The supply of electricity was discontinued due to the failure of the previous owners to pay the dues for consumption of electricity on the premises. The new owners, who purchased the properties in auction, applied for new electricity connections for the premises to which electricity had been disconnected for failure to pay the dues. Super & Stainless Hi Alloy Ltd, this Court by an order dated 24 August 2006 referred the Civil Appeals to a Bench of three Judges for dealing with the issue of the recovery of arrears of electricity. It also laid down a legal framework for supply of electrical energy and imposed certain responsibilities and obligations on persons licensed to supply electricity with a view to incentivise the growth of the electricity industry through private licensees. The 1948 Act mandated the state governments to constitute State Electricity Boards under Section 5 and entrusted them with the responsibility of administering the grid-system and arranging the supply of electricity in the state. Parliament consolidated and harmonised the provisions of the 1910 Act, 1948 Act, and 1998 Act by enacting the 2003 Act.
The State Commission has been empowered under Section 50 to specify an Electricity Supply Code to provide among other things for the recovery of electricity charges, intervals for billing of electricity charges and disconnection PART B of supply of electricity for non-payment. In Maharashtra, the Maharashtra State Electricity Board framed MSEB Conditions and Miscellaneous Charges for Supply of Electrical Energy, 1976 in exercise of power under the 1948 Act. Clause 23(b) of the MSEB Conditions of Supply allowed the Board to refuse to supply or give a new electricity connection to any person claiming to be an heir, legal representative, transferee, assignee or successor of the defaulting consumer.
In 2005, the Gujarat Electricity Regulatory Board notified the Gujarat Electricity Regulatory Commission (Electricity Supply Code and Related Matters) Regulations, 2005. This Court elucidated the position in the context of Section 24 of the 1910 Act to emphasise that the contract for PART C supply was only between the Electricity Board and the previous consumer, and the subsequent purchaser was neither a consumer within the meaning of the 1910 Act nor had any contractual relationship with the Electricity Board. This Court noted that though electricity is public property which the law must protect, yet the law, as it stood at that time, was inadequate to enforce the liability of unpaid electricity charges of a previous consumer against a subsequent purchaser of the premises. Andhra Pradesh State Electricity Board, a three-judge Bench of this Court observed that the terms and conditions of supply notified by the Electricity Boards are statutory in character as they have been framed in exercise of statutory power under Section 49 of the PART C 1948 Act. It was further held that the conditions of supply mandating the clearance of electricity dues of a previous owner by a new purchaser before electricity supply is restored or a new connection is given to the premises cannot be termed as unreasonable or arbitrary. Whether the power to recover arrears of a previous owner or occupier from an auction-purchaser of the premises falls within the regulatory regime of the 2003 Act; d. Whether the power to enable the recovery of arrears of the previous owner or occupier from an auction-purchaser can be provided through subordinate legislation by the State Commissions; e.
Whether the statutory bar on recovery of electricity dues after the limitation of two years provided under Section 56(2) of the 2003 Act, will have an implication on civil remedies of the Electric Utilities to recover such arrears; and PART E g. (ii) Section 43(1) opens with the words “save as otherwise provided in the Act”, which brings in compliance with other provisions of the 2003 Act including Section 50 which empowers the State Commission to specify the Electricity Supply Code; PART E iii. The definition of consumer under Section 2(15) of the 2003 Act includes “any person whose premises are for the time being connected for the purpose of receiving electricity with the works of a licensee…” Hence the expression “premises” is the continued PART E identified place for supply of electricity, irrespective of any change in the owner or occupier; and iii. In Hyderabad Vanaspathi (supra) this Court held that terms and conditions of supply framed by the Electricity Board under Section 49 of the 1948 Act are statutory in character; ii. Civil and Statutory remedies to recover electricity arrears of the Utilities (i) Section 56(2) of the 2003 Act does not bar the recovery of electricity arrears through other avenues of recovery in accordance with law; (ii) The limitation of two years under Section 56(2) of the 2003 Act is with reference to bar on disconnection by the licensee.
The auction purchasers were put to notice of the requirement of clearing the dues as the public auction-sale of the premises on “as is where is” basis would include a condition of acknowledging all liabilities in respect of the said premises, with or without specific reference to the payment of electricity dues; i. (i) Electricity constitutes goods within the meaning of Entries 53, 54, and 56 of List II of the Seventh Schedule of the Constitution and under the Sale of Goods Act 1930; ii. (ii) The obligation to provide electricity to consumers under Section 43 of the 2003 Act is not hedged by a condition to discharge the arrears incurred by the previous consumer; iii. (iii) The phrase “price as determined by the appropriate commission” in Section 43(2) of the 2003 Act could only be the price at which electricity is supplied to the distribution licensee.
The only exception to this statutory obligation is provided by Section 44 where the licensee PART E is prevented from giving supply due to cyclone, floods, storms or other circumstances beyond his control; and (vi) The legislature has consciously inserted all the substantive requirements which the person making an application for supply of electricity is required to meet, which has been primarily captured under Sections 43(2), 45, 46, 47, and 48 of the 2003 Act. The emphasis under Section 2(15) is therefore on the “person” who is the owner or occupier of the premises; and (ii) Sections 2(15), 43, and 44 refer to “premises” because while an ordinary manufacturer or distributor may insist on the consumer to come to this factory or warehouse to take the supply of goods, the distribution licensee is obliged to take the supply to the consumer’s premises. The liability to pay electricity dues is only on the person to whom the supply of electricity is made. Even if it is assumed that such liability can be enforced by a delegated legislation, the parent law must clearly prescribe the power of framing such a piece of legislation. The State Commission under Section 50 of the 2003 Act can only frame regulations for supply of electricity and has no power to provide for any fiscal exaction.
Electric Utilities cannot recover dues over and above what is provided for in the Section 56 (2) of the 2003 Act; and b. The Electric Utilities have argued that the duty to supply electricity under Section 43 of the 2003 Act is not absolute. It is further urged that the ‘price’ in Section 43 can only mean the price at which electricity is supplied to the distribution licensee, and cannot include the arrears of the previous owner or occupier of the premises. Under Section 22 read with Section 3(2)(f) and Clause VI of the first Schedule, there was an obligation to supply electricity on the distribution licensees. Section 43 of the 2003 Act casts a duty on every distribution licensee to supply electricity to the premises on an application made by the owner or occupier of such premises. Thus, under Section 43, the distribution licensee is obligated to supply electricity to the premises of an owner or occupier, provided that the owner or occupier pays all charges and complies with all conditions stipulated by the distribution licensee. Section 47 indicates that a distribution licensee can refuse to supply electricity under Section 43 if the applicant fails to furnish the requisite security. Under Section 48, a distribution licensee may require the applicant, who requires a supply of electricity in pursuance of Section 43, to accept (i) any restrictions which may be imposed for the purpose of enabling the distribution licensee to comply with the regulations made under Section 53; and (ii) any terms restricting any liability of the distribution licensee for economic loss resulting from PART F negligence of the person to whom electricity is supplied. A two-judge Bench of this Court in Paschimanchal Vidyut Vitran Nigam (supra) held that a distribution licensee can stipulate terms and conditions subject to which it will supply electricity to the applicant which are not arbitrary and unreasonable. It has been argued that the arrears of the previous owner or occupier of the premises is also a ‘price’ determined by the State Commission and payable at the time of making an application for the supply of electricity. The term “price” has to be given a broad meaning to include all the ‘tariffs’ and ‘charges’ that may be determined by the appropriate commission. The reference to premises in the definition of ‘consumer’ under Section 2(15) as well as Section 43 of the 2003 Act is, it is urged, only to fix a situs for the supply of electricity to the owner or occupier of the premises.
The definition of “consumer” under Section 2(15) of the 2003 Act is similar to the definition of “consumer” in the 1910 Act. The reference to premises in the second limb connotes that the demand for guaranteed charges or dues will incur even if the owner or occupier has stopped consuming power for the time being, but the premises remain connected. The second limb clarifies that a consumer who commences receiving power at the premises will continue to remain a consumer even if they stop consuming power for the time being, so long as the premises are connected to the power system. In this situation, the consumer PART F continues to remain a consumer as the premises are connected for the time being for the purposes of receiving the supply of electricity, though the consumer may not themselves be consuming electricity (the consumption being by the tenant). The second limb goes only so far as to say that when electricity is supplied to any person at a particular land, building, or structure, such person will continue to remain a consumer, even though they are not consuming electricity, so long as the electricity connection exists. Section 43 of the 2003 Act obligates a distribution licensee to supply electricity “on an application by the owner or occupier of any premises”. The duty to supply electricity under Section 43 is only with respect to the owner or occupier of the premises, and not the premises, as it is the owner or occupier who has the statutory right to “demand” electricity for the premises under their use or occupation. The distribution licensee necessarily has to lay down special infrastructure such as electricity lines and transformers to transmit electricity and supply it directly to the consumer, at their premises. Section 126 also uses the words “the electricity charges payable by such person or any other person benefited by such use.” Thus, the overall scheme of the 2003 Act makes it evident that only a consumer can be held liable for default in payment of electricity dues or charges. Whether electricity connection sought by a subsequent owner constitutes a reconnection or fresh connection 57. The Electricity Board insisted upon the auction purchaser paying the arrears owed by the erstwhile owner as a condition precedent to provide an electricity connection. In Gujarat Inns (supra), another three-judge Bench of this Court held that the connection sought by auction-purchasers of properties would constitute a fresh connection.
It necessarily follows that when a new owner or occupier of the premises applies for supply of electricity in terms of Section 43 of the 2003 Act, it will constitute a fresh connection, regardless of the fact that the premises for which the electricity is sought was being supplied with electricity previously. For an application to be considered as a ‘reconnection’, the applicant has to seek supply of electricity with respect to the same premises for which electricity was already PART F provided. The Electric Utilities have submitted that: (i) Section 49 of the 1948 Act empowered the Board to supply electricity upon such terms and conditions as it thinks fit; (ii) the phrase “regulate” in Section 79 of the 1948 Act has a wider implication allowing the State Commission to do everything necessary to prescribe the principles governing the supply of electricity; (iii) the Electricity Supply Code notified under Section 50 read with Section 181(2)(x) of the 2003 Act governs all matters relating to the supply of electricity to premises; and (iv) the Conditions of Supply which provide for payment of outstanding dues of the previous consumer have a clear nexus to the scheme of the 2003 Act and the objectives sought to be achieved. From the other side, the auction purchasers have urged that: (i) the provisions of the 1910 Act, 1948 Act, and the 2003 Act do not empower the PART F Electricity Board or, as the case may be the distribution licencee to recover the arrears of electricity of the previous consumer from the new owner or occupier of the premises; and (ii) the conditions of supply prescribed under the 1948 Act do not have the character of regulations and are not statutory.
Similarly, the Boards c ould also prescribe conditions under Section 21 of the 1910 Act by virtue of Section 26 of the 1948 Act. Section 79 permitted the Board to make regulations providing for the principles governing the supply of electricity by the Board to persons other than licensees under Section 49: PART F Clause (j) of Section 79 empowered the Board to make regulations prescribing the principles governing the supply of electricity to consumers. A P State Electricity Board a two-judge Bench of this Court upheld the validity of Section 49 of the 1948 Act.
The above discussion shows that Conditions of Supply were notified: first, by the Supply Licensee and Electricity Boards under Section 21 of 1910 Act; and second, by the Electricity Boards under Section 49 of 1948 Act. In India Thermal Power Ltd (supra), the issue before the two-judge Bench was whether the State Government can alter the terms of the Power Purchase Agreement entered into under Sections 43 and 43-A of the 1948 Act. Therefore, any condition enacted under Section 49 of the 1948 Act, specifically one requiring the new owner to clear the arrears of the previous owner as a precondition to availing electricity supply, will have a statutory character.
This Court has held on many occasions that the term ‘regulate’ is to be given a wide interpretation allowing the performance of everything necessary for the organised implementation, development, and conduct of business. This Court observed that “power to regulate carries with it full power over the thing subject to regulation and in absence of restrictive words, the power must be regarded as plenary over the entire subject.” The Constitution Bench in V S Rice and Oil Mills v. In Paramount Polymers (supra), a two-judge Bench of this Court was called upon to decide the validity of clause 21-A of Terms and Conditions of PART F Supply which provided that no fresh connection in respect of the premises would be given to a purchaser unless the purchaser cleared the amount that was left in arrears by the previous consumer.
The auction purchasers concede that Section 50 of the 2003 Act is exhaustive, but contend that it does not enable the State Commission to lay down conditions for recovery of electricity arrears of the previous owner. In the process, the Parliament has also conferred discretion on the regulatory authorities, particularly the Central Commission and State Commission, to work out further details within the framework of the legislative policy laid down in the legislation. The scheme of the 2003 Act makes it evident that the regulatory powers of the State Commission under section 181(2) are of wide import. The Commission PART F has certain plenary powers to regulate on matters contained in section 181(2), including Electric Supply Code under Section 50. This Court held that a distribution licensee can stipulate such terms necessary for supply of electricity, including that the arrears due in regard to the supply of electricity made to the premises when they were in the occupation of the previous owner or occupant, should be cleared before the electricity supply is restored or a fresh connection is provided to the premises.
Section 42 of PART F the 2003 Act requires the distribution licensee to develop and maintain an efficient, coordinated, and economical distribution system in their area of supply to supply electricity in accordance with the provisions of the said Act.
The Supply Conditions providing for recoupment of electricity dues of a previous consumer from a new owner are necessary to recover the costs incurred for laying down the infrastructure as well as the ongoing current liabilities towards the electricity generation and transmission companies. In Hyderabad Vanaspati (supra) this Court was adjudicating upon the validity of Clause 39 of the Conditions of Supply which defined various malpractices and provided for enquiries by designated officials. It is just and reasonable for distribution licensees to specify conditions of supply requiring the subsequent owner or PART F occupier of premises to pay the arrears of electricity dues of the previous owner or occupier as a pre-condition for the grant of an electricity connection to protect their commercial interests, as well as the welfare of consumers of electricity. Venkata Sastri & Sons, was limited to the extent that it holds that a charge created by an act of parties under Section 100 of the Transfer of Property Act 1882 does not attract the provisions of Section 59 of the Indian Registration Act 1908. In terms of the first paragraph of Section 100, when an immovable property of one party is pledged as security for the payment of money to another, and the transaction does not constitute a mortgage, the latter would acquire a charge over the property. It provides that a charge cannot be enforced against a property in the hands of a transferee without notice. An auction purchaser, who became the owner of the property, resisted the attempt of the Municipal Corporation to recover the arrears of pending taxes in exercise of its charge on the ground that they were not aware PART F of the past municipal tax arrears. The provisions of the 1910 Act, 1948 Act, and the 2003 Act do not provide that the arrears of electricity dues would constitute a charge on the property or that such a charge shall be enforceable against a transferee without notice. Consequently, in general law, a transferee of the premises cannot be made liable for the outstanding dues of the previous owner since electricity arrears do not automatically become a charge over the premises. The next issue which falls for consideration is whether an electricity charge can be introduced by way of statutory regulations or rules enacted by a regulatory commission under its rule making power in the 2003 Act.
For example, the Kerala Electricity Duty Act 1963 and Kerala Electricity Duty Rules 1963 provide that the dues from a consumer towards electricity duty create a first charge on the amounts recoverable for the energy consumed. In terms of Section 50 of the 2003 Act, a State Commission is empowered to provide for recovery of electricity charges, intervals for billing of electricity charges, disconnection of supply of electricity for non-payment thereof, restoration of supply of electricity and other cognate matters. The State Commission is conferred with wide powers under the statutory framework to provide for different mechanisms in the Electricity Supply Code for recovery of electricity arrears of the previous owner.
Reliance by the auction purchasers on the decisions in India Cement Ltd (supra) or Indian Council of Legal Aid and Advice (supra) render little assistance to their cause. This Court held that Rule 21-A framed by the State Government under Section 19 of the Madras General Sales Tax Act, 1939 was ultra vires. The electricity utilities would get a period of twelve years to recover the dues charged on the immoveable property from the date when the money payable became due. In the absence of such a provision, Electric Utilities would be left without any recourse and would be compelled to grant a fresh electricity connection, even when huge arrears of electricity are outstanding.
Uttar Haryana Bijli Vitran Nigam Limited to contend that the use of the expression “under this section” in Section 56(2) means that the avenue of effecting disconnection to recover money cannot be resorted to after the limitation period. It was urged that Section 56 does not restrict the right of the licensee to insist on payment of the arrears of charges incurred on the premises, from a subsequent applicant for a fresh connection to the same premises. On the other hand counsel representing the auction purchasers have urged that (i) the period of limitation under Section 56(2), which begins with a non obstante clause, bars the recovery of outstanding electricity dues from successful auction purchasers who apply for a new connection for the supply of electricity from the licensee; (ii) two conditions need to be fulfilled to get over the embargo on the recovery of a sum due from any consumer, after a period of two years from the date when such sum became first due, namely (a) such sum has been shown continuously as recoverable as arrears of charges for electricity supplied, and (b) the licensee shall not cut off the supply of the electricity; (iii) the conditions of supply, being subordinate legislation, cannot override the duty cast upon the licensee, and dues cannot be recoverable either in a manner or over and above what is provided for in the Section 56 (2); and (iv) any alternative interpretation would render the bar under Section 56(2) meaningless, and the conditions of supply could be used to resurrect time barred claims as held in State of Kerala v.
Section 56(1) provides that where any person neglects to pay any charge for electricity or any sum other than a charge for electricity due from him to a licensee or a generating company, the licensee or generating company may after giving a written notice of fifteen days, disconnect the supply of electricity, until such charges, including the expenses incurred are paid. Section 56(2) provides that notwithstanding anything contained in any other law for the time being in force, no sum due from any consumer “under this section” shall be recoverable after a period of two years from the date PART F when such sum became first due unless such sum has been shown continuously as recoverable as arrears of charges for electricity supplied and the licensee shall not cut off the supply of electricity. Section 56(1) provides that the power of the licensee to disconnect electrical supply when a consumer is in default of payment is “without prejudice to his rights to recover such charge or other sum by suit”.
The import of Section 24 was considered by this Court in Isha Marbles (supra), where it was observed that the action of cutting off electricity supply after service of the notice as prescribed under Section 24 was in addition to the general remedy of filing a suit for recovery. Section 56(2), which begins with a non obstante clause, provides a limitation of two years for recovery of dues by the licensee through the means of disconnecting electrical supply. Before we deal with the implication of Section 56(2) on the civil remedies available to a licensee, it is important to clarify that when the liability incurred by a consumer is prior to the period when the 2003 Act came into force, then the bar of limitation under Section 56(2) is not applicable.
Section 56(2) ensures that a licensee does not have the liberty to arbitrarily impose a bill after a long period and then recover such a huge amount through the drastic step of disconnection of electrical supply. However, it did not empower the licensee to take recourse to the coercive measure of disconnection of electricity supply for PART F recovery of the additional demand. The period of limitation under Section 56(2) is relatable to the sum due under Section 56. Section 56(2) provides that such sum due would not be recoverable after the period of two years from when such sum became first due. In that case, a three-judge Bench of this Court while dealing with agricultural loans extended by the Kerala Finance Corporation, held that since the Kerala Revenue Recovery Act does not create a new right, a person could not claim the recovery of amounts which are not legally recoverable. Implication of the sale of premises on “as is where is” basis, with or without reference to electricity arrears of the premises 132. When a property is sold on an “as is where is” basis, encumbrances on the property stand transferred to the purchaser upon the sale. This Court delved into the nature of public auctions and opined on the implications of an auction conducted on an “as is where is basis”, where an auction purchaser is expected to exercise due diligence with regard to the condition of a site. The Court relied on the terms and conditions, specifically Clause 25, stipulated in the auction notice published by Punjab Urban Planning and Development Authority in reaching its conclusion and held that the auction notice would have considerable bearing in resolving the dispute. Clause 11 of the Development Agreement further stipulated that the builder was deemed to have inspected the site and its surroundings and checked the information available. Reliance placed by the auction purchasers on Raghu Nath Gupta (supra) and Kenneth Builders and Developers (supra) to contend that “as is where is” is a feature of physical property, limited to encumbrances or charges running with land, is misconceived. Thus, the implication of the expression “as is where is” or “as is what is basis” or “as is where is, whatever there is and without recourse basis” is not limited to the physical condition of the property, but extends to the condition of the title of the property and the extent and state of whatever claims, rights and dues affect the property, unless stated otherwise in the contract. It concluded that the auction purchaser was “clearly put to notice” since there was a specific mention of the quantification of dues of various accounts including electricity dues. On the liability of the past owners to bear electricity dues when the sale is on “as is where is” and existence of electricity dues is specifically mentioned, this Court PART F categorically held that the auction purchasers were bound to inspect the premises and provide for the dues in all respects.
However, in terms of Section PART G 55(1)(a), in the absence of a contract to the contrary, the seller is under an obligation to disclose material defects in the property or in the seller’s title thereto of which he is aware and which a buyer could not with ordinary care discover for himself. At the outset, we note that the relevant date to determine the applicability of the conditions of supply or Electricity Supply Code is the date on which the auction purchaser applied for a fresh connection or reconnection for supply of electricity to the premises. In terms of Clause 15(c), when there is a transfer of ownership or right of occupancy of the premises, the registered consumer shall intimate the transfer of the right of occupancy of the premises within seven days to the officer concerned. In both these cases, the Kerala High Court upheld the validity of Clause 15(e) and directed that to avail a fresh electricity connection for PART G premises where arrears are due, the auction purchasers would have to pay outstanding dues of the previous consumer in compliance with the said condition. The appellant sought permission of the KSEB for wiring for an electricity connection in the property by a letter dated 4 June 1999.
On 18 September 2000, the Single Judge rejected the application filed by the appellant, holding that KSEB can insist on the arrears being cleared before the connection is given. By its judgement dated 18 July 2001, the Kerala High Court upheld the validity of Clause 15(e) and held that the KSEB is not bound to give a reconnection or a new connection to the premises where there are arrears on any account due to the Board, unless the arrears including penalty, are cleared in advance. Finally, the High Court clarified that the mere fact that the Electricity Board was trying to recover the due amount as a secured creditor before the winding up proceedings as against the previous owner, would be of no consequence on the applicability of Clause 15(e). On 1 December 1989, the appellant allegedly applied to KSEB for an electric connection to the purchased premises. The appellant submitted that the “judgement under review was delivered without taking note of the fact that condition 15(e) was incorporated in the Conditions of Supply of Electrical Energy only with effect from 1.1.1990 while the petitioner purchased the property on 31.10.1989 in a Court auction and the application for electric connection was made on 1.12.1989.” It has been urged that in the absence of any existing statutory regulations, the appellant cannot be called upon to clear the past arrears incurred by the erstwhile consumer as a condition precedent to electricity supply. It is argued that in these circumstances, it is unlikely that the appellant would have PART G received possession of the premises or would have applied for an electric connection on 1 December 1989, as alleged by the appellant.
The MSEB Conditions of Supply laid down a detailed procedure in respect of the application for supply of electrical energy, payment of bills, procedure to be adopted in case of prejudicial use of electrical energy and the terms on which the supply of electrical energy is released to a consumer. The Circular presented prospective owners who purchased sick/ closed industrial units in auction with PART G two options — either pay arrears including minimum charges to get electricity supply reconnected, or apply for a fresh connection after completing necessary formalities, without being liable for outstanding arrears of the previous owner. After the enactment of the 2003 Act, the Maharashtra Electricity Supply Code, 2005 was framed under Section 50 of the 2003 Act. Regulation 10.5 of the Maharashtra Electricity Supply Code provides that dues owed to the distribution licensee are charge on the property and as a statutory effect, the liability for the PART G payment of electricity dues is passed on to the new owner/ occupier of the premises, albeit to a certain time restriction.
Presently, the Maharashtra Electricity Regulatory Commission (Electricity Supply Code and other Standards of Performance of Distribution Licensees including Power Quality) Regulations 2021 have been enacted repealing the Maharashtra Electricity Supply Code 2005. The 1976 PART G MSEB Conditions of Supply would continue to operate till the enactment of the Maharashtra Electricity Supply Code in 2005. From 10 June 2003 to 20 January 2005 : The provisions of the 2003 Act were brought into force with effect from 10 June 2003. Regulation 19(1) of the Electricity Supply Code 2005, provides that any terms and conditions of supply which are inconsistent with the provisions of the Maharashtra Electricity Supply Code 2005 shall be deemed to be invalid from the date on which these regulations come into force; and c. The appellant-Board relied on Condition 23 of the MSEB Conditions of Supply to impose a precondition of clearing electricity arrears of the erstwhile consumer, before a new electricity connection could be provided.
The High Court concluded that the contract of supply was only between the Electricity Board and the previous consumer, and since the subsequent purchaser was a third party, it cannot be made liable for the past liabilities of the erstwhile consumer. Accordingly, the words preceding the word “successor” clearly disclose a reference to a person who acquires the right to the property on account of either voluntary transfer or on account of death of the owner; and b. The Electricity Board can demand arrears due by an erstwhile defaulting consumer in regard to supply of electricity to premises from the purchaser of a property seeking reconnection or fresh connection of electricity when either of two conditions are met: a. In the cases before us governed by the 1910 Act read with 1948 Act, no charge was created on the property in favour of the Electricity Board for the payment of electricity dues. In Hyderabad Vanaspathi (supra) this Court held that the Conditions of Supply in the State of Andhra Pradesh, notified in exercise of the powers conferred by Section 49 of the 1948 Act, are statutory in character. PART G Raghunath Paper Mills Private Limited, this Court observed that Regulation 13(10)(b) of the Orissa Electricity Regulatory Commission Distribution (Conditions of Supply), Code, 2004 was inapplicable to the facts of the case as the auction purchaser had requested for a fresh connection, whereas in terms of the concerned regulation, previous dues had to be cleared only with respect to a reconnection or a transfer of service connection from the name of the erstwhile consumer. In terms of Condition 23(b), if the consumer commits breach of Condition 23(a) and neglects to pay the Board any charges for energy and consequently, the electricity supply of such consumer is disconnected, then the third party upon whom such a transfer was effected is liable to pay arrears of electricity which the defaulting consumer has not paid.
For the application of the ejusdem generis rule, it is essential that enumerated things before the general words must constitute a distinct category or a genus or a family which admits of a number of members. In the impugned judgment Ecto Spinners, the Bombay High Court observed that the word “successor”, occurs in the collocation of other words “heir”, “legal representative”, “transferee” and “assignee”, and its meaning must take colour from the preceding words in association with which it is used. The expression “successor” has been defined in Black’s Law Dictionary as “a person who succeeds to the office, rights, responsibilities, or place of another; one who replaces or follows a predecessor.” The category of a “universal successor” is further understood to mean “someone who succeeds to all the rights and powers of a former owner, as with an intestate estate or an estate in bankruptcy”. In the case at hand, the use of the expression “otherwise dispenses of” in the phrase “a consumer…dies, or transfers, assigns or otherwise dispenses of the undertaking or premises”, does not bring into play the rule of ejusdem generis for the preceding words “dies”, “transfers”, “assigns” do not belong to a single limited genus.
Condition 23 of the MSEB Conditions of Supply is a mode of recovery of electricity arrears of the erstwhile consumer, which could be recovered even from a successor. The first respondent purchased a sick industrial unit in auction from the SICOM under Section 29 of the State Financial Corporations Act. By a common judgment dated 19 December 2002, the Bombay High Court disposed of the writ petitions and quashed the impugned Circular 607 on the ground that MSEB lacked jurisdiction PART G as the circular was beyond the powers of the Board under Section 24 of the 1910 Act.
In Srigdhaa Beverages (supra), this Court held that the electricity dues, where they are statutory in character under the Electricity Act and as per the terms and conditions of supply, cannot be waived in view of the provisions of the Act itself, more specifically Section 56 of the 2003 Act ( pari materia with Section 24 of the 1910 Act), and cannot partake the character of purely contractual dues. Accordingly, a sale made by the corporation is deemed to be a sale made by the owner of the property, attracting Condition 23 of the MSEB Conditions of Supply. This clause was further subject to another provision in Clause 6, where the purchaser was liable to make their own inquiries about arrears of dues for supply of power, water and other facilities and the auction purchaser was made liable to pay such arrears. The respondent-purchaser took out a Judges Order in a civil suit before the Bombay High Court, seeking a clarification that it was not liable for past dues and liabilities of any kind in respect of the property purchased through the auction sale.
The Bombay High Court by its impugned judgment dated 24 September 2004 disposed of the writ petition with a direction to the appellant to grant an electricity connection to the premises within one month, without insisting on clearance of past dues of the previous consumer. Clause 14 in the standard agreements entered between the MSEB and consumers provides that the Conditions of Supply, as amended from time to time, shall be deemed to be part of the agreement. The first respondent incurred an expenditure of Rs 4 crores to overhaul the plant and machinery at the premises, and thereafter applied for a fresh electricity connection as a High Tension Consumer for the premises.
The High Court held that the respondent could not be made liable for the dues of the erstwhile owner as a prerequisite for obtaining a new electricity connection as there was neither any statutory provision nor an agreement creating any charge over the property in relation to the electricity arrears. The bank filed a dispute before the Co-operative court at Nagpur. The Judge, Cooperative court at Nagpur by an order dated 23 February 2005 granted permission to sell the hypothecated plant and machinery and mortgaged land and building of M/s Sumit Re-Rolling Mills Pvt. The authorised officer of the bank handed over the physical possession of the entire moveable plant and machinery and immovable land and building, PART G mortgaged with the bank, to the respondent on 21 March 2005 on “as is where is” and “as is what is” basis. The appellant-MSEDC refused the request of the first respondent by a letter dated 9 September 2005 on the ground that the arrears of electricity charges of the earlier owner were pending, and the first respondent was liable to clear them in light of Condition 23 of MSEB Conditions of Supply. At the same time, from the deed of assignment and sale placed on record, it emerges that the sale of the premises and possession was given after 20 January 2005. However, the proviso lays down that except in the case of a transfer of a connection to a legal heir, the liabilities which are transferred under Regulation 10.5 are restricted to a maximum period of six months of the unpaid charges for electricity supplied to the premises. By a sale notice dated 2 May 2001, offers were invited from interested bidders for purchase of properties of M/s Hariganga Alloys & Steel Ltd on “as is where is” and “as is what is” basis.
By a letter dated 22 June 2005, the appellant rejected the application on the ground that arrears of electricity charges of Rs 83 lakhs of the erstwhile owner were pending and a permanent electricity connection could not be released till full dues were paid. By an order dated 22 October 2007, this Court directed the appellant to restore the electricity connection after receipt of the first two instalments by the respondent in view of the undertaking given by the respondent that it shall deposit the entire arrears of Rs 83 lakhs in terms of the proposal dated 9 August 2007. The Court has been informed that pursuant to the order, M/s Ankush Shikshan Santha had paid the arrears to the tune of Rs 83 lakhs and the appellant has granted a fresh electricity connection. In 2002, the electricity supply of M/s R & J Alloys Pvt. On 3 October 2005, the first respondent successfully purchased the properties of M/s R & J Alloys Pvt.
By letter dated 12 January 2006, the appellant refused to give a new electric connection unless the arrears of Rs 11 crores of the erstwhile owner of the property were paid. The High Court directed the Electricity Board to grant interim electricity connection subject to final adjudication of the rights of the parties.
Mr MY Deshmukh, counsel appearing on behalf of the first PART G respondent has urged that the MSEB Conditions of Supply 1976 are inapplicable after the enactment of the Maharashtra Electricity Supply Code 2005. Hence, the first respondent requested the appellant to supply electricity after the Maharashtra Electricity Supply Code 2005 came into effect on 20 January 2005. In terms of Regulation 10.5 of the Maharashtra Electricity Supply Code 2005, any unpaid electricity dues constitute a charge on the premises, and would be recoverable from the new owner or occupier of the premises to whom the premises have been transferred.
The charge attaches to the property and a distribution licensee is entitled to recover the unpaid dues from the first respondent subject to the permitted period specified in the proviso to Regulation 10.5.
The distribution licensee should not let arrears mount up and must be prompt in disconnecting electricity supply and thereafter pursuing its remedy by filing a suit for recovery of moneys/ dues. From 10 June 2003 to 31 March 2005 :
Also Read: https://newslaw.in/?p=652
As per Section 185(2)(a) of the 2003 Act, the extant Conditions of Supply continued to apply. From 31 March 2005 when the Supply Code came into force : Clause 4.1.11 was notified under the Supply Code. Clause 4.1.11 post the amendment in 2010 reads thus: PART G The High Court of Gujarat had occasion to deal with the validity of Clause 2(j) of the Conditions of Supply and Clause 4.1.11 of the Gujarat Electricity Supply Code. The Single Judge allowed the writ petition and struck down clause 2(j) of the Conditions of Supply for being arbitrary and inconsistent with statutory provisions of the law. On 10 August 2001, Gujarat Electricity Board issued a notification under Section 49 of the 1948 Act incorporating Condition 2(j) in the ‘Condition and Miscellaneous Charges for Supply of Electrical Energy’.
It has been further averred by the appellant that the arrears are for a period before the date of winding up order, which is 10 August 1998. The relevant part of the said application is extracted hereunder: PART G
Case Title: K.C. NINAN Vs. KERALA STATE ELECTRICITY BOARD & ORS. (2023 INSC 560)
Case Number: C.A. No.-002109-002110 / 2004
