Gujarat High Court
Abhisar vs Torrent on 14 September, 2010
Equivalent citations: AIR 2011 GUJARAT 1
Author: Ks Jhaveri
Bench: Ks Jhaveri
Gujarat High Court Case Information System
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SCA/4669/2007 13/ 13 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 4669 of 2007
With
SPECIAL
CIVIL APPLICATION No. 2160 of 2007
With
SPECIAL
CIVIL APPLICATION No. 17053 of 2007
HONOURABLE
MR.JUSTICE KS JHAVERI
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1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
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ABHISAR
DEVELOPERS - Petitioner(s)
Versus
TORRENT
POWER LIMITED - Respondent(s)
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Appearance
:
MR MAYUR RAJGURU, MR B.T. RAO
AND MR H.A. DAVE for Petitioners
MR KB PUJARA for Respondent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE KS JHAVERI
Date
: 14/09/2010
ORAL
JUDGMENT
1.0 In all these petitions common question of law is raised and therefore all these petitions were heard together and are being decided by this common judgement.
2.0 In all these petitions the respondent licensee Electricity Company had granted electric connections to the respective premises long back. The said electric connections were disconnected by the Respondent Company in exercise of its powers under section 24 of the Indian Electricity Act, 1910, due to non-payment of electrical energy charges as well as the corresponding Government Electricity Duty and Tax and Tax on sale of electricity.
2.1 The petitioners herein have purchased the concerned premises (wherein the electricity supply was discontinued due to non payment of charges) in auction held in winding up proceedings under the Companies Act,1956 or under Secularization and Reconstruction of financial Assets and Enforcement of Security Interest Act, 2002.
2.2 When the petitioners approached the respondent electricity company for electric supply at the said premises the respondent insisted that unless and until the outstanding dues of the electric connections at the said premises are paid the respondent company would not be in a position to give electric supply to the petitioners. It is under these circumstances that the present petitions have been preferred.
3.0 Learned Advocate for the petitioners raised the following contentions:
3.1 The application of the petitioners for grant of fresh power connection is after enactment of the Electricity Act, 2003 (Act of 2003).
Accordingly the provisions of Electricity Act, 2003 would apply in relation to such application.
3.2 As per section 43 of the Act, 2003, the respondent, which is a distribution licensee within the meaning of section 2(17) of the Act, is obliged to give supply of electricity within one month.
3.3 The GERC has framed Electricity Supply Code under section 50 of the Act, 2003. This code provides for regulations based on which the power is required to be supplied by the Distribution Licensees. These regulations are to be applied uniformly by all the Distribution Licensees in the State of Gujarat.
3.4 There is no provision in the Act or the Regulations permitting the respondent company to recover the dues of the predecessor. On the contrary, the Division Bench of this court has held that the supply code does not permit the respondent company to demand dues of the earlier consumer from the new applicant.
3.5 In the case of Raipur (Rakhial) Commercial Cooperative Housing Society Ltd. Vs. Ahmedabad Electricity Company Ltd. (2005)3 GLR 2689, this court has held that the respondent company cannot insist upon the payment of arrears of electricity dues for grant of power supply to the concerned petitioner. This judgement has been upheld by the Division Bench in the case reported in (2006) 3 GLR 1944.
3.6 The petitioners have also relied upon the following decisions:
[1] Isha Marbles Vs Bihar State Electricity Board, reported in 1995 (2) SCC
648.
[2] Ahmedabad Electricity Company Limited Vs. Gujarat Inns Pvt. Ltd., reported in 2004(3) SCC 587.
3.7 Thus, the learned Advocates for the petitioners submitted that the respondent Electricity Company cannot insist that unless and until the outstanding dues of the electric connections at the concerned premises prior to the auction purchase are paid, the respondent company would not grant electric supply to the petitioners.
4.0 Mr. K.B. Pujara, learned Advocate for the respondent Electricity Company has raised the following contentions:
4.1 The petitioners have purchased the concerned premises wherein the electricity supply was discontinued due to non payment of charges, in auction held in winding up proceedings and the auction was held "As is where is and whatever there is" basis and purchasers were given the opportunity to inspect the premises before the auction.
Therefore as held by the Apex Court in Dakshin Haryana Bijli Vitran Nigam Limited Vs. M/s Paramound Polymers (Pvt) Ltd., reported in JT 2006 (9) SC 349, it is not as if the petitioner was an ignorant party, and before submitting the bid the purchaser would certainly have inspected the premises and could have come to know that the power connection to the premises had been snapped and this information should have put him on reasonable inquiry about the reasons for power disconnection leading to information that the previous owner of the undertaking or the consumer was in default and any reasonable inquiry by the prudent person would have put him on notice of subsistence of such liability.
4.2 Mr. Pujara has submitted that after the Division Bench judgement of this court in Torrent Power AEC Limited (supra), the Apex Court has rendered two decisions viz. (i) Dakshin Haryana Bijli Vitran Nigam Limited vs. M/s Paramount Polymers (Pvt) Ltd reported in JT 2006 (9) SC 349 and (ii) Paschimanchal Vidyut Vitran Nigam Ltd vs DVS Steels and Alloys Pvt Ltd reported in 2009 (1) SCC 210.
5.0 This Court has heard learned advocates for the respective parties at length and perused the papers on record. Under section 24 of the Indian Electricity Act, 1910 the licensee had power to recover the charges by filing Civil Suit and also the right to discontinue the supply of electrical energy to the consumer who neglects to pay the charges and to keep the supply discontinued until the charges are paid. In these cases the petitioners have purchased properties of another company in public auction. After purchase of the property the petitioners have applied for electricity connection. However, the respondent has refused the same on the ground that there are arrears of the previous consumer and the electricity connection be granted.
5.1 On a conjoint reading of section 2(17), the definition of Distribution Licensee, Section 14 the provision regarding grant of licence to the Distribution Licensee by the State Commission, section 15 the procedure to grant license, section 19 the provision regarding revocation of license by the State Commission in the event the licensee acts contrary to the Act or the Regulations, section 43 - the duty to supply power on request, etc. would demonstrate that as per the scheme of the Act, 2003 the electricity companies are known as the Distribution Licensee and they are obliged to act strictly as per the Act and the Regulations framed by the State Commission i.e. Gujarat Electricity Regulatory Commission (GERC). They have no independent right to prescribe any different terms or conditions than what is stipulated in the Act and/or the Regulations.
6.0 In view of the Division Bench judgement in the case of Vallabhbhai Lakhmanbhai Patel (decd.) through heir vs. State of Gujarat reported in 2006(3) GLR 1944 which is not stayed by the Apex Court in SLP preferred by the Ahmedabad Electricity Company, the law on the subject is very clear. In that view of the matter, as on today it can be said that the respondent company has not followed the law. However, an endeavour is made to take shelter of the observations made by the Apex Court in subsequent judgements which are as under.
"...it is not as if the petitioner was an ignorant party, before submitting the bid the purchaser would certainly have inspected the premises and could have come to know that the power connection to the premises had been snapped and this information should have put him on reasonable inquiry about the reasons for power disconnection leading to information that the previous owner of the undertaking or the consumer was in default and any reasonable inquiry by the prudent person would have put him on notice of subsistence of such liability."
7.0 After considering the law on the subject it is evident that the officers of the respondent company are required to follow the law namely, they ought to have filed civil suit against the defaulter and having failed in doing so, the dues of the earlier owner which are more than three years old are time barred. The claim of the respondent company is therefore time barred today. Even while public notice was given for auction of the property the respondent authority has not objected and therefore it would not be appropriate for the respondent authority now to deprive the petitioners of their rights which they have acquired after the purchase of property in public auction either through official liquidator or state financial corporation or bank or public institution for which prima facie assumption is that they have complied with the requirements under the law. It is required to be noted that the dues are against the consumer and not against the land or property. In that view of the matter, the conduct of the respondent company is required to be viewed very seriously and for their omission the petitioners should not be deprived of their huge investment made after due diligence. There is no claim lodged before any of the authorities and therefore the respondent company is not covered by lis pendens or any other principle on dues of property.
8.0 The judgement of the Apex Court in the case of Paschimanchal Vidyut Vitaran Nigam Ltd. Vs. DVS Steels and Alloys Pvt. Ltd., reported in (2009) 1 SCC 210, is not applicable to the facts of the present case inasmuch as this judgement arose from the proceedings which started in April 1994 i.e. when the earlier Act viz. Electricity (Supply) Act, 1948 was in operation. The Act of 2003 has different provisions and there is a new supply code prepared by GERC under section 50 of the said Act. Furthermore, the judgement refers to the then applicable supply code of State of Uttar Pradesh. The said supply code are not applicable to the consumers of the State of Gujarat. The consumers of the State of Gujarat are governed by the supply code/regulations framed by the GERC under section 50 of the Act.
8.1 It is pertinent to note that the auction either through Official Liquidator or by State Financial Corporation under State Financial Corporation Act or Secularization Act or by the Bank or public institution are held after giving due public notice. The respondent Company should have put forth their claim at that stage or even earlier in the proceedings pursuant to which such auction was held. Respondent Company ought to have filed its claim as a creditor of the Company which was being liquidated. After having not participated or sat silent during such proceedings they cannot now claim the alleged previous dues from the auction purchaser. If the auction purchaser says that he does not want reconnection, but wants a new connection to the premises purchased by him under the auction, I do not think any law would protect the respondent company for its action of refusal to give such connection. Thus, having not participated or made a claim for their dues in the liquidation proceedings, the respondent company must be deemed to have given up their dues. In any event, their remedy is against the original owner and/or the sale proceeds of the property in question in the hands of the Official Liquidator or the financial institutions and not against the auction purchaser. It appears, the refusal of the Company is an effort to overcome the inaction on the part of the concerned officials of the respondent Company in not diligently acting in realizing the dues of the Company at the proper stage.
8.2 It is also required to be noted that these are the resumption charges and not taxes and therefore this will be covered by purely the terms of contract. If the contention of the respondent is allowed to be accepted then a tenant or lessee using property of landlord is not paying dues of the electricity company the property of landlord cannot be auctioned or cannot be withheld at the instance of the default of the consumer. Further it is also required to be noted that if the subsequent purchaser or tenant is asked to pay the charges of the previous owner, no prudent person would be willing to invest in a resale property or in auction proceedings. At the end of the day the government shall also be at a loss. Merely because the authority failed to recover the amount from the initial owner, they cannot deny the right of the subsequent purchasers purchasing the said property. In that view of the matter, the observation made by the Apex Court is required to be suitably interpreted. The observations of the Apex Court shall apply only in case when public auction is collusive and only with a view to avoid dues of the electricity company. No such allegation is made in any of these matters.
9.0 At this stage it would be advantageous to refer to a decision of the Apex Court in the case of Haryana State Electricity Board V. M/s Hanuman Rice Mills & Ors, reported in JT 2010 (8) SC 619. In the said decision the Apex Court considered the case of Isha Marbles Vs. Bihar State Electricity Board [(1995)2 SCC 648], Dakshin Haryana Bijli Vitran Nigam Ltd. V. Paramount Polymers (P) Ltd [(2006)13 SCC 101], and Paschimanchal Vidyut Vitran Nigam Ltd. V. Excell Buildcon Pvt. Ltd. [2008 (10) SCC 720]. The apex Court observed therein as under:
"9. The position therefore can may be summarized thus:
[I] Electricity arrears do not constitute a charge over the property. Therefore in general law, a transferee of a premises cannot be made liable for the dues of the previous owner/occupier.
[ii] Where the statutory rules or terms and conditions of supply which are statutory rules or terms and conditions of supply which are statutory in character, authorize the supplier of electricity, to demand from the purchaser of a property claiming re-connection or fresh connection of electricity, the arrears due by the previous owner/occupier in regard to supply of electricity to such premises, the supplier can recover the arrears from a purchaser.
Position in this case:
10. The appellant did not plead in its defence that any statutory rule or terms and conditions of supply, authorized it to demand the dues of previous owner, from the first respondent. Though the appellant contended in the written statement that the dues of Durga Rice Mills were transferred tot he account of the first respondent, the appellant did not specify the statutory provision which enabled it to take such a claim. The decision in Paramount Polymers shows that such an enabling term was introduced in the terms and conditions of electricity supply in Haryana, only in the year 2001. The appellant did not demand the alleged arrears, when first respondent approached the appellant for electricity connection in its own name for the same premises and obtained it in the year 1991. More than three years thereafter, a demand was made by the appellant for the first time on 16.1.1995 alleging that there were electricity dues by the previous owner. In these circumstances the claim relating to the previous owner could not be enforced against the first respondent."
9.1 Thus, the electricity arrears do not constitute a charge over the property and therefore in general law, a transferee of a premises cannot be made liable for the dues of the previous owner/occupier. A transferee of the premises or a subsequent occupant of a premises with whom the supplier has no privity of contract cannot obviously be asked to pay the dues of his predecessor in title or possession, as the amount payable towards supply of electricity does not constitute a charge on the premises. A purchaser of a premises, cannot be foisted with the electricity dues of any previous occupant, merely because he happens to be the current owner of the premises. In the present case the learned Advocate for the respondent is not in a position to show any statutory rules or terms that the arrears due in regard to the supply of electricity made to the premises when it was in the occupation of the previous owner/occupant, should be cleared before the electricity supply is restored to the premises or a fresh connection is provided to the premises. In absence of any such term or rule, the claim relating to the previous owner cannot be enforced against the petitioners.
10.0 At this stage, learned Advocate for the respondent Electricity Company stated that the very same issue is pending before the Apex Court in Special Leave Petitions preferred by the respondent in other matters.
11.0 For the foregoing reasons, the petitions are allowed, subject to the petitioners giving an undertaking that they shall abide by the decision of the Apex Court which has been pending in the SLP preferred by the Ahmedabad Electricity Company is allowed. The respondent electricity company shall provide electric connection to the petitioners on their making necessary payment of connection charges, if not already made. Rule is made absolute in each petition accordingly with no order as to costs.
12.0 At this stage, Mr. Pujara, learned Advocate, requests to stay the present order for a period of two weeks. The request is granted. This order is stayed for a period of two weeks from today.
(K.S. JHAVERI, J.) ar Top