Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: MUHAMMAD HANIF and otherss VS Respondent: KARACHI ELECTRIC SUPPLY COMPANY LIMITED and another
Court Name: Sindh High Court Judge(s): Munib Akhtar Title:MUHAMMAD HANIF and otherss vs KARACHI ELECTRIC SUPPLY COMPANY
LIMITED and another Case No.:C.M.As. Nos.3027 and 3055 of 2012 in Suit No,329 of 2012, 3029 and 3057 of 2012 in Suit No,330 of 2012, 3032 and 3059 of 2012 in Suit No,331 of 2012, 3036 and 3061 of 2012 in Suit No,332 of 2012, 3128 of 2012 in Suit No,343 of 2012, 2868 of 2012 in Suit No,315 of 2012; 2865 of 2012 in Suit No,309 of 2012 and 3111 of 2012 in Suit No,359 of 2012 Date of Judgment:2012-04-17 Reported As: 2013 CLC 571 Result: Order accordingly Judgment ORDER ' MUNIB AKHTAR, J.--- Two sets of applications fall to be decided in these connected suits. One set of applications have been filed by the respective plaintiffs seeking to have their electricity supply restored after disconnection by the contesting defendant the Karachi Electric Supply Company Ltd. ("KESC"). In one (Suit 309 of 2012) the supply has not been discontinued and the relief sought is that power should not be disrupted. In some, but not all, of the suits ad interim orders were made directing KESC to restore electricity supply. The second set of applications has been moved by KESC seeking recall and withdrawal of the orders of restoration of supply. 2. Mr. Arshad Tayebaly, ably assisted by Mr. Amel Khan Kansi and Mr. Taimur Mirza, who appeared for the plaintiffs in all the suits except Suit 359 of 2012, submitted that the plaintiffs were industrial consumers to whom KESC had been supplying electricity for a number of years. It was not in dispute that each plaintiff was fully paid up on the bills sent by KESC. Learned counsel submitted that as presently relevant, the electricity bill received by the plaintiffs had two components. One was by way of fixed charges, and this was an amount that was charged by KESC for purposes of maintaining the load sanctioned for that plaintiff. Earlier, this amount was, as the name suggests, a fixed amount which would appear as such on the bill each month and be paid accordingly. However, it appears that since about December, 2010 onwards, the formula for computing the fixed
---
## Page 2
charges has been changed by the regulator, the National Electric Power Regulatory Authority ("NEPRA"), such that, in effect, the amount varies according to the maximum load taken by the consumer at any given point during the entire month. In other words, the fixed charges are levied on the basis as though the maximum load registered for the plaintiffs' consumption at any given moment on any given date was the load utilized on each day of that month. The second component of the bill is of course the current charges which are the charges for the electricity actually consumed during that month by the consumer. 3. Learned counsel submitted that on or about 17-2-2012 each of the plaintiffs received a notice ("the Notice"), in identical form, from KESC which expressly stated that it had been issued under section 20 of the Electricity Act, 1910 ("1910 Act") read with Chapters 8 and 14 of the Consumer Service Manual ("CSM"). The CSM has been issued by and under the authority of NEPRA in the exercise of statutory powers vested in it by the Regulation of Generation, Transmission and Distribution of Electricity Power Act, 1997 ("1997 Act") and the National Electric Power Regulatory Authority Licensing (Distribution) Rules, 1999 ("1999 Rules") framed thereunder. It will be advantageous to reproduce the contents of the Notice, and as issued to the plaintiff in Suit 329 of 2012, it stated as follows:--- "Notice to consumers under section 20 of the Electricity Act, 1910 read together with Chapters 8 and 14 of the Consumer Service Manual ("CSM") issued by NEPRA- Irregular Load Consumption and Under Utilization of Sanctioned Load CONSUMER # BH000233 ACCOUNT # 2506474241260." ' For the benefit of all its consumers, KESC is introducing system improvements across the board to remove inequalities in load distribution and ensure operational efficiencies through upgrading and optimizing the electricity distribution system for all consumers so as to provide uninterrupted power supply and higher quality of services to all concerned. ' In accordance with section 20 of the Electricity Act, 1910 read together with Chapters 8 and 14 of the CSM, if a consumer uses electricity for a purpose other than for which it was sanctioned, or if the consumer has changed the load without authorization, or has no further requirement for the provision of electricity at the sanctioned load, then the licensee may on reasonable notice enter the premises of the consumer to examine and inspect any measuring apparatus or supply lines etc. To determine actual load being consumed against sanctioned load and where necessary, remove any measuring apparatus and/or supply of electricity. ' Through this 3 day notice, KESC hereby calls upon you to allow KESC inspection team access to your metering equipment and premises so as to determine the actual load being consumed by you against sanctioned load. It is also relevant to point out that from an examination of your billing record for the past 12 months, it appears that you no longer require the sanctioned load which was previously allocated to you by KESC and your actual load, consumption for a prolonged period has been materially below the sanctioned load. ' Based on the foregoing, we have duly authorized our inspectors/technicians to visit your premises in the forthcoming days to double check your metering connections and consumption/load requirements against sanctioned limits in your presence to determine the facts on the ground. Please note that any failure by you to abide by the terms of this notice has serious consequences under the relevant provisions quoted above and KESC may if it deems fit disconnect power supply to you in the event of non-compliance hereof without further reference to you at your sole risk as to cost and consequences. ' Once KESC representative has conducted a site inspection and determined the current position of your power consumption/load needs, please note that KESC may where the sanctioned load is no longer required, disconnect power supply whether in whole or in part without further reference to you. Any security deposit where applicable lying to your account with KESC may in the 'event of
---
## Page 3
such disconnection be refunded or adjusted against any dues owed by you to KESC as appropriate. ' It may kindly be appreciated that any surplus sanctioned load which is cancelled as a result of the above procedure will become available for allocation by KESC to other consumers in its network so as to match sanctioned load with demand and ensure a level playing field for all consumers without any discrimination. We therefore, thank you in advance for your cooperation in this matter." 4. Learned counsel submitted that except for one plaintiff, each of the other plaintiffs allowed KESC staff to enter their premises and permitted the inspection to be carried out in terms of the Notice. In the case of the plaintiff who initially refused to do so (being the plaintiff in Suit 329 of 2012), its electricity supply was disconnected. However, another notice was received by this plaintiff on or about 9-3-2012, and thereupon its premises were also inspected. Learned counsel submitted that each of the plaintiffs was, on inspection, handed a document which stated that it was an undertaking-cum-indemnity, and informed orally that if it did not fill in and sign the said document, its electricity supply would be disconnected. Again, it is appropriate to reproduce this document ("the Undertaking") in full:--- "This "Undertaking and Indemnity" is given at Karachi on this day of March, 2012, by Limited, having Consumer No and Meter/Account No, ' WHEREAS KESC has in the recent past provided me with various notices for irregular power consumption and non-utilization of sanctioned load in which regard KESC had expressed its intention to disconnect power supply/reduce the sanctioned load for the future in accordance with my past billing history. ' AND WHEREAS at my request, KESC has agreed to postpone disconnection of power supply in relation to irregular power consumption and under utilization of sanctioned load in consideration of the Undertaking set forth herein. ' NOW THEREFORE I hereby irrevocably and unconditionally undertake as follows:--- (1) That I henceforth shall utilize my sanctioned load upto minimum 50% and commence normal utilization of power supply from KESC to the satisfaction of KESC subject to my regular payment of monthly power consumption bills as generated by KESC. (2) That KESC shall be entitled to review my performance under this Undertaking on a monthly basis to ensure my continuing compliance with the above. ' That I hereby indemnify KESC against any losses or damages of whatsoever nature it may incur by reason of its reliance on this Undertaking. (4) That this Undertaking is in addition to and not in derogation of any other rights or remedies that KESC may be entitled to under the law and in particular the provisions of the Consumer Service Manual issued by NEPRA and the provisions of the Electricity Act, 1910." 5. Learned counsel submitted that except in one case (Suit 309 of 2012) the plaintiffs refused to give the Undertaking and accordingly in line with the threat made by KESC, their respective power supplies were disconnected. (The power supply of the plaintiff in Suit 309 of 2012 was of course, not disrupted.) The disconnections took place on different dates but there is no dispute that the power supply was cut off many day or, in some cases, several weeks prior to the institution of the present suits. 6. Learned counsel submitted that the reason why the plaintiffs' electricity supplies were disconnected was the allegation in each case by KESC that the sanctioned load was being under- utilized by them. He contended that no determination as such was made in this regard by KESC nor was any notice making such an allegation issued to the plaintiffs. Learned counsel further submitted that it was clear from the counter-affidavit that had been filed by KESC that its case was that the plaintiffs were using their electricity connections for a purpose other than that for which it had been sanctioned. He submitted that this was one of the grounds on which the electricity
---
## Page 4
supply could be disconnected in terms of Chapter 8 of the CSM but he emphasized that under- utilization of the, sanctioned load was not the same thing as using the electricity connection for a purpose other than that for which it was sanctioned. His case therefore was that the basis on which electricity supply had been disconnected had no foundation either in law or on the facts, since no factual determination in this regard had been made by KESC and in any case the interpretation placed by KESC on the applicable provisions of the CSM was entirely erroneous. 7.Developing his point, learned counsel first took up section 20 of the 1910 Act. He submitted that if at all, the only provision therein that could apply was clause (c) of subsection (1), which allowed KESC to cut off supply and remove its supply lines, meters, etc. "where a supply of energy is no longer required". He submitted that this clause did not apply to the plaintiffs for a number of reasons. Firstly, there had been no factual determination as to whether or not the supply of energy was required. Secondly, it was for the consumer itself, and not KESC, to make such a determination. And thirdly, even if (which was not admitted) the electricity supply from KESC was being used only for standby purposes, it was nonetheless still "required". Therefore, the plaintiffs' case, on any view of the matter, did not come within the ambit of the provision relied upon. In this context learned counsel referred to the fixed charges being levied by KESC (and regularly paid by the plaintiffs) and submitted that this component of the bill was itself sufficient to establish that the supply of energy from KESC was required by the plaintiffs. He also contended that the Notice was only a notice to enter the premises for the purposes therein stated which did not include making a determination as to whether the supply of energy was required or not. Referring also to subsection (2), learned counsel submitted that section 20 did not confer any power on KESC to disconnect the electricity supply of any consumer. 8. Learned counsel further contended that the Undertaking demanded from the plaintiffs was an act of coercion for which there was no authority or warrant in either the 1910 or 1997 Acts or the CSM or any applicable rules or regulations. He submitted that the plaintiff in Suit 309 of 2012 had been coerced into executing the Undertaking under imminent threat of discontinuance of supply. He submitted further that in its counter-affidavit as also the application seeking recall of the ad interim orders, KESC had taken the position that it could not restore the power supply to the plaintiffs since the loads that had been sanctioned to them had been given to new consumers. Learned counsel contended that this was a mere ploy to defeat or frustrate any orders that might be made by the Court. He submitted that although the electricity supplies of the plaintiffs had been disconnected on various dates, all the new connections were given on 30-3-2012, i,e, on the very day on which ad interim orders were made by the Court. Learned counsel submitted that the applications on which such new connections had been granted dated back in some cases to 2010. Thus, the entire exercise was a mere sham which was intended to try to create new facts on the ground and purported third party interests so that interim relief would be refused. 9, Learned counsel submitted that the exercise being carried out by KESC was not limited to the plaintiffs but also affected a. Large number of other industrial consumers who were issued notices in the same terms and compelled to execute the undertaking-cum-indemnity on the same basis. He submitted that the aggrieved parties, through their concerned trade associations, approached NEPRA which twice made interim orders, once on 5-3-2012 and then on 12-3-2012, restraining KESC from disconnecting power supplies and restoring power where this had been done. Instead of obeying these orders, KESC filed a constitutional petition in this Court, being C.P. No,D-956 of 2012, in which interim orders were made on 15-3-2012 suspending NEPRA's order dated 12-3-2012. Learned counsel submitted that none of the plaintiffs was party to the aforesaid petition but he clarified that by means of the present suits, the plaintiffs did not challenge or impugn the issue of KESC's disobedience of the orders issued by NEPRA. He prayed that al, the ingredients for interim relief were applicable in the plaintiffs' case and they were entitled to appropriate interim relief.
---
## Page 5
10. Mr. Asim Mansoor, who appeared for the plaintiff in Suit 359 of 2012, adopted the submissions made by Mr. Arshad Tayebaly and emphasized certain factual aspects peculiar to his case. He submitted that the plaintiff operated two distinct manufacturing operations on its premises, only one of which was being supplied power by KESC. The other operation was being run entirely on self-generated power. He submitted that even the billing issued by KESC itself showed that the power being consumed was at least equal to 50% of the sanctioned load that was now being demanded. Thus, in his case, there could be no grievance that the power supply was being used for standby purposes. It appears that the plaintiff's premises were inspected once again by a KESC team on 9-4-2012 and learned counsel submitted that this inspection also established the correctness of the plaintiff's case. Learned counsel also submitted that the power generation unit installed at the plaintiff's premises ran entirely on diesel fuel and not on gas. 11. Mr. Abid Zuberi, ably assisted by Mr. Ayan Memon, counsel for KESC strongly resisted the applications for interim relief and pressed the applications seeking recall of the ad interim orders. Learned counsel submitted that the plaintiffs had not properly disclosed to the Court the most fundamental point in issue, which was that each of the plaintiffs was generating electricity from its own (i,e,, 'captive') sources of power generation. He emphasized that the notices issued by KESC had only been sent to those industrial consumers who were utilizing captive power generation. He submitted that these consumers were utilizing the electricity supply from KESC for standby purposes., i,e,, the KESC supply was used only when their own self-generation of power failed for any reason or needed to be supplemented. He contended that this was absolutely clear from the billing history of each of the plaintiffs and it was for this reason that KESC had been forced to issue the impugned notices. He emphatically denied that the plaintiffs had suffered any losses and pointed out that although electricity supply had been disconnected long before the filing of the suits (in some cases many weeks prior thereto), it was indisputable that the plaintiffs' manufacturing facilities had continued to operate during that entire period. Learned counsel submitted that KESC did not wish to disconnect the power supply of any consumer; it was after all in the business of supplying and selling electricity. However, the issuance of the notices was necessitated on account of the use of captive sources of generation by industrial consumers and the consequent losses and wastage of load suffered by KESC. Developing this point, learned counsel submitted that each power plant operated by KESC had a certain generation capacity which was distributed amongst various grid stations attached to that plant. Each grid station had different feeder stations attached to it and power was supplied to consumers through the feeders. The sanction of a particular load to a consumer meant, in effect, that that capacity was locked-in for that consumer and could not be utilized for anyone else. Learned counsel submitted that if a consumer was properly utilizing its sanctioned load, then of course. There was no problem. However, if a consumer chose to use its sanctioned load only for standby purposes, then electricity from KESC was hardly, if at all, being consumed by such a consumer but the idle capacity could not be utilized for purposes of a new connection. It was precisely because this situation arose in relation to the plaintiffs and other similarly placed consumers that KESC was forced to take action, He submitted that the first paragraph of the Notice clearly and categorically stated this position and explained the matter to the consumers. He submitted that even in terms of the Undertaking, KESC was not demanding full utilization of the sanctioned load but only utilization of a- minimum 50%. He denied that there had been any coercion or any use of unlawful means to force consumers (such as the plaintiff in Suit 309 of 2012) to execute the Undertaking. In this context, learned counsel further submitted that the captive power generation used by most of the industrial customers such as the plaintiffs needed gas as its fuel, and submitted that the total amount of gas being consumed on a daily basis by such customers far exceeded the gas supply made available to KESC for running its power plants. Thus, not merely were the plaintiffs and other such consumers
---
## Page 6
keeping a substantial load or capacity idle but were also utilizing another scarce resource, i,e, natural gas, and its unavailability for KESC served to further exacerbate the power crisis. He submitted that the plaintiffs were not entitled to any relief whatsoever. 12. Learned counsel for KESC further submitted, in relation to the new connections that had been given, that the process of finalizing the long pending applications had started immediately after the disconnection of electricity supply to the plaintiffs and other such consumers. He submitted that this process took some time and was ultimately finalized close to 30-3-2012 and that was the only reason why new connections were given on that date. He emphatically denied any wrongdoing or attempt by KESC to disobey the Court or to frustrate any orders that might be made on the present applications. 13. As already noted, learned counsel submitted that the serious under-utilization by the plaintiffs of the sanctioned load was based on their billing history over several months and was not something that, could be denied. He therefore, contended that a proper determination of the relevant facts had indeed been made by KESC and it was only then that the notices were issued. With reference to section 20 of the 1910 Act, learned counsel submitted that upon its proper interpretation clause (c) of subsection (1) fully empowered KESC both to disconnect the supply of power and also to enter the consumer's premises to remove the supply lines, meters, etc. He submitted, with reference to Chapter 8 of the CSM, that the plaintiffs' case came squarely within clause 8.1 thereof. He submitted that this clause envisaged three different situations in which power supply could be disconnected, one of which was if the consumer used "the electric connection for a purpose other than for which it was sanctioned". His case was that the use of KESC connection for standby purposes by consumers using captive power generation was precisely such a situation. Learned counsel also referred to Chapter 14 of the CSM, the third provision that formed the basis of the Notice. He compared clause 14.1 with section 20 and submitted that although there were many similarities between the two, they were not identical. His case therefore was that each of section 20, Chapter 8 and Chapter 14 were separate and discrete provisions, which independently conferred powers on KESC to take action. It was for this reason that all three had been invoked in the Notice. Learned counsel emphasized that the action taken by KESC was entirely lawful and proper and fully within the powers conferred upon it. He submitted that the request for the Undertaking was eminently reasonable since the plaintiffs and other similarly placed consumers were only being asked to undertake that they would consume electricity up to a minimum of 50% of the sanctioned load. Learned counsel submitted that on account of the mismatch between demand and supply KESC, as the power utility, had to balance the competing and sometimes conflicting requirements of its various consumers and also ensure that it acted in an equitable manner towards all. He submitted that the methodology adopted in the present case had been developed keeping in mind all the relevant factors and could not be faulted. Learned counsel also referred to certain case-law. 14. Exercising their right of reply, learned counsel for the plaintiffs submitted, that the three provisions relied upon in the Notice were not separate and independent powers but were interrelated and it was for this reason that all three had been invoked. It was submitted that it was clear from a reading of the Notice that the grievance of KESC was an under-utilization of the load and not its utilization for a purpose other than that for which it was sanctioned. With regard to the power conferred by clause 8.1, learned counsel referred to Chapter 7 of the CSM. This Chapter relates to the tariff to be charged by a distribution company such as KESC. It was pointed out that clause 7.1 defined "tariff' as meaning, inter alia, the rates, charges, terms and conditions and sale of electric power to consumers. Clause 7.5 dealt with misuse of tariff and sub-clause (a) thereof stated that "the consumer shall, in no case, use the connection for the purpose other than for which it was originally sanctioned. In case of violation, the consumer is liable for disconnection and/or
---
## Page 7
penal action" (emphasis supplied). Learned counsel submitted that this provision made clear that the corresponding words as found in clause 8.1 had a narrow and limited meaning and were to be understood and applied only in the context of issues relating to tariff. For example, if a consumer was sanctioned a load for residential purposes but started using it for commercial or industrial purposes, that would be a misuse of the tariff for which the electric supply could be disconnected. As regards the inability of KESC to restore power supply to the plaintiffs on account of the new connections, learned counsel submitted that this was patently not correct. It was contended that the mere fact that the power of some of the plaintiffs had been restored on account of the ad interim orders without the supply of power to the new connections being disrupted was sufficient to show that the situation was not as…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.