Bombay High Court
Super & Stainless Hi-Alloys Ltd. vs State Of Maharashtra And Ors. on 19 December, 2002
Equivalent citations: AIR2003BOM236, II(2003)BC228, 2003(3)BOMCR62, 2003(1)MHLJ1001, AIR 2003 BOMBAY 236, (2003) 5 ALLINDCAS 466 (BOM), 2003 (5) ALLINDCAS 466, (2003) 2 ALLMR 580 (BOM), (2003) 1 MAH LJ 1001, (2003) 2 BANKCAS 228, (2003) 3 BOM CR 62
Author: V.G. Palshikar
Bench: V.G. Palshikar, V.G. Munshi
JUDGMENT V.G. Palshikar, J.
1. By these petitions the petitioners have challenged the action of M.S.E.B. the respondent in denying the electricity supply connection to the petitioner in Writ Petition No. 5196 of 2001 and put petitioner No. 1 in W.P. No. 295 of 2001 for purchasing sick/closed industrial unit in auction from the Maharashtra State Financial Corporation under Section 29 of the State Financial Corporations Act. Since the reliefs claimed are identical, both these petitions from the Appellate Side and the Original Side are taken up together for hearing and adjudication.
2. By these petitions, the petitioners have challenged the circular issued by the Respondent No. 1 on 19-12-1998 by which it was provided that the earlier instructions issued on 18th June 1993 by circular No. 518 was withdrawn. According to the petitioners the circular cannot affect the rights of the auction purchasers who purchase sick/closed industrial units under Section 29 of the State Financial Corporation Act in auction duly held in accordance with the provisions of that section.
3. By the earlier circular No. 518 dated 18th June 1993, the Board has given two options for the party seeking fresh connection in relation to industrial units purchased by the purchasers.
4. The circular No. 518 dated 18th June 1993 deals with the power supply of the sick/closed industrial unit in auction. It was issued in the light of the Government policy then released by the Government of Maharashtra in the year 1993. Taking into consideration the new industrial policy of the State, the Board decided to give option to the purchasers for the purposes of seeking fresh connection. The option was then either pay all the arrears of earlier owner/consumer for availing the electricity supply made to the earlier owner or to have fresh connection in the name of the purchasers by paying the prescribed sums without payment of outstanding arrears of the earlier owner or outgoing consumer. This circular was withdrawn by circular No. 607 dated 19-12-1998 which is challenged in this petition and the petitioner has prayed for quashing of the same. By this circular of 1998 the earlier circular of 1993 was withdrawn. The circular was made operative immediately and prospectively.
5. The application of the circular is challenged by both the petitions, on almost identical grounds. It is submitted that such circular cannot affect auction purchasers, who purchase units under Section 29 of the State Financial Corporation Act as the same is not voluntary.
6. Mr. Naphade, Senior advocate appearing on behalf of the Sicon submitted that the impugned circular of 1998 is clearly contrary to the statutory provisions of the Electricity Act as also the law laid down by the Supreme Court under Article 141 of the Constitution of India. According to the learned counsel the circular is liable to be struck down in view of the judgment of the Supreme Court as also the judgment of this court. Heavy reliance was placed by the learned counsel on the judgment of the Supreme Court in case of Isha Marbles v. Bihar State Electricity Board and Anr. where the Supreme Court of India considered extensively the provisions of the Electricity Act, the State Financial Corporation Act and held that : "On sale under Section 29(1) of State Financial Corporation Act, of the premises for which supply of electricity had been disconnected for non-clearance of consumption charges by the previous consumer/owner would not render auction purchasers liable to meet the liability of the previous consumer in order to secure reconnection." The Supreme Court also in the case of Isha Marbles has observed thus :
"16. The electricity dues by the previous industry is a contractual liability between the industry and the respondent-Board. It is not statutory in nature since electricity is consumed by consumer on the basis of a written contract as prescribed in Form EB-70 approved by Section 26 of the Indian Electricity Act, 1910."
"20. Section 24 of the Electricity Act could be invoked only as against the person to whom energy has been supplied. Under Section 2(c) of the Electricity Act consumer means "any person who is supplied with energy". Therefore, the liability to pay electricity dues is obviously fastened only to the consumer."
"24. Insofar as this respondent had not consumed electricity, it was merely seeking reconnection and there being no statutory dues towards consumption charges, the Board cannot insist upon the respondent to pay the arrears owing by the erstwhile consumer, as a condition precedent to provide electricity connection. On the contrary, there is an obligation under Section 3(2)(f) and Section 22 of the Electricity Act read with Clause VI of Schedule I thereof to supply electricity. The said Clause VI of Schedule I contains conditions under which supply can be discontinued. Those conditions do not stipulate that the supply will be discontinued if the arrears of the electricity owing by an erstwhile consumer in the premises are not paid first. Such a precondition is illegal and ultra vires both the Acts. In Sanjay Dhingra v. M.P. Electricity Board, the High Court laid stress on a specific clause viz. Clause 22-A Without such a specific provision, it will not be possible to foist any such obligation to pay dues on a subsequent bona fide purchaser of assets like the present respondent."
7. The Supreme Court has also held that in view of the non-applicability of Section 24 of the transactions of the kind entered into by the petitioners herein the Board has no power to put such conditions of recovery for reconnection. As such conditions can be imposed as held by the Supreme Court only to persons who factually consumed the electricity.
8. This judgment was considered by this court in its Bench at Aurangabad in W.P. No. 607 of 1998 and following the same, the Bench has held that no such recovery of the dues of previous owner can be made from the new purchaser all that the Board can demand for new connection and the charges necessary and permissible under the Rules for such new connection.
8-A. Mr. P. P. Chavan the learned counsel for the Board defended the circular by saying that issuance thereof was necessary to avoid mal practices by the defaulting consumers. According to him some of such consumer has the practice of selling units fictitiously to dupe the Board of lakhs of rupees of charges due for electricity supply. Therefore it was within the jurisdiction of the Board to issue such circular. This aspect of the matter was also considered by the Supreme Court and observed that the law as it stands is inadequate to enforce the liability of the previous contracting party against the auction-purchaser who is a third party and is in no way connected with the previous owner/occupier. Therefore there is no nexus or relationship or privity of the contract between the auction purchaser and the Board using such bills unpaid by the previous consumer can be recovered by auction purchaser.
9. In view of the Ruling of the Supreme Court in the light of Section 24 of the Act it is obvious therefore that the power to put conditions for electricity supply, as envisaged for the purpose of making recoveries of bills, the previous consumer cannot be called upon to clear the dues, as a condition of reconnection to a person, who is not and was not consumed in that sense. In the result therefore the petition succeeds and is allowed.
10. The circular dated 19-12-1998 is beyond the powers of the board under Section 24 of the Act and therefore is liable to be quashed for lack of jurisdiction. It is accordingly quashed.
11. The Board is directed to give reconnection to the petitioner, without taking into consideration the said circular which is quashed. If any dues are paid for the purpose of securing reconnection during the pendency of this petition by the petitioner in W.P. No. 5196/2001 is concerned, the same be adjusted by the board towards his future bills to the extend that the amount were not recoverable due to quashing of the said circular.