VIDYUT OMBUDSMAN
5th Floor, Singareni Bhavan, Red Hills, Hyderabad –500 004.

 

Dated 17-10-2007

 

Present

 

K.Rajagopala Reddy, Director (Law) and

Vidyut Ombudsman

 

Appeal No.16 of 2007

 

Between

 

Sri Rajiv Kumar Baid,

Managing Partner, M/s Poly Pipes,

D.No.25-18, Kabela Road,

Vijayawada-520 012                                                                                                                                             … Appellant

 

and

 

1.      Assistant Divisional Engineer/Division-I, KG Market, Vijayawada,

2.      Divisional Engineer/Operation, Vijayawada,

3.      Superintending Engineer/Operation, Vijayawada,    

4.      Assistant  Accounts Officer/ERO/Town-2, Vijayawada,

5.      Divisional Engineer/DPE/Vijayawada.                                                                                                            …  Respondents

 

 

The representation dated 14.05.2007 (received on 16.05.2007) of the Appellant has come up for final settlement before the Vidyut Ombudsman on 06.10.2007 in the presence of the representative of appellant and  respondents and stood over for consideration till this day,  the Vidyut Ombudsman passed/issued the following:

 

AWARD

 

            Aggrieved by the order of the Forum for Redressal of Consumer Grievances of APSPDCL (for short the “Forum”) dated 16.04.2007 in CG.No.110/2006-07/Vijayawada  Circle, the appellant herein filed a representation (appeal) dated 14.05.2007 stating that;

 

(a)        Based on inspection report of R-5 dated 17.07.2006, R-1 issued notice dated 25.07.2006 stating that S.C.Nos.1423, 2231 and 2232 were released in the same premises under same category-III and that as per clause nos.3.5.3 and 3.5.4 of the General Terms and Conditions of  Supply (for short, ‘GTCS’) the said services are to be clubbed into one HT service.  The appellant was also required to file a single application for HT category-I to club the above three services within 30 days from the date of receipt of the notice, failing which all the 3 services will be disconnected without any further notice.

 

(b)        In response to the above, the appellant submitted representation dated 25.08.2006 objecting to the proposal of clubbing the above mentioned three services giving detailed particulars pertaining to each of the three services viz., service connection number, date of release of service, name of the firm / establishment to which service released, nature of business of the firm / establishment, names of partners, SSI Registration, Factory Inspectors Licence, House tax assessment, Income tax assessment, PAN number, VAT certificate, Service tax registration, ESI registration, etc.

 

(c)        Different licences obtained from each department and registration of partnership firms, lease agreements, sale deeds, etc., are all within the purview of law. After due examination of records and physical verification of premises, different services were released.  Had the department of the respondents is particular about issuing HT connection treating all the three independent units as one, M/s. Arihant Polymers and M/s. Poly Pipes would have opted for different premises.

 

(d)        R-1 tried to mislead the Forum below by stating that conversion from LT to HT category-I is beneficial to the consumers.  To prove that the said contention is false, appellant filed detailed statement along with this representation (appeal).  Similarly, particulars of investments made by M/s Arihant Polymers who is the tenant of the premises, is also filed herewith.

 

(e)        The observation of the Forum below that release of three services in the same premises in the years 1993 and 2000 is against rules is not correct.  S.C.Nos.2231 and 2232 were released on 28.03.2000 in the ground floor, while S.C.No.1423 was released on 21.12.1993 in the first floor of the same premises.  Smt.Premlata Hirawat and Sri Rajiv Kumar Baid purchased the site jointly and constructed the building.  They do not belong to one family. Smt.Premlata Hirawat is an independent entrepreneur.  Therefore, they are entitled to take separate connections one for each floor.  Thus release of three services for the building is not wrong and is not against the Terms and Conditions of Supply.

 

(f)         The Forum below ought to have seen that in the inspection reports of R-1 and R-5 during the August, 2004 and on 17.07.2006 respectively, it is not mentioned about the door, water point, raw-material  and about other incriminating points.  Presumption of    R-1 and the Forum below in this regard is only aimed to cover the mistakes of the department of the respondents.

 

(g)        The observations of the Forum that because three services are existing in one premises and that the three establishments belong to the same family and therefore they shall be treated as single service as per clause 27.3 of Terms and Conditions of Supply of erstwhile APSEB and 3.5.3 of GTCS as approved by the APERC is not correct.  According to the appellant, it is not correct to state that the establishments are in one premises. They are allotted different door numbers and house tax is paid to the Panchayat separately.  The three establishments are different and district legal entities. Smt.Premlata Hirawat and Sri Rajiv Kumar Baid are not related to each other.  Similarly Sri Vikas Baid and Vinay Kumar  Hirawat are not  related to each other.

 

(h)        The appellant herein collects plastic scrap from various units and grinds into powder.  It is a job work done by the appellant for other plastic industries and the product is not owned by the appellant.  Such powder is not used as raw-material for other two industries existing in the premises.  M/s Arihant Polymers and M/s Poly Pipes obtain raw material from M/s Reliance Industries Limited, Hazira (Gujarat); Indian Petrochemicals Corporation Ltd., Gandhar (Gujarat); M/s Finolex Industries Ltd., Pune (Maharastra);  Dhranagadhara Chemical Works Ltd.,  Tuticorin (Tamilnadu).  In the processing of final product, there is no inter-relation, inter-dependency or inter-connection with regard to use of raw material or of the finished product among the three establishments. 

(i)         The observation of the Forum below that all the three firms have only one common water point fed from S.C.No.2321 is not correct.  There are two separate water connections from Gollapudi Panchayat to M/s Arihant Polymers and M/s Poly Pipes and one motor pump is for bore well.  Thus there are three water connections available in the premises which can be verified from the inspection report of R-1 dated 17.04.2007.

 

(j)         It is not correct to state that M/s.Poly Pipes and M/s Arihant Polymers  are manufacturing same product viz., ‘poly pipes’ is not correct.  M/s. Poly Pipes manufactures electrical PVC pipes and profiles, whereas M/s Arihant Polymers manufactures PVC water pipes, threaded pipes and SWR pipes for agricultural and sanitary purposes.  The dies and machinery are not of the same type and are not suitable to one and another.  One unit  cannot manufacture the products of other unit.  Therefore, the question of splitting the units does not arise as they are meant for manufacture of different products.  All plastic industries cannot be treated as one and the same.

 

(k)        If separate bills for consumption of electricity are not given to each of the three units, they will face problems from other departments as they are separate firms and establishments.  The appellant herein need not pay for consumption of electricity of M/s. Arihant Polymers, likewise M/s.Arihant Polymers is not expected to pay electricity bills of M/s Poly Pipes.

 

(l)         If the three units are treated as one unit, Industries Department will recall subsidies given by the Government to SSI units and they will face lot of problems.

 

(m)       GTCS as approved by APERC vide proceedings dated 06.01.2006 leaves discretion on the part of the Distribution licensees including APSPDCL to club consumers of same group / family / firm / company or to give separate points of supply and it does not mandate that consumers of same group/ family/firm/company have to compulsorily club their service connections. 

 

(n)        For all the above reasons, the appellant requests suitable orders may be issued to the respondents concerned not to convert three services into HT-I or into LT-III(B) from existing LT-III(A).

 

2.         In terms of Clause 8(1)(c) and Clause 11 of the Regulation No.1 of APERC, the Ombudsman is required to endeavour to promote settlement of the representation (appeal) by mutual agreement between the appellant and the respondents through conciliation or mediation.  Accordingly, re-conciliation meeting was held on 23.07.2007.  However, inspite of best efforts by the Ombudsman, parties could not arrive at settlement by mutual agreement.  Therefore, respondents were directed to file counter if any to the representation (appeal) filed by the appellant, with a copy to the appellant. 

 

3.         On 13.08.2007, a common counter affidavit on behalf of the respondent was filed before Ombudsman, after serving a copy of the same on the appellant on 09.08.2007, wherein it is stated that :-

 

(a)        That powder produced by the appellant (S.C.No.2231) is the raw material for the other two firms for manufacturing poly pipes in the premises having service connections 1423 and 2232.  Thus the nature of supply in all the three services is one and the same.

 

(b)        All the three services are in the same premises and in the same building.  They are enclaved within one compound wall.  The appellant herein, Smt.Premlata Hirawat, Sri Vikas Baid and Sri Vinay Kumar Hirawat are all members of the same family.

 

(c)        M/s Poly Pipes  and M/s Arihant Polymers are manufacturing PVC pipes with PVC powder from the firm of appellant, apart from obtaining PVC powder from other sources also.  The waste and damaged PVC pipes manufactured by M/s Poly Pipes  and M/s Arihant Polymers are used by the unit of appellant for making PVC powder.  Thus there is a cyclic process.

 

(d)        The three units are availing supply from different service connections situated within a single premises (one building) by splitting the units. M/s Poly Pipes  and M/s Arihant Polymers are manufacturing PVC pipes and supplying  them with same trade mark “Durga”.  For reference, letter heads of said two firms are filed herewith. 

 

(e)        All the three units have one office room with common telephone numbers, fax number and e-mail address and it reveals that all 3 units are one single establishment.  Business cards of M/s Poly Pipes  and M/s Arihant Polymers having same telephone numbers, fax number and e-mail address are filed herewith.   Thus it is clear that instead of taking power supply for entire consumption of the three units, they are split into tiny units for enjoying supply at LT instead of under HT.

 

(f)         All the three units are having only one generator in their premises and also one water point, but with different motors.  This also reveals that auxiliaries such as water, generator, office establishment, communication, marketing are same for all the three units.

 

(g)        In the ground floor of the building, entrance is provided from one unit to the other unit of M/s. Arihant Polymers facilitating free movements of men and material.

 

(h)        As per the clause 3.5.3 of GTCS as approved by APERC, APSPDCL reserves right to treat multiple connections existing in a single premises as a single service connection and charge the total consumption of all the consumers at an appropriate tariff applicable for such a single service connection.  Similarly, clause 3.5.4 of the said GTCS states that wherever the total connected load of all multiple connections exceeds 75 HP, consumers must necessarily switch over to HT supply or LT-III(B) as the case may be. 

 

(i)         R-5 inspected the service connections on 17.07.2006 and observed that the services are existing in the same premises and are being used for manufacturing poly pipes.  Based on such report, R-1 issued a notice on 25.07.2006 for clubbing services under clause 3.5.3 and 3.5.4 referred to above.

 

(j)         In pursuance of the orders of the Forum below, notices were given to the appellant as well as to the other two firms on 23.04.2007 by R-1 after inspecting the premises, when it was noticed that the total connected load of the three units is 143.72 HP against contracted load of 194.79 HP.  

 

(k)        In view of the above, the respondent prays the Ombudsman to dismiss the representation (appeal).

 

4.         On 25.08.2007, the appellant filed rejoinder dated 22.08.2007 stating that :-

(a)        The relationship mentioned in the counter affidavit between Smt. Premlata Hirawat and appellant herein is false.  There is no blood relationship between them, except they belong to same caste.

 

(b)        It is not correct to state that M/s Poly Pipes  and M/s Arihant Polymers  are making PVC pipes by using PVC powder manufactured by the proprietary firm of Rajiv Kumar Baid.

 

(c)        There is no inter-relation or inter-dependency between the final product or use of  raw material by them in the process of manufacture of final product.  It is not correct to state that raw material for other two firms is supplied by the unit of Rajiv Kumar Baid.  Purchase bills of M/s Poly Pipes  and M/s Arihant Polymers of one year with regard to purchase of raw material are filed herewith for reference.

 

(d)        The name “Durga” is not the trade mark of any of the units.  Moreover, brand  name or logo does not determine whether three units are one establishment or different.

 

(e)        The contention that there is only one generator in the premises and they are having one water point, but with different motors, located at the ground floor is not correct. M/s Poly Pipes  and M/s Arihant Polymers obtained separate permissions in the year 2000 for installation of separate generating sets for their captive power requirements.  Copies of the proceedings issued by APERC dated 03.11.2000 and 07.12.2000 are enclosed herewith for reference.

 

(f)         The contention of the respondent that all the three companies are having one office room, same telephone number, fax number and e-mail address is false.  Copies of visiting cards and letter pads filed by the respondents is a cheap trick played by the department of the respondents to prove that the units are one.  Actual visiting cards and letter pads of M/s. Poly Pipes  and M/s.Arihant Polymers are filed herewith for reference.

 

5.         Heard the arguments of the representatives of the parties concerned.

 

6.         The point arises for consideration is “whether the order dated 16.04.2007 passed by the Forum below is sustainable or not”.

 

7.         Perused the records.  The Forum below noticed that M/s Poly Pipes, M/s.Arihant Polymers, which are partnership firms under the Indian Partnership Act, 1932 and the proprietary concern of Sri Rajiv Kumar Baid were registered separately by the District Industries Centre, Department of Industries as SSI units. Permanent Account Numbers were allotted to the two partnership firms and to Sri. Rajiv Kumar Baid separately by the Income Tax Department. M/s. Poly Pipes  and M/s. Arihant Polymers have separate licenses to work as factories issued by the Inspector of Factories, Vijayawada II Circle and Value Added Tax registration certificates issued by the Commercial Tax Officer, VAT Registering Authority, Nandigama Circle, Vijayawada Division. After considering all the particulars pertaining to the two firms and the proprietary firm of Sri.Rajiv Kumar Baid, the Forum below came to the conclusion that ‘as all the partners in the three establishments are of same family and existing in single premises’, all the three service connections shall be treated as single service, in light of the rule position mentioned in clause 27.3 of the “Terms and Conditions of Supply” of erstwhile APSEB and clause 3.5.3 of the “General Terms & Conditions of Supply” (GTCS) approved by the Andhra Pradesh Electricity Regulatory Commission (APERC).

8.         The GTCS approved by APERC, vide proceedings No.Secy / 01 / 2006 dated 06.01.2006, supercedes the “Terms and Conditions of Supply” of APSEB. Therefore, it is not necessary to refer to the later any more.

 

9.         The Forum has gone through the definition of “Definition of separate establishment’ mentioned under clause 3.5 of the GTCS and extracted all the sub-clauses in its order dated 16.04.2007. Clause 3.5.1 mentions the different types of establishments. Clause 3.5.2 states that each separate establishment will be given a separate point of supply.  Clause 3.5.3 vests a right in the distribution and retail supply licensees to treat multiple connections of consumers of the same group or family or firm or company who are availing supply under different service connections situated within a single premises by splitting the units, as single service connection and charge the total consumption of all the consumers at the appropriate tariffs applicable for a single service connection. Clause 3.5.4 states that where the total connected load of all such multiple connections exceeds 75 HP, the consumers must necessarily switch over to HT supply or LT III (B) as the case may be and regularize their services and pending such switch over, the licensee shall be entitled to bill the service at HT tariff as per the procedure mentioned in Clause 12.3.3.2 (i). 

 

10.       On close examination of Clause 3.5.3, it is clear that the right vested in the distribution and retail supply licensee is not absolute. Before exercising its right under the said clause, a distribution company has to reasonably establish that the multiple connections existing in a single premises belong to consumers of the same group or family or firm or company and that they are availing supply under different service connections situated within a single premises by splitting the units.  The question that falls for consideration of the Ombudsman in this case is whether the burden cast on the distribution company of the respondents herein to reasonably establish that the partners of the two firms and Sri. Rajiv Kumar Baid belong to ‘same family’ and that they are availing supply under different service connections situated within a single premises by splitting the units, is discharged by the company so that the respondent concerned can exercise right to treat the multiple connections as a single service connection.

11.       As seen from the record, except stating that the partners of M/s Poly Pipes and M/s Arihant Polymers and Sri Rajiv Kumar Baid are members of the same family, the respondents have not established their family relationship before the Forum. In the absence of the same, the Forum below could not have concluded that all the partners in the three establishments are of same family.

 

12.       As per Section 11 of the Indian Contract Act, 1872 ‘Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject’.  As seen from the material placed on record, Sri Rajiv Kumar Baid and Smt. Premalata Hirawat entered into a partnership deed in the year 1991 and carrying on business in partnership under the name and style ‘M/s Poly Pipes’. The terms and conditions of the partnership deed entered between them were altered and such altered terms and conditions were again reduced into writing on 01.04.1995. Similarly Sri. Vikas Baid and Sri. Vinay Kumar Hirawat entered into a partnership deed on 29.12.1999 and carrying on business in partnership under the name and style and M/s Arihant Polymers.

 

13.       The contention of the respondents appears to be that Rajiv Kumar Baid (partner of M/s Poly Pipes) is the brother of Vikas Baid (partner of M/s.Arihant Polymers). Similarly, Smt.Premalata Hirawat (partner of M/s Poly Pipes) is the mother of Vinay Kumar Hirawat (partner of M/s Arihant Polymers).   Eventhough some effort is made, the exact relationship between Rajiv Kumar Baid and Premalata Hirawat could not be established by the respondents. Whatever it might be, the above persons who are not otherwise incompetent to enter into contract with others formed partnership firms under law and carrying on business.  As mentioned above, the two partnership firms were registered under the Indian Partnership Act, 1932. They obtained all the necessary licenses, permissions etc., from the competent authorities. 

 

14.       Admittedly, M/s Poly Pipes, in which Rajiv Kumar Baid and Premalata Hirawat are the partners, obtained service connection (1423) in the year 1993 in the first floor of the building bearing D. No. 25-17 (old No. 9-4/4). Thereafter, in the year 2000 the said Rajiv Kumar Baid again obtained separate service connection (2231) for a portion in the ground floor of the same building, in which M/s Poly Pipes obtained separate service connection as mentioned above. At the same time M/s Arihant Polymers also obtained another service connection (2232) for the other portion in the ground floor. It is claimed that the ground floor is assigned separate D.No. 25-18 (old No. 9-4/5). During the year when separate service connections to Rajiv Kumar Baid and M/s.Arihant Polymers were released in the year 2000, apart from the existing service connection for the premises under question, “Terms and Conditions of Supply” of erstwhile APSEB were in vogue. As per clause 27 of the said terms and conditions, two options were available to the respondents at that time. Firstly, the respondent(s) concerned might have been satisfied that because of different licenses or registrations under relevant laws, proprietary firm of Rajiv Kumar Baid and M/s. Arihant Polymers are different establishments and  therefore, they are entitled for separate connections, eventhough they are situated within same premises as that of M/s.Poly Pipes. Secondly, the respondent(s) concerned would have refused to release S.C.No. 2231 and 2232 stating that the two establishments seeking such connections will be treated as a single establishment along with M/s Poly Pipes, already existing in the building, in exercise of discretion vested in it as they are all situated within single premises owned or leased by the same person and also require for purpose covered under same category of tariff.  It appears that the respondent(s) concerned exercised first option mentioned above and released separate service connections.

 

15.       That apart, record pertaining to the case reveals that the partners of the two firms and Sri Rajiv Kumar Baid have identity of their own from one another. It also appears they intend to conduct business separately from one another and are complying with the rules, regulations, etc., as applicable to firms / establishment.  Therefore, it is difficult to believe that the different firms / establishments are availing supply under different service connections, eventhough they are situated within a single premises, by splitting the units.    Therefore, even under Clause 3.5.3 of the GTCS, it cannot be said that the respondent(s) concerned have an option to direct these firms / establishment to club the multiple service connections on the ground that their service connections are existing in single premises.

16.       Thus the respondents herein failed to prove firstly that the partners of M/s Poly Pipes  and M/s Arihant Polymers and Sri Rajiv Kumar Baid are belonging to the same family and secondly that they are splitting the units for the purpose of availing different service connections.  Therefore, the Forum below is not correct in stating that the service connections of these firms / establishments shall be treated as a single service as per clause 27.3 and 3.5.3 of the GTCS on the ground that they are of same family and existing in single premises.

 

17.       For all the reasons mentioned above, the Ombudsman is of the opinion, the Forum below is not correct in directing the respondent(s) concerned to bill the services of M/s Poly Pipes, Rajiv Kumar Baid and M/s Arihant Polymers under H.T.Tariff-I as per clause 12.3.3.2 of GTCS in case the said firms / establishments do not switch over either to HT Category-I or LT Category III(B). Therefore, the one month notices issued to the two firms and to Rajiv Kumar Baid, all by R-1 dated 23.04.2007 in pursuance of the order dated 16.04.2007 of the Forum below requesting the firms and Rajiv Kumar Baid to file single application for HT Cat-I or LT Cat-III(B) to club all the three services is not correct and the same are set aside.

 

18.       In the result, the appeal is allowed with a direction to the respondents concerned not to bill the service connections bearing Nos.1422, 2231 and 2232 under HT Cat-I as directed by the Forum below. 

 

            This order is corrected and signed on this 17th  day of October, 2007.

Sd/..

                                                                                                            Vidyut Ombudsman