STAR TEXTILE MILLS Ltd. And 5 Others vs K.E.S.C. And Another
This matter concerns six petitions for special leave to appeal against a judgment of the Sind High Court, which dismissed constitutional petitions filed by textile mills challenging demands for additional security deposits by the Karachi Electric Supply Corporation (K.E.S.C.). The petitioners, having entered into electricity supply agreements, were issued notices by the K.E.S.C. demanding additional security deposits under threat of supply disconnection, citing insufficiency of existing security. The core legal questions involve whether the K.E.S.C. retains the power to disconnect electricity due to insufficient security following amendments to the Electricity Act, 1910, by Ordinance No. LXII of 1979, and whether contractual clauses regarding security deposits can override statutory provisions. The Supreme Court granted leave to appeal, identifying these as questions of general public importance. As an interim arrangement, the Court ordered the petitioners to deposit the disputed amounts in court, permitting the K.E.S.C. to withdraw such funds upon furnishing a bank guarantee to the satisfaction of the Nazir of the High Court. The Court directed that the appeals be prepared and fixed for hearing within six months.
- Whether the K.E.S.C. can disconnect electricity supply on the ground of insufficient security following the amendments made to the Electricity Act, 1910 by Ordinance No. LXII of 1979?
- Whether contractual clauses regarding security deposits can prevail over the statutory provisions of the Electricity Act, 1910?
- Does Section 24 of the Electricity Act, 1910 authorize the disconnection of electricity supply due to insufficient security?
- Section 24, Electricity Act 1910
- Ordinance No. LXII of 1979, Electricity Act 1910
ORDER
ZAFFAR HUSSAIN MIRZA, J.--These six petitions for special leave to appeal arise out of a common judgment of a Division Bench of the Sind High Court, dated 22-11-1982 and therefore, this order will cover all the six petitions.
2. The petitioners are companies owning and operating Textile Mills at Karachi, and for the supply of electricity, had entered into separate agreements with the Karachi Electric Supply Corporation Limited (K.E.S.C.) respondent No. 1 herein. According to the terms of the said agreements, each petitioner was required to deposit in each with the K.E.S.C., a certain amount of money mentioned in the agreement, by way of security. In pursuance to this stipulation each petitioner had deposited the sum as agreed. However, subsequently by a notice, each petitioner was directed to deposit additional sum of money, purportedly by way of additional security on the ground that the existing security furnished by each had become insufficient. By means of further notice the K.E.S.C.
Threatened disconnection of the supply of electricity in the event the additional security deposit, as demanded, was not paid within 7 days. The petitioners protested with the K.E.S.C. Against the aforesaid demand but finding no satisfactory response, ultimately filed Constitutional Petitions challenging the alleged illegal demands. These petitions were then heard together and dismissed as per the judgment, dated 22-11-1982.
3. After hearing Mr. Khalid Anwar, Advocate we feel that the following questions of law of general public importance arise for consideration in these petitions:
(i) Whether in view of the amendments effected in the Electricity Act, 1910 by means of Ordinance No. LXII of 1979 in terms whereof the power to disconnect the electricity which previously was given in cases in which security had become invalid or insufficient was now restricted only to cases in which it had become invalid, it was open to K.E.S.C. To discontinue the supply of electricity on the ground that the security had become insufficient?
(ii) Whether clause 10 of the Agreement between the parties provides justification in law to K.E.S.C.
To enable it to demand additional security?
(i.e) Whether in any event the provisions of clause 10, as interpreted by K . E. S. C . Can prevail over the statutory provisions?
(iv) Whether section 24 of the Electricity Act, 1910 has been correctly interpreted by the High Court in holding that this provision supports the impugned action of the K.E.S.C.?
4. Leave is accordingly granted in all these petitions. Security for costs in each case shall be Rs.2,000. Subject to the decisions in these cases, the petitioners have no objection to deposit in Court the amount equal to sum demanded by the K.E.S.C. By way of additional security in each case. In fact this was the arrangement under the interim orders passed by the High Court. Counsel for both parties agreed to the same arrangement and further that the K.E.S.C. Would be entitled to withdraw the money thus deposited in Court upon furnishing bank guarantee to the satisfaction of the Nazir of the High Court of Sind. We, therefore, order accordingly, by way of interim arrangement until the decision of these appeals.
5. In view of the nature of the controversy in these cases, we further direct that if possible these appeals shall be prepared and fixed within six months.