (per KWH) was introduced as against the original charge of 8 to 10.50 paises per unit stipulated in the said agreement.

3. WAPDA, it is claimed, unilaterally enforced the new Tariffs from the month of September 1969. and issued a bill on the basis of the same to the respondent demanding a sum of Rs. 152 towards fixed meter charges. The respondent refused to pay the same and on the 27th of September 1969, filed a civil suit against WAPDA (the appellants herein) in the Court of the Civil Judge, for a declaration that the said demand was contrary to the agreement entered into between the plaintiff and the defendants. The respondent also asked for a permanent injunction restraining WAPDA from recovering the said amount.

4. The appellants contested the suit and claimed that the contract entered into between the parties itself authorised WAPDA to unilaterally increase the rate from time to time.

5. The trial Court held that WAPDA was entitled to charge at the rate of Rs. 75 per month only under the existing agreement and not at the rate of Rs. 152 per month, and, accordingly, decreed the suit in part in favour of the respondent.

6. The respondent went up in appeal before the learned Additional District Judge, and contended before him that WAPDA was not even entitled to charge at the rate of Rs. 75 per month, but the appeal was dismissed. In the course of his judgment the learned Additional District Judge observed that the case of the appellant (respondent herein) was mainly based on the plea that WAPDA was not competent to levy the new Tariffs. The learned Additional District Judge agreed with the trial Court that WAPDA had powers to do so.

7. The respondent then went up in revision before the Lahore High Court. A jogrned Single Judge of the High Court allowed the revision, modified the decree of the trial Court and declared that the bill for the month of September 1969 could not exceed the amount that might be worked out on the basis of the original agreement between the parties which till then was subsisting.

8. The appellants approached this Court for special leave to appeal on the ground that section 25 of the West Pakistan Water and Power Development Authority Act XXXI of 1958, hereinafter called the Act, empowered WAPDA to prescribe rates for sale of power and enhance such rates from time to time unilaterally without giving notice to the consumers. In support of this contention the appellants cited a Division Bench decision of the Lahore High Court in the case of M. Daud Khan v. Government of West Pakistan (P L D 1971 Lah. 462). Leave was granted to consider the question raised by the appellants as well as to consider the correctness of the aforesaid decision of the Lahore High Court.

9. Mr. M. Sardar Khan, learned counsel, appearing for the appellants has contended before us that under section 25 of the Act WAPDA was not only empowered, but was under an obligation to fix the rates in the manner prescribed under subsection (2) thereof. The learned counsel has further contended that even under the terms of the agreement between the parties, namely, Conditions Nos. 26 and 27, WAPDA was entitled to change the rates. Section 25 of ; he Act is as follows : ‑

10. "25. Rates for sale of Power.‑(1) The Authority shall ordinarily sell power in bulk.

(2) The rates at which the Authority shall sell power shall be so fixed as to provide for meeting the operating costs, interest charges and depreciation of assets, the redemption at due time of loans other than those covered by depreciation, the payment of any taxes and a reasonable return on investment."

11. Conditions Nos. 26 and 27 of the said agreement are in these terms :‑

12. "26. Interpretation.‑These Conditions shall be subject to the Act and nothing in these Conditions shall abridge or prejudice the right of the Department under Act of the Government of Pakistan or the West Pakistan or any rule thereunder.

27. Right of Department to Revise Schedules of Tariffs and Charge and Conditions of Supply.‑Subject to Clause 26 above the Department reserves the right at any time to amend, cancel or add to any of these Schedules and Conditions."

13. It may be mentioned here that the original agreement appears to have been lost, but the pro forma of such agreement has been annexed to the paper‑book and these Conditions are quoted from the pro forma agreement.

14. Section 25 of the Act clearly empowers WAPDA to change the rates of , the power in keeping with the directions given in subsection (2) of the section. As a matter of fact in the case of M. Daud Khan the learned Judges of the Lahore High Court have taken pains to indicate the reasons that led WAPDA to introduce the new Schedule of Tariffs under section 25(2) of the Act. One of the reasons indicated in the concise statement lodged on behalf appellants is that there was a large scale pilferage of energy supplied to private tube‑wells and under the new method of levying fixed charge on connected load basis a stable minimum return was ensured to WAPDA.

15. In the present case the agreement between the parties is consistent wit ,the provisions of section 25 of the Act, and, therefore, section 23 of the Contract Act is not attracted. Conditions Nos. 26 and 27 of the agreement kept in view the requirements of law under section 25 of the Act.

16. Before us, however, the chief contention has been that Paragraph 4 of the new Schedule of Tariffs itself contemplated a notice to the old consumer to enable him to exercise the option either to continue to be governed by the Special Condition of supply in respect of Minimum Consumption Guarantee or to come under Special Condition No. 3 of Tariff‑D to the new Schedule .of Tariffs. Conditions Nos. 3 and 4 are as follows :‑

17. "3. The supply under this Tariff shall not be subject to any Special Condition of Supply in respect of Minimum Consumption Guarantee. Instead, the consumers falling under this Tariff shall be governed by the following conditions :‑

18. .(i) In cases where the capital No line rental of installation charges expenditure on supply of shall be recovered. power does not exceed Rs. 7,500.

(ii) In cases where the The amount in excess of Rs. 7,500 capital expenditure on along with interest at the prevalent supply of power exceeds market rate, shall be recovered in

19. Rs. 7,500 but does not 5 equal annual instalments and the first exceed Rs. 10,000. instalment shall be recovered before the connection is given.

(iii) In cases where the amount in excess of Rs. 10,000 capital expenditure on shall be recovered in lump sum before supply of power exceeds the connection is given, and the amount

20. Rs. 10,000. of Rs. 2,500 being the difference between Rs. 7,500 and Rs. 10,000, shall be recovered in the manner prescribed in item (ii) above.

4. The Consumers who were connected with the Authority's Supply System before the introduction of this Schedule of Tariffs shall have the option either to continue to be governed by the Special Condition of Supply in respect of Minimum Consumption Guarantee .or to come under Special Condition No. 3 above of this Tariff. The consumers opting for Special Condition No. 3 of this Tariff shall not, however, be entitled to any claim whatever in respect of the payments made by them in the past on account of Minimum Consumption Guarantee."

21. On a reading of the two conditions together, as it should be, it appears ,clear that they relate only to the exercise of a choice between the special condition of supply in respect of Minimum Consumption Guarantee under the old Tariffs and the special Condition No. 3 of the new Schedule of Tariffs. They do not, in any way, concern or affect the revised rates as prescribed in the new Schedule of Tariffs. It is here that the learned Single Judge appears to have fallen in error.

22. So far as the option contemplated under Condition No. 4 of the Schedule of Tariffs is concerned the respondent was aware of the change d ,position as soon as the Schedule of Tariffs was notified. Besides Conditions Nos. 26 and 27 of the agreement put him on notice of a possible change in the rates in the future, and he should have exercised his option at the appropriate time. In any event, when the bill for September 1969 was served on him he became aware of the change and could and should have exercised the option, if he so desired. He did not do so. In these circum stances there is no substance in the contention advanced on behalf of the respondent that without the service of a notice upon the respondent, the new Tariffs could not be legally enforced against him. Condition No. 4 does not envisage such a notice. The respondent cannot be said to have suffered any prejudice by the omission to serve the notice. WAPDA says that such a notice was not necessary, and they had the sole right under the Schedule of Tariffs to say so. Paragraph 8 of WAPDA (Electricity Operations Branch) Notification No. 27840‑A/Com/T‑86, dated Lahore the 15th of July 1969, runs thus :‑

23. "8. The Authority further reserves the sole right to interpret any of these Tariffs and the Definitions and Special Conditions of Supply."

24. The view I have taken receives support from the decision in M. Daud ' Khan. The decision is correct on the points decided by me. It was a Division Bench decision dated the 12th of May 1970, and should have been followed by the learned Single Judge allowing the revision on the 26th of November 1974.

25. I would, therefore, allow the appeal but without any order as to costs.

26. ANWARUL HAQ, J.‑I agree.

27. MUHAMMAD GUL, J. ‑I agree.

28. MUHAMMAD AFZAL CHEEMA, J.‑I AGREE.

29. S. A. H. Appeal allowed.