Authority: High Court of Gujarat at Ahmedabad

Order Date: 11/09/2026

Case Overview

  • Original plaintiff Gujarat Electricity Board (GEB) appealed the judgment and decree dated 01/07/2004 in Special Civil Suit No.373 of 2002, which had dismissed its claim for recovery of Rs 41,82,789.79.
  • The appellant sought to enforce an agreement for 2000 KVA power supply with Mahendra Suting Ltd (the respondent). The estimate for the 2000 KVA load was Rs 4,08,320 issued on 15/07/1994.
  • The respondent initially received a stop‑gap supply of 500 KVA for night‑hours only, having paid a security deposit of Rs 5,62,000 and installing a night‑hour meter and CTPT.
  • The Board later indicated readiness to supply the remaining 1500 KVA subject to a security deposit of Rs 34,41,951 within one month and a clause that failure to take supply within four months would attract minimum charges for the full 2000 KVA.
  • The respondent failed to pay the security deposit and also refused to pay an additional 20% of the estimate charges (Rs 81,664) required for load reduction.
  • Subsequent correspondence (letter dated 25/05/1998) showed the respondent agreed to pay the 20% amount and requested installment payment of the security deposit, which the Board granted, yet the deposit remained unpaid.
  • The Board issued termination notices for non‑payment of energy charges and minimum demand charges; the respondent filed Special Civil Application No.744 of 1999, obtaining an installment order for energy consumption charges of Rs 37,74,178.76, after which the termination notice was cancelled and the 500 KVA connection re‑connected.
  • Despite paying the 20% estimate charge, the respondent never paid the security deposit; the Board adjusted the Rs 81,664 towards arrears of energy bills, and the 500 KVA connection was eventually permanently disconnected.
  • The respondent company entered liquidation on 09/07/2025; the Official Liquidator was impleaded as respondent No.3 and conceded that any successful appeal would require the liquidator to lodge a claim in the liquidation queue.
  • Evidence presented included:
  • Exhibit 04.06.1997 – Additional Chief Engineer’s letter recognizing the unit as a Continuous Processing Industry and directing extension of benefits for 24‑hour supply.
  • Exhibit 19 – Testimony of Executive Engineer Shri Malibhai G. Patel confirming the Board could not supply 2000 KVA before 23/01/1998 and that only 500 KVA was supplied from 19/03/1998.
  • Exhibits 26, 28‑30 – Documents showing the Board’s inability to provide continuous 2000 KVA and that night‑only supply would disrupt the defendant’s process.
  • Exhibit 32 – Acceptance of Rs 81,664 for cancellation/reduction of the additional 1500 KVA load, with no contractual provision authorising the amount.
  • Exhibits 59‑60 – Indicate a proposed installment of Rs 11,47,000 contingent on restoration of the 1500 KVA, which never occurred.
  • The appellant argued that the contract required payment of minimum guaranteed charges irrespective of actual consumption, relying on Bihar State Electricity Board v. Green Rubber Industries (1990) and Hyderabad Vanaspathi Ltd. v. A.P. State Electricity Board (1998). The court found these precedents inapplicable because the Board never supplied the contracted 2000 KVA.
  • The court concluded that the Board’s claim for minimum demand charges on the basis of 2000 KVA was unsupported, as the supply was never provided, the security deposit remained unpaid, and the respondent had effectively reduced the load to 500 KVA.

Final Outcome

  • The High Court dismissed the appeal as devoid of merit, upheld the 2004 decree, and rejected the Gujarat Electricity Board’s claim for Rs 41,82,789.79.
  • Interim relief, if any, was dismissed; the connected application was also disposed of, and the record was sent back.

Topics: Court Order, Electricity Supply Dispute, Liquidation