The Supreme Court in the case Madras Aluminium Co. Ltd. vs Tamil Nadu Electricity Board observed and has stated that the State action irrespective of being in the contractual realm must abide by Article 14 of the Constitution.
The bench comprising of Justice B R Gavai, Justice Sanjay Karol and Justice Aravind Kumar in the case stated that the fact a dispute falls into the contractual realm does not relieve the State of its obligation to comply with the requirements of Article 14 of Constitution of India.
In the present case, an application was filed by the Madras Aluminum Co. Ltd in order to reduce the contracted maximum demand (Electricity) to 10000 KVA with effect from 27.01.2002. therefore, the said issue raised in the said appeal was weather such an action of the application remaining pending for an unreasonable period could in itself be classified as an arbitrary and unreasonable act.
The bench in the case observed while keeping in view the above-stated well established principles that State action irrespective of being in the contractual realm must abide by Article 14 of the Constitution of India, and that:
a) after passage of a considerable period of time, in the month of July, 2004 the reduction to 10000 KVA was agreed to and a new agreement to that effect was entered into
b) irrespective of the amount of reduction in KVA seek other applications were considered within a reasonable period of time.
c) no reason has been put forth before the court for keeping such application pending.
d) that the Appellant duly and repeatedly followed up with the authorities in order to effectuate such reduction.
e) the Appellant has been unjustifiably asked to furnish costs for unutilized electricity which, in any case should not have extended beyond the time period of six months wherein considering the reasonable period to consider an application, to be so for the period much larger thereto, while rendering such action unquestionably unreasonable and arbitrary.
The bench in the case observed and has directed the Tamil Nadu Electricity Board for returning the amount as may be calculated and verified, which is being paid by the Appellant to it for 13000 KVA, in excess to its request of maximum sanctioned demand of 10000 KVA (the 23000-10000 = 13000 KVA).
