Calcutta High Court (Appellete Side)
M/S M.K. & Sons vs C.E.S.C. Limited & Ors on 25 August, 2011
Author: Pinaki Chandra Ghose
Bench: Pinaki Chandra Ghose
1
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELALTE JURISDICTION
APPELLATE SIDE
M.A.T. No. 1392 of 2010
+
C.A.N. No. 9172 of 2010
M/s M.K. & Sons
VS.
C.E.S.C. Limited & Ors.
BEFORE:
The Hon'ble Justice PINAKI CHANDRA GHOSE
A N D
The Hon'ble Justice SHUKLA KABIR (SINHA)
For Appellant : Mr. Pratap Kumar Chatterjee, Sr. Advocate
Mr. Sakya Sen, Adv.
Mr. Ahteshan Islam, Adv.
Mr. Bakhtias Ali Shah, Adv.
Ms. Srinanda Sen, Adv.
For Respondent (C.E.S.C.) : Mr. Anindya Mitra, Sr. Adv.
Mr. Subir Sanyal, Adv.
Mr. Srijan Nayak, Adv.
Heard on : 22.03.2011 and 23.03.2011 Judgment on : 25.08.2011.
PINAKI CHANDRA GHOSE, J.: This appeal is directed against an order and/or judgment dated 6th September, 2010. The Hon'ble Single Judge after hearing the parties was pleased to direct as follows:-
"14. So I dispose of this writ application with the following directions:
a) That the present writ petitioner is liable to pay the arrears of Rs.35,17,687/- as demanded by the respondents either in full or by 2 instalments as may be granted by the CESC Limited within such time as will be fixed by them on prayer of the firm, if made;
b) Upon payment of such dues in full the CESC Limited shall supply electricity to the writ petitioner as prayed for within one month from the date of full payment of the outstanding dues and upon compliance of all other formalities as may be required by the supplier."
Being aggrieved, this appeal has been filed by the appellant. The facts of the case briefly are as follows:-
In September 2007 the appellant took tenancy of a portion of premises No. 9X, Abinash Chowdhury Lane, Kolkata-700046. Thereafter, the writ petitioner in the month of June 2008 applied for a new electric connection at the said tenanted portion. The licensing authority (CESC Ltd.) intimated the writ petitioner on 8th July, 2008 that before the supply is effected the writ petitioner has to resolve the dispute with regard to the outstanding dues in respect of the consumption of electricity at the said premises enjoyed by the previous consumer. The writ petitioner contended before the said authority that writ petitioner is not entitled to pay the third party's liability for such consumption of electricity. However, no steps were taken by the CESC Ltd. Hence, on 20th April, 2009 the writ petitioner issued a notice demanding justice which was duly replied on 30th April, 2009 by CESC Ltd. informing the writ petitioner that unless the arrears of the previous consumer on account of consumption of electricity is 3 paid no steps can be taken by them. In these circumstances, the writ petitioner filed the writ petition challenging such demand on behalf of the CESC Ltd.
The question raised in this appeal is that:
(a) whether the respondent can withhold the supply of electricity if there is any nexus between the erstwhile consumers and the present occupier/tenant?
(b) whether the respondent/CESC Ltd has right to claim the defaulted amount of the erstwhile consumers from the present occupier/tenant?
The contention of the writ petitioner is that the writ petitioner/appellant is a registered partnership firm comprised of four persons namely Md. Husain Shah, Fateh Ali Shah, Ahmed Shah and Monowar Ali Shah. It is admitted that all the partners are sons of Late Md. Kamgar Shah. The Deed of Partnership was executed on 4th January, 1980 and subsequently the partnership firm was reconstituted from time to time and on 3rd April, 1998 a Deed of Rectification was also executed by the aforesaid partners.
Md. Husain Saha, one of the partners of the appellant partnership firm, purchased about 6 Cottahs 25 Sq. Ft. out of the total area of 15 Cottahs 8 Chittacks together with structure standing thereon situate at premises No. 9/H/14, Abinash Chowdhury Lane, P.S.: Beniapukur, Kolkata-700046 at a very 4 low consideration price of Rs.15,00,000/-. Subsequently, the said portion was renumbered as premises No.9X, Abinash Chowdhury Lane, Kolkata-700046. The said portion was let out to the appellant partnership firm by Md. Husain Shah. Thereafter, the appellant partnership firm applied for supply of electricity at the said premises. The respondent CESC Ltd asked for payment of the outstanding dues of electricity charges Rs.12,27,140/- and Rs.28,58,934/-.
Mr. Pratap Chatterjee, learned Senior Advocate appearing on behalf of the appellant submitted that the Hon'ble Single Judge committed an error in observing that the writ petition has been filed in the name of the firm to conceal the identity of partners. His Lordship further held that the purchaser has taken up the liability of paying all outstanding dues of the vendor in respect of the said premises. His Lordship also came to the conclusion that there is clear proof of nexus by and between the parties to evade the outstanding liabilities of the consumption of electricity by theft or pilferage as stated by the respondent.
Mr. Chatterjee submitted that there is no question of concealment of the identity of the partners in filing the said writ petition in the name of the partnership firm. He further submitted that the Hon'ble Single Judge has misconstrued the facts of the case and thereby has committed an error in coming to such conclusion.
According to Mr. Chatterjee, except the purchaser Md. Husain Shah none of the partners have acquired any right title and interest over the said premises 5 except having a right to use the said premises as a tenant thereof. The alleged theft of electricity was committed by one Md. Nadeem, having his consumer No. 29188044010, Meter No. 2130297-K for industrial use and the said supply was disconnected on 13th January, 2005 default to pay the said amount. According to Mr. Chatterjee there is no nexus between the Md. Nadeem and the writ petitioner or its partners.
The alleged theft of electricity was also committed by M/s Plasto Wings having consumer No. 29188048000, Meter No.2141671-K, for industrial use and supply of electricity was disconnected on 5th January, 2007 and a demand of Rs.22,90,547/- was made. Therefore, it is submitted that there is no nexus or connection between the firm or its partners with the said theft of electricity committed by Md. Hussain Shan and M/s Plasto Wings the previous defaulted consumer of the said premises.
He further submitted that the Hon'ble Single Judge has committed an error in coming to the conclusion that there is nexus amongst themselves and to assume new identity to evade such liability.
According to Mr. Chatterjee, in the facts and circumstances of the present case the opinion of the Hon'ble Single Judge is detrimental and cannot be sustained in the eye of law, since from these facts it would appear that there is no nexus between the erstwhile consumers and the present appellant/writ 6 petitioner. He further submitted that the payment of Rs.35,17,687/- cannot be claimed by the CESC Ltd from the present occupier/writ petitioner.
In this connection, it is further pointed out that the Hon'ble Single Judge has failed to apply the provisions of the Regulation 3.4.2 of the West Bengal Electricity Regulatory Commission (Standards of Performance of Distribution Licensees Relating to Consumer Services) Regulations, 2005. It is submitted that under the said provision it is clearly stipulated that onus of proving a nexus, if claimed by a licensee, it has to be discharged by the licensee. The CESC Ltd being the licensee failed to discharge its liability. He pointed out that under Section 43(3) of the New Electricity Act, 2003 the licensee is bound to give supply to the writ petitioner/appellant herein. Accordingly it is submitted that the issues which have been raised by the appellant in this matter should be answered in the affirmative in favour of the appellant.
On the contrary, Mr. Anindya Mitra, learned Senior Advocate submitted that Md. Husain Shah knew well that a huge outstanding dues of Rs.40,85,534/- was payable in respect of the said premises by the erstwhile two consumers/owners on account of pilferage of electricity. The purchase was made at a very under rated value of Rs.15,00,000/- when the value of land in question per cottah in the said area was Rs.6,00,000/-. Furthermore, it is submitted that the same place in the premises is being used by the appellant where the new supply has been asked for by them.
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He drawn our attention to the Deed of Sale dated 10th September, 2007, in particular Clause 4 of the said Deed of Sale which is reproduced hereunder: -
"AND THAT the Vendor hereby declare and assure the Purchaser that all rates, taxes, revenues and other outgoings in respect of the said property prior to the date of execution of these presents have been paid and cleared in full and no amount is outstanding and the Vendor hereby undertake to keep the Purchaser saved, harmless and indemnified against any claims, demands, expenses, losses, actions and proceedings as may be suffered by the Purchaser, his heirs, executors, administrators, legal representatives and assigns arising out of any non-payment thereof."
In these circumstances, the Hon'ble Single Judge has come to the conclusion that the partners of the appellant partnership firm had full knowledge of the said outstanding dues of electricity charges. By the said Clause the purchaser has taken up the liability of paying all the outstanding dues of the vendor. Therefore, it is apparent on the face of the record that although the ownership has been retained by Md. Husain Shah but the premises has been occupied in the name of a partnership firm as a tenant to which a partner of the appellant had an interest.
Therefore, the said fact clearly shows that to evade the outstanding liabilities of the consumption of electricity the appellant took the tenancy from one of its partners to avoid the responsibility of payment of the outstanding dues. 8 It would be evident from the fact that there is a clear nexus between the appellant partnership firm and its partners vis-à-vis erstwhile owners/erring consumers.
It is also pointed out that according to Clause 13.9 of the West Bengal Electricity Regulatory Commission (Standard of Performance of Licensees Relating to Consumer Services) Regulations, 2010 for getting new connection for supply of electricity from a licensee an intending consumer shall be responsible for payment of outstanding dues/charges calculated in a pro rated manner, if it is established that he or she had a nexus with the previous consumer including the purchaser/new lessee/new tenant of a property or a portion thereof in respect of which there are outstanding charges and/or who has/had benefited from non-payment of the aforesaid outstanding dues by the previous consumer to the licensee.
Mr. Mitra, learned Senior Counsel appearing on behalf of the respondent also drew our attention to 2007(1) CHN 210 (Pashi Metals Pvt. Ltd. Vs. WBSEB & Ors.). He further drew our attention to a decision Paschimanchal Vidyut Vitran Nigam Ltd. & Ors. Vs. DVS Steels and Alloys Pvt. Ltd. & Ors. reported in 2009 (1) SCC 210 where the Supreme Court held that the stipulation by the distributor that the dues in regard to the electricity supply to the premises should be cleared before electricity supply is restored by a new connection is given to a premises cannot be termed as unreasonably or arbitrary. Accordingly 9 he submitted that the appellant/writ petitioner is liable to pay the outstanding dues for having a new connection at the said premises.
He further drew our attention to a decision reported in 2010 (2) CLJ 450Paras 3, 4 and 5 (The Assistant Engineer and Anr. Vs. Sri Nirmal Kumar Mondal And Anr.) and also in an unreported decision dated 17th March, 2010 passed in F.M.A No.2427 of 2010 (West Bengal State Electricity Distribution Company Limited & Anr. Vs. Rabi Jain) where it is held that the licensing company can include a condition in the agreement for that new supply should be made after the outstanding dues of the erstwhile occupiers/owners are cleared by the new consumer.
He also relied upon the decision reported in AIR 2010 SC 3835 (Haryana Sate Electricity Board Vs. M/s Hanuman Rice Mills, Dhanauri & Ors.) and submitted that the said decision has no application in the facts and circumstances of the present case since the said decision was in relation to the Indian Electricity Act, 1910 and the Rules framed thereunder whereas the instant case is guided by the Electricity Act, 2003.
We have also noticed that the Hon'ble Single Judge on the question of nexus held as follows:-
"10. .....What is apparent on the face of record that four sons of Late Md. Kamgar Shah are running the petitioner firm as partners from 04.01.1980 and theft of electricity occurred within their full knowledge 10 in the premises in respect of which they have executed rectification deed as above. Considering all these facts I hold that there is nexus between the previous owner and the present firm, i.e., amongst all those four brothers seeking supply of electricity for commercial purpose in the same premises without paying any outstanding dues and by indemnifying the previous owner in written instruments amongst the partners of the firm to evade the liability and to deprive the respondent CEST Limited of its legitimate claim of recovery of arrears by suppressing existing fact in round about way.
11. So I hold that where four brothers forming a registered partnership firm are running a business in a premises where theft of electricity has been taken place they are jointly and severally liable to pay the outstanding dues claimed by the CESC Ltd. even after shifting of venue and change of status of the occupier firm because of their clean knowledge of such fact and nexus amongst themselves to assume new identity to evade such liability.
12. I also hold that where such nexus is proved from instrument of partnership and rectification deed amongst four brothers, they are bound to clear the dues of the CESC Ltd in respect of the place of business of their firm in terms of Regulation 3.4.2 of the West Bengal Electricity Regulatory Commission (Standards of Performance of Distribution Licensee Relating to Consumers Service) Regulations, 2005 and that they shall be entitled to get commercial connection for supply of electricity for the firm only after discharging such liabilities and after due performance of all other statutory formalities irrespective of the fact whether such prayer is made either by a partner or on behalf of the partnership firm."11
We have noticed the materials placed before us and it appears to us that all the four partners are the sons of Late Md. Kamgar Shah. It is not in dispute that the new partnership business deemed to have commenced from April 2009 with all its partners' assets, liabilities, benefits and privileges belong to the old firm. It is also not in dispute that the said property has been purchased by Md. Husain Shah at a very low consideration price of Rs.15,00,000/-. Admittedly the property situated at prime location and all the partners had full knowledge of assets and liabilities of M/s M.K. Sons which has been devolved upon the new partnership. By a further Deed of Rectification of partnership they intended to continue the old partnership business at new premises. Therefore, it is accepted that all the liabilities as well as the assets of the said firm has been devolved upon the new partnership. It is no doubt that in the writ petition the appellant tried to prove to be a tenant in respect of the said premises. Md. `Husain Saha although the purchaser, but the intention to bring the partnership firm as a tenant at the said premises is nothing but to by-pass the claim of the CESC Ltd, so that supply of electricity can be effected in the name of M/s M.K. & Sons and not in the name of Md. Husain Saha who is admittedly a partner of the said firm. Therefore, this action on the part of the firm was also known to each one of the partners. Therefore, evidently all the partners had knowledge of the fact that there are liabilities and the conduct of the partners of the said firm would show that action on the part of the firm is nothing but to evade the outstanding liabilities. It appears that under Section 25 of the Indian Partnership Act each partner is jointly and separately liable to shoulder the liability of the firm. 12
Therefore, with regard to the issue of nexus we do not have any hesitation to accept the findings of the learned Single Judge.
We have also noticed Regulation 3.4.2 of the West Bengal Electricity Regulatory Commission (Standards of performance of Distribution Licensee Relating to Consumers Services) Regulation, 2005, which is reproduced hereunder: -
"3.4.2 The licensee shall be eligible to recover from a new and subsequent consumer(s) the dues for the previous and defaulting consumer(s) in respect of the same premises only if a nexus between the previous and defaulting consumer(s) and the new consumer(s) in respect of the same premises is proved. The onus of proving a nexus, if claimed by a licensee, shall lie on the licensee."
We have noticed in Paschimanchal Vidyut Vitran Nigam Ltd. & Ors. Vs. DVS Steels and Alloys Pvt. Ltd. & Ors. reported in 2009 (1) SCC 210 where the Supreme Court observed as follows:-
"But the above legal position is not of any practical help to a purchaser of a premises. When the purchaser of a premises approaches the distributor seeking a fresh electricity connection to its premises for supply of electricity, the distributor can stipulate the terms subject to which it would supply electricity. It can stipulate as one of the conditions for supply, that the arrears due in regard to the supply of electricity made to the premises when it was in the occupation of the pervious owner/occupant, should be cleared before the electricity supply is restored to the premises or a fresh connection is provided to the premises. If any statutory rules govern the 13 conditions relating to sanction of a connection or supply of electricity, the distributor can insist upon fulfillment of the requirements of such rules and regulations. If the rules are silent, it can stipulate such terms and conditions as it deems fit and proper, to regulate its transactions and dealings. So long as such rules and regulations or the terms and conditions are not arbitrary and unreasonable, courts will not interfere with them."
We have also considered the decision of Haryana Sate Electricity Board Vs. M/s Hanuman Rice Mills, Dhanauri & Ors. reported in AIR 2010 Supreme Court 3835 where the Supreme Court held that the appellant electricity board did not pleaded in its defence that any statutory rule or terms and conditions of supply, authorized it to demand the dues of previous owner, from the purchaser. Moreover such demand was made years after giving notice of a new connection to respondent auction purchaser. Therefore, the Supreme Court held that the demand made was illegal.
In our considered opinion, the said decision has no application in the facts and circumstances of this case. Under the Regulation 3.4.2 the licensee is entitled to recover the dues of the previous and defaulting consumer in respect of the same premises from a new and subsequent consumer if nexus between the previous and defaulting consumer and the new consumer in respect of the same premises is proved.
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After examining the materials placed before us and after considering the regulation 3.4.2 of the West Bengal Electricity Regulatory Commission (Standards of Performance of Distribution Licensees Relating to Consumer Services) Regulations, 2005, we find that the Hon'ble Single Judge has correctly held that there was nexus between the erstwhile consumers and the present tenant. We have further considered the Clause 4 of the Deed and after analyzing the said Deed we accept the contention of Mr. Mitra that the vendor is indemnified the purchaser Md. Husian Saha that all rates, taxes, revenues and other outgoings in respect of the said property have been paid and cleared in full and no amount is outstanding and by the said clause the vendor undertake to keep the purchaser saved, harmless and indemnified against any claims, demands, expenses, losses, actions and proceedings as may be suffered by the purchaser, arising out of any non-payment. Therefore, the purchaser, being the partner of the said firm is bound to pay the claims of the CESC Ltd and the CESC Ltd being the licensee shall have the right to claim the said outstanding dues from the vendor. In the given facts, it appears to us that Md. Husain Shah is the partner of the firm in question. Therefore, the letting out of the property in question of the firm, in our opinion, is a step to evade such claims of the CESC Ltd. Therefore, we hold that the appellant is bound to pay the said outstanding dues for obtaining the supply of electricity at the said premises in question.
On the given facts we hold that the Hon'ble Single Judge has correctly directed the writ petitioner to pay the arrears as demanded by the CESC Ltd and 15 upon such payment, supply shall be effected to the writ petitioner, the appellant herein.
Accordingly, we do not find that the said order suffers from any illegality or irregularity and we affirm the order passed by the Hon'ble Single Jude. We do not find any merit in this appeal. Hence we dismiss the appeal.
Photostat certified copy of this judgment, if applied for, be supplied to the parties.
(PINAKI CHANDRA GHOSE, J.) I agree.
(SHUKLA KABIR (SINHA), J.)