Karnataka High Court
B.K. Syed Zakir vs The Bangalore Electricity Supply ... on 24 February, 2005
Equivalent citations: AIR2005KANT289, ILR2005KAR1676, 2005(2)KARLJ546, AIR 2005 KARNATAKA 289, 2005 AIR - KANT. H. C. R. 1177, 2005 A I H C 2440, (2005) ILR (KANT) 1676, (2005) 2 KANT LJ 546, (2005) 2 KCCR 946
Author: N. Kumar
Bench: N. Kumar
ORDER N. Kumar, J.
1. The property bearing Sy. No. 43/H, Old Sy. No. 43 situated at Kotehal Village, Basavapattana Panchayat Limits, Channagiri Taluk, Davanagere District, belongs to M/s. K.G.N. Rice Industries Limited. They had availed loan from K.S.F.C. to set up the said industry. They had also obtained power supply from Karnataka Electricity Board. When they committed default in repayment of loan to K.S.F.C., the K.S.F.C. in exercise of its power under Section 29 of the State Financial Corporations Act, 1951, seized the entire unit and sold the same in public auction. As the petitioner was the highest bidder the K.S.F.C. sold the entire property including the power connection to the petitioner. A registered sale deed came to be executed on 30-9-2003 as per Annexure-B.
2. As the erstwhile owner had committed default in payment of electricity charges the electricity had been disconnected. The K.E.B. had filed a suit in O.S. No. 2 of 2003 before the Civil Judge Court, Davanagere, for recovery of the electricity dues from the said previous owner. The said suit is still pending enquiry.
3. The petitioner made an application to the respondents for fresh electricity connection on 14-11-2004. The respondents issued Annexure-A, dated 17-12-2004 refusing to supply electricity on the ground that as the petitioner has not paid a sum of Rs. 1,86,304-00 which is arrears due to the respondents from the previous owner. Aggrieved by the said endorsement, the petitioner has preferred this writ petition.
4. The learned Counsel for the petitioner assailing the said endorsement contends that the respondents are under obligation to provide fresh electricity connection to the petitioner. As the petitioner is not a party insofar as the claim of arrears is concerned, the said claim cannot be enforced against the petitioner, In support of his contention he relies on two judgments of the Supreme Court. One in the case of Isha Marbles v. Bihar State Electricity Board and Ors., , which was followed by yet another judgment of the Supreme Court in the case of Ahmedabad Electricity Company Limited v. Gujarat Inns Private Limited and Ors., . Therefore, he submits that the respondents have no right to demand the arrears of electricity due from the previous owner in respect of the said unit.
5. Per contra, the learned Counsel for the respondents contends that the law laid down in the aforesaid two judgments has no application to the facts of this case. In the sale deed which is executed in favour of the petitioner the petitioner has agreed to pay its liability of arrears of electricity charges. Secondly, he contended that in view of Regulation 4.34 of the Karnataka Electricity Board Electricity Supply Regulations, 1988, a right is conferred on the respondents to demand and collect the arrears payable by the erstwhile owner before giving connection. In the aforesaid judgment of the Supreme Court it is held that in the absence of any statutory provision or a charge created on the property the purchaser is not under obligation to discharge the arrears and therefore, he submits that the petitioner is not entitled to the relief sought for.
6. In the Isha Marbles, case referred to supra, the Supreme Court held that:
"Where the premises conies to be owned or occupied by the auction purchaser, when such purchaser seeks supply of electric energy he cannot be called upon to clear the past arrears as a condition precedent to supply. There is no charge over the property. What matter is the contract entered into by the erstwhile consumer with the Board. The Board cannot seek enforcement of contractual liability against the third party".
Therefore, it was held that:
"It is impossible to impose on the purchasers a liability which was not incurred by them. Though the auction purchasers came to purchase the property after disconnection but they cannot be "consumer or occupier" within the meaning of the above provisions till a contract is entered into".
In paragraph 63 of the judgment after noticing the provisions of Bihar State Electricity Board Regulations where there was no provision to make such claim, it was held that 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.
7. Following the said judgment, in the case of Ahmedabad Electricity Company Limited, the Supreme Court held that in a case of fresh connection though the premises are the same the auction-purchasers cannot be held liable to clear the arrears incurred by the previous owners in respect of power supply to the premises in the absence of there being a specific statutory provision in that regard.
8. Therefore, it is clear that Supreme Court in the aforesaid two judgments was dealing with the situation where there was no specific provision in the statute empowering the Electricity Board to demand the arrears due by the previous owner from the purchaser and in that context, as the law stood, they held that the claim for previous arrears is without authority.
9. Probably, it is because of these judgments the Karnataka Electricity Board while framing the Regulations have taken care to provide a specific statutory provision enabling them to claim such amount. Regulation 4.34 reads as under:
"If any person desires to have electricity for a premises for which the power supply agreement has been terminated (whether the service line is dismantled or not), he will be treated as fresh consumer and the Board reserves the right to collect the outstanding arrears from such person before connection is given".
10. Even in the subsequent Karnataka Electricity Regulatory Commission (Electricity Supply and Distribution) Code, 2000-01, the said provision is retained which is found at Section 4.12(v).
11. The K.S.F.C. an yet another authority, probably, with the experience they have gained over years, have taken care to see that in the sale deed executed in such public auctions, a specific clause is inserted foisting the liability on the purchaser to clear the arrears. Annexure-B the sale deed dated 30th September, 2003, under which the petitioner purchased this property contains a clause as under:
"that the purchaser shall pay all taxes, electricity charges, water consumption charges or any other taxes/charges (including arrears) regularly to the concerned authorities or Corporation or boards and get the Khatha transferred into his name".
12. In fact, the aforesaid provision of law was challenged before the Court as unconstitutional in W.P. No. 31929 of 1994, DD: 19-7-2000 in the case of Krishnappa (deceased) by L.R. v. Karnataka Electricity Board, Bangalore and Anr., 2000(6) Kar. L.J. 153. After considering the rival contentions and relying on the judgment of the Supreme Court referred to supra and others, this Court held that:
"The aforesaid Regulation is either arbitrary or unconstitutional. The provisions of Regulation 4.34 is a reasonable restriction and this restriction has rational and reasonable nexus with the object to be achieved by the Board, namely, recovery of amounts due to it from the consumer of electricity. While achieving this object, the Board by its impugned Regulations places a restriction of not granting fresh power supply to the same premises in respect of which if there has been an installation which is in arrears. Therefore, it can safely be said that the impugned provisions are intra vires of the Act".
The said judgment has become final.
13. It is necessary to notice what the Supreme Court has said in the aforesaid Isha Marbles case. In paragraph 63, the Supreme Court has held thus:
"63. ...... Law, in its majesty, benignly protects public property and behaves everyone to respect public property. Hence, the Courts must be zealous in this regard. But, 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. It may not be correct to state, if we hold as we have done above, it would permit dishonest consumers transferring their units from one hand to another, from time to time, infinitum without the payment of the dues to the extent of lakhs and lakhs of rupees and each one of them can easily say that he is not liable for the liability of the predecessor in interest. No doubt, dishonest consumers cannot be allowed to play truant with the public property but inadequacy of the law can hardly be a substitute for overzealousness".
14. Therefore, a duty is cast upon the Courts to protect the public property and see that such claims which would be against the interest of public are not encouraged. There is a statutory provision empowering the Board to claim the said amount, The Court has to give effect to the said right of the Board and not to find fault with that claim. In the instant case, the petitioner cannot have any grievance whatsoever, because he has purchased the property subject to the payment of electricity arrears, and it is made explicitly clear by insertion of a clause in the sale deed. Having accepted the liability to discharge the arrears due to K.E.B., it is not open to the petitioner to contend before this Court in the absence of mutuality between him and the K.E.B., the K.E.B. has no right to enforce the said claim.
15. The learned Counsel for the petitioner contended that when the K.E.B. has already instituted a suit to recover the said amount and if the petitioner were to pay the same amount as arrears due, the K.E.B. would be unjustly enriching itself by enforcing the decree against the previous owner. Therefore, he submits that in view of the pendency of the suit, the K.E.B. is estopped from claiming this amount. The K.E.B. would be entitled to the said arrears either from the previous owner or from the present owner. They cannot get it from both. If the present owner pays the money and takes a fresh connection and in the event the K.E.B. were to obtain a decree against the previous owner, the K.E.B. is under an obligation to make over the said decree to the petitioner. Therefore, I do not find any merit in any of the contentions. Hence, I pass the following order:
Writ petition is disposed of as under:
(a) In the event of petitioner paying the entire arrears as demanded by the K.E.B. he would be entitled to a fresh connection of electricity.
(b) If after the payment of money by the petitioner, the K.E.B. were to obtain a decree against the previous owner, it is open to them either to assign the decree at the cost of the petitioner or recover the money and pay the same to the petitioner.