Gujarat High Court
Bipin Laxmanbhai Kathiriya vs Gujarat State Financial Corporation on 18 August, 2023
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 18942 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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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 or any order made thereunder ?
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BIPIN LAXMANBHAI KATHIRIYA
Versus
GUJARAT STATE FINANCIAL CORPORATION
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Appearance:
MR BM MANGUKIYA(437) for the Petitioner(s) No. 1,2,3,4,5,6
MS BELA A PRAJAPATI(1946) for the Petitioner(s) No. 1,2,3,4,5,6
MR AS ASTHAVADI(3698) for the Respondent(s) No. 1
MS LILU K BHAYA(1705) for the Respondent(s) No. 3,4
NOTICE SERVED BY DS for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 18/08/2023
CAV JUDGMENT
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1.Heard learned advocate Mr. B.M. Mangukiya for the petitioners, learned advocate Mr. A.S. Asthavadi for the respondent no.1 and and learned advocate Ms. Lilu K. Bhaya for respondent nos. 3 and 4
2.Since the issue involved in this petition is in a narrow compass, with the consent of learned advocates for the respective parties, the petition is taken up for hearing.
3.By this petition under Article 226 of the Constitution of India, the petitioners have prayed for a direction to hold and declare the action of respondent Dakshin Gujarat Vij Company Limited demanding the amount due and payable for the electricity connection of the erstwhile owner M/s. Vaishnav Fabrics Pvt.
Ltd. with delayed payment charges and interest as ex-facie illegal, arbitrary and contrary to the guidelines issued by the Page 2 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined Government of Gujarat vide its resolutions dated 07.02.2004, 21.05.2005, 05.09.2005 and 24.09.2008.
4.Brief facts of the case are that the petitioners was the successful bidder for purchase of the property situated at Plot no.G/3-A, Revenue Survey No.55, Block No. 46, Pipodra, pursuant to the auction advertisement to sell the properties of M/s.
Vaishnav Fabrics Pvt. Ltd. by the respondent no.1 Gujarat State Financial Corporation (for short "GSFC")under section 29 of the State Financial Corporations Act, 1951 (For short "the SFC Act").
4.1) It is the case of the petitioners that offer of the petitioners having been found highest, Letter of Acceptance of offer dated 06.08.2010 for consideration of Rs.12,02,000/- was issued. The petitioner Page 3 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined paid the consideration within the stipulated time, however the sale deed was executed by the respondent no.1 GSFC on 28.03.2022.
4.2) It is the case of the petitioners that when the sale deed was executed, the petitioners were informed that on the basis of resolutions of the State Government dated 07.02.2004, 21.05.2005, and 24.09.2008 the petitioners are only liable to make payment of taxes as referred to local taxes and the petitioners would not be responsible for payment towards any liability of the Sales Tax Department and/or Electricity Board as per clause (7) of the sale deed. Clause (7) of the sale deed reads as under:
"7. Any taxes, local bodies charges, Stamp Duty, double Stamp Duty, Registration Charges, Transfer Fee, Pending Stamp Duty under 32-C with penalty and other if any are to be paid by the Purchaser. The purchaser hereby further confirms and agrees that Save & Except the claims liabilities of Sales Tax and Gujarat Electricity Board, if any other Page 4 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined liabilities/claims of Government which is found payable in accordance with law in respect of the 'Said Land', shall be paid by the Purchaser: in accordance with law. Likewise, dues or claims of Local Authorities, if any, found payable, in accordance with law shall also be paid by the Purchaser in accordance with law. In no case, the Vendor herein shall be liable or responsible for payment of any such dues/claims excepts Sales Tax dues and Gujarat Electricity Board dues of the Industrial concern which shall be subject to Government of Gujarat, Industries & Mines Department, Gandhinagar G.R. Nos. GFC (GIC) 102003-1711-P dated 07.02.2004, GFC (GIC) 102003-1711-P dated 21.05.2005, GFC (GIC) 102003-
1711-P dated 0.09.2005 &
GIC/1007/1633/P dated 24.09.2008,
and subsequent GR, if any, as the assets are sold on "AS IS WHERE IS BASIS".
4.3) The petitioners thereafter received a communication dated 25.05.2022 whereby the petitioners were informed that pro-rata payment has been made to Gujarat Urja Vikas Nigam Ltd. (GUVNL) amounting to Rs.1,16,000/- on 28.03.2012 as per Government Resolution dated 07.02.2004.
Page 5 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined 4.4) The petitioner no.6 thereafter made an application dated 04.07.2022 before respondent no.3 Dakshin Gujarat Vij Company Ltd. to release the electric connection.
4.5) It is the case of the petitioners that erstwhile company M/s. Vaishnav Fabrics Pvt. Ltd. is alleged to have been involved in theft of electricity in the year 1994-1995 for which supplementary bill was given to it and the respondent electricity company is now threatening to recover the amount due and payable from the said company from the petitioners.
4.6) The petitioner no.6 received a communication dated 16.07.2022 from respondent no.3 informing that the amount of Rs.17,28,441.32/- is due and payable by the company and until such amount is paid with Page 6 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined delayed payment charges, no connection can be released.
4.7) The petitioners, therefore, being aggrieved by the said communication dated 16.07.2022 has preferred this petition for quashing and setting aside the same.
5.Learned advocate Mr. B.M. Mangukiya for the petitioners submitted that as per Government Resolution dated 07.02.2004, respondent no.1 Gujarat State financial Corporation has executed the sale deed stipulating the terms in Clause (7) of the sale deed. It was submitted that the Letter of Acceptance of Offer in the year 2010 was issued subject to payment of Sales Tax dues and dues of Gujarat Electricity Board of the company whose properties are purchased by the petitioners subject to Government Resolutions dated 07.02.2004, 21.05.2005 and 24.09.2008 of Government of Gujarat, Industries and Mines Page 7 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined department.
5.1) It was submitted that as per the Government Resolution dated 07.02.2004, it is resolved that when the sale is made under section 29 of the SFC Act, sale proceeds realized by auction would be apportioned between the outstanding dues of the Gujarat Electricity Board, Gujarat Industrial Development Corporation and Electricity charges of the State Government on pro-rata basis which would be coordinated by the Commissioner of Industries. It was therefore, submitted that action of respondent no.3 to refuse the electric connection is illegal and contrary to Articles 14 and 19 of the Constitution of India.
5.2) Learned advocate Mr. Mangukiya submitted that the petitioners are successful bidders in auction held under section 29 of the SFC Act and once the sale has been Page 8 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined confirmed and conveyance has been executed by respondent no.1 GSFC, the petitioners cannot be saddled with the electricity dues of the erstwhile owner in view of the Government Resolution dated 07.02.2004 and subsequent resolutions passed by the State Government.
5.3) It was therefore submitted that such resolutions were passed by the State Government so as to enable respondent no.1 Gujarat State Financial Corporation to hold auction without any liability of the dues of other Government departments. It was pointed out by learned advocate Mr. Mangukiya that respondent no.3 has accepted pro-rata amount made available to its share in the year 2012 and for ten years, no action has been taken for recovery of any amount, if at all, due and payable by the petitioners.
5.4) It was further submitted that the Page 9 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined properties purchased by the petitioners was for Rs. 12 lakhs in the year 2010 whereas outstanding dues sought to be paid by the petitioners is Rs. 17 Lakh with dealayed payment charges which would be more than Rs.40 Lakh. It was therefore submitted that the action of the respondents is ex-facie arbitrary waiting for more than ten years for claiming the dues which is absolutely time barred.
5.5) It was also submitted that the action of the respondents in demanding Rs. 17 lakhs together with overdue charge and interest without reference to any date is arbitrary and illegal. Respondent no.3 has failed to point out the details of dues, if any, except mentioning the amount relying upon Clause No.4.30 of the Supply Code, 2015 (For short "the Supply Code") framed by Gujarat Electricity Regulatory Commission Page 10 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined (GERC) which cannot be made applicable in facts of the case.
5.6) It was submitted that delayed payment charges and interest is also not quantified by the respondent no.3 in the impugned communication dated 16.07.2022 and therefore, such demand is contrary to the provisions of section 29 of the SFC Act and Government Resolution dated 07.02.2004 and other subsequent resolutions.
6.On the other hand, learned advocate Ms. Lilu K. Bhaya for respondent nos.3 and 4 -
electricity company submitted that Government Resolution(G.R.) dated 07.02.2004 was issued when the Gujarat Electricity Board was in existence and thereafter, Electricity Act, 2003 (For short "the Act, 2003") has come into force on 9.12.2004 and therefore, such G.R. cannot be said to be in force when the Page 11 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined transaction of sale took place in the year 2010. It was submitted that all the G.R. and guidelines which are issued after coming into force of the Act, 2003 cannot be implemented.
6.1) Learned advocate Ms. Bhaya referred to and relied upon section 43 of the Act, 2003 which empowers the respondent nos. 3 and 4 to release the connection on such terms and conditions as may be decided by the licensee.
Reliance was also placed on sections 45 and 46 of the Act, 2003 to submit that it is for the licensee to supply electricity on such terms and conditions which is prayed in view of Clause no. 4.30 of Supply Code framed by GERC.
6.2) It was submitted that respondent no.3 is entitled to recover the outstanding dues of M/s. Vaishnav Fabrics Pvt. Ltd. which owned the property which was sold under Page 12 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined section 29 of the SFC Act on 06.08.2010 and payment was made by petitioners on 21.03.2011. It was submitted that after a lapse of more than 11 years sale deed was executed between the petitioners and respondent no.1- GSFC on 08.04.2022.
6.3) It was submitted that in view of Clause No. 4.30 of the Supply Code, unless the petitioners pay the remaining outstanding dues of M/s. Vaishnav Fabrics, respondent nos.3 and 4 cannot release the new electric connection.
6.4) It was also submitted that petition is not maintainable in view of alternative remedy available to the petitioners as provided under section 42(5) of the Act, 2003 to approach the Consumer Grievances Redressal Forum and against the decision of Consumer Grievances Redressal Forum, the petitioners Page 13 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined can approach Electricity Ombudsman as provided under section 42(6) of the Act, 2003. However, the petitioners have straightway approached this Court by preferring this petition without availing the alternative efficacious remedy provided under the Act, 2003 and, therefore, the petition deserves to be dismissed relegating petitioners to avail alternative remedy.
6.5) Learned advocate Ms. Bhaya referred to and relied upon the decision of this Court in case of Jitendrabhai Babubhai Patel v. the Dakshin Gujarat Vij Co. Ltd. (Judgment dated 27.06.2022 passed in Special Civil Application No.9655 of 2022) wherein the petition is dismissed by relegating the petitioners to avail the alternative remedy.
6.6) Reliance was also placed on the decision of Apex Court in case of Maharashtra Page 14 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined Electricity Regulatory Commission v. Reliance Energy Ltd. and others reported in (2007) 8 SCC 381, wherein the Apex Court has referred to the judgment in case of Suresh Jindal v.
BSES Rajdhani Power Ltd. reported in (2006) 132 DLT 339 (DB).
6.7) It was submitted that the reliance placed by the petitioners on G.R. dated 7.2.2004 was issued prior to coming into force of the Act, 2003 and, as such, such resolution would not be applicable in view of provisions of section 185(2)(a) of the Act, 2003.
6.8) It was submitted that in view of repeal provision of section 185(2)(a) of the Act, 2003, all circulars, guidelines and resolutions issued by the Government of Gujarat which are inconsistent with the provisions of the Act, 2003 and Electricity Page 15 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined Supply Code which is framed in exercise of powers conferred upon GERC under section 50 of the said Act would not be applicable because such Supply Code would be binding upon all the consumers.
6.9) Learned advocate Ms. Bhaya referred to and relied upon Clause No. 4.1.11 of Supply Code wherein it is provided that irrespective of purchase of the property by consumer from auction or private transaction, the consumer is required to make payment of dues of the earlier consumer.
6.10) It was therefore, submitted that circulars, guidelines, resolutions or directives which are inconsistent with the provisions of Act, 2003 and the Supply Code will not have any force of law as the Supply Code is statutory condition having legal force and therefore, it is applicable, and it Page 16 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined is not unreasonable for the respondent nos. 3 and 4 to demand the outstanding dues of previous owner as a condition for release of new electric connection.
6.11) It was further submitted by learned advocate Ms. Bhaya that the amount which is received from respondent no.1-GSFC of Rs.
1,16,000/- in the year 2012 has been given credit and thereafter the outstanding amount is calculated by respondent nos. 3 and 4.
6.12) Learned advocate Ms. Bhaya referred to and relied upon the decision of the Apex Court in case of Telangana State Southern Power Distribution Company Limited and another v. Srigdhaa Beveragees reported in (2020) 6 Supreme Court Cases 404, wherein the Apex Court has held that electricity company can recover the outstanding amount from the subsequent purchaser as under:
Page 17 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined "(7.) A writ petition was filed by the respondent before the High Court of Telangana and Andhra Pradesh seeking quashing of these demands predicated on a reasoning that as a subsequent purchaser, the respondent was not responsible for the dues of the earlier owner, and in that behalf relied upon the judgments of this Court in Isha Marbles v. Bihar State Electricity Board & Anr., (1995) 2 SCC 648 and Southern Power Distribution Company of Telangana Limited (through its CMD) & Ors. v.
Gopal Agarwal & Ors., (2018) 12 SCC 644 Reliance on these judgments persuaded the learned single Judge to issue directions quashing the demand of appellant No.1. The appeal filed before the Division Bench against this order was also dismissed on 30.4.2018.
(8.) We have examined the submissions in the contours of the aforesaid controversy, and take note of the fact that in the case of Isha Marbles, (supra) the sale was in pursuance of Section 29(1) of the State Financial Corporations Act, 1951, but the important aspect was that there was no clause specifically dealing with the issue of electricity dues or such other dues, as in the present auction notice. This Court elucidated the position in the context of Section 24 of the Electricity Act, 1910, to emphasise that under Section 2(c) of the Electricity Act, a consumer means any person who is supplied with energy, and since liability to Page 18 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined pay electricity dues is fastened only on the consumer, at the relevant time, the purchaser was not the consumer. It has also been stated that in the absence of consumption of electricity, the subsequent purchaser was merely seeking reconnection without there being any statutory dues towards consumption charges. We had specifically posed a question to the learned counsel for the respondent in the order dated 15.11.2019, that whether, in the context of the judicial pronouncements sought to be relied upon, there was a specific clause in the nature of Clause 26 as in the present E-auction sale notice, which absolved the Authorized Officer of various dues including electricity dues . On the conspectus of the judgments referred to by the respondent, there were no such clauses in the cases in question.
(9.) We may also notice that there have been subsequent judicial pronouncements dealing with this aspect of electricity dues. A three Judge Bench of this Court has held that the dues under the terms and conditions of supply partake the character of statutory dues (Hyderabad Vanaspathi Ltd. v. A.P. State Electricity Board & Ors., (1998) 4 SCC 470). The mere fact that agreements were entered into with every consumer only served the purpose of bringing to the notice of the consumer the terms and conditions of supply, but did not Page 19 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined make the dues purely contractual in character.
(10.) We can draw strength from the observations of this Court in Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd., (2006) 13 SCC 101 (2 Judges Bench) where there was a similarity as in the present case, of a specific clause dealing with electricity dues. It was observed that in such a scenario if a transferee desires to enjoy the service connection, he shall pay the outstanding dues, if any, to the supplier of electricity and a reconnection or a new connection shall not be given to any premises where there are arrears on account of dues to the supplier unless they are so declared in advance.
(11.) We may also notice that as an auction purchaser bidding in an as is where is, whatever there is and without recourse basis, the respondent would have inspected the premises and made inquiries about the dues in all respects. The facts of the present case, as in the judgment aforesaid, are more explicit in character as there is a specific mention of the quantification of dues of various accounts including electricity dues. The respondent was, thus, clearly put to notice in this behalf. (12.) The same view in case of a similar clause has been taken in Paschimanchal Vidyut Vitran Nigam Limited & Ors. v. DVS Steels and Page 20 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined Alloys Private Limited & Ors., (2009) 1 SCC 210 (2 Judge Bench) It has been further observed that if any statutory rules govern the 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 so long as such rules and regulations or the terms and conditions are not arbitrary and unreasonable. A condition for clearance of dues cannot per se be termed as unreasonable or arbitrary. (13.) We may notice a slightly contra view in Haryana State Electricity Board v. Hanuman Rice Mills, Dhanauri & Ors., (2010) 9 SCC 145 (2 Judge Bench) in a given scenario where the pendency of electricity dues was not mentioned in the terms & conditions of sale, and it was held in those facts that the dues could not be mulled on to the subsequent transferee. (14.) We may notice that in Special Officer, Commerce, North Eastern Electricity Supply Company of Orissa (NESCO) v. Raghunath Paper Mills Private Limited & Anr., (2012) 13 SCC 479 (2 Judge Bench) a distinction was made between a connection sought to be obtained for the first time and a reconnection. In that case, no application had been made for transfer of a service connection from the previous owner to the auction-purchaser, but in fact, a fresh connection was requested. In light of the Page 21 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined regulations therein, previous dues had to be cleared only in the case of a reconnection. Hence, the respondents were held to be free from electricity liability. This Court in Southern Power Distribution Company of Telangana Limited (through its CMD) & Ors. (supra) found that the facts were similar to the NESCO (supra) case, and thus followed the same line.
(15.) We have gone into the aforesaid judgments as it was urged before us that there is some ambiguity on the aspect of liability of dues of the past owners who had obtained the connection. There have been some differences in facts but, in our view, there is a clear judicial thinking which emerges, which needs to be emphasized:
A. That electricity dues, where they are statutory in character under the Electricity Act and as per the terms & conditions of supply, cannot be waived in view of the provisions of the Act itself more specifically Section 56 of the Electricity Act, 2003 (in pari materia with Section 24 of the Electricity Act, 1910), and cannot partake the character of dues of purely contractual nature.
B. Where, as in cases of the E- auction notice in question, the existence of electricity dues, whether quantified or not, has been specifically mentioned as a liability of the purchaser and Page 22 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined the sale is on AS IS WHERE IS, WHATEVER THERE IS AND WITHOUT RECOURSE BASIS , there can be no doubt that the liability to pay electricity dues exists on the respondent (purchaser).
C. The debate over connection or reconnection would not exist in cases like the present one where both aspects are covered as per clause 8.4 of the General Terms & Conditions of Supply."
6.13) In support of her submissions, learned advocate Ms. Bhaya further relied upon the following decisions:
i) Paschimachal Vidyut Vitran Nigam Ltd. & others v. M/s. DVS Steels and Alloys Pvt.
Ltd. and Ors. reported in AIR 2009 Supreme Court 647, wherein the Hon'ble Apex Court held as under:
"8. The appellant submitted that if a consumer disposed of its premises, or any portion thereof, without clearing the dues in regard to the electricity supplied to its premises, any transferee seeking fresh electricity connection or supply of electricity to the premises, will have to clear the electricity dues of the previous Page 23 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined occupant. The appellant referred to sub-clauses (g) and (h) of clause 4.3 of the Electricity Supply Code, which is extracted below :
"(g) Where the property has been legally sub-divided, the outstanding dues for the consumption of energy on such premises, if any, shall be divided on pro-rata basis.
(h) A new connection to such sub-divided premises shall be given only after the share of outstanding dues attributed to such sub-divided premises, is duly paid by the applicant.
Licensee shall not refuse connection to an applicant only on the ground that, dues on the other portion(s) of such premises have not been paid, nor shall the licensee demand record of last paid bills of other portion(s) from such applicants."
The appellant submitted that similar provisions existed in the relevant regulations of the Board even before the said Code came into force.
9. The supply of electricity by a distributor to a consumer is `sale of goods'. The distributor as the supplier, and the owner/ occupier of Page 24 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined a premises with whom it enters into a contract for supply of electricity are the parties to the contract. 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. The supplier can therefore neither file a suit nor initiate revenue recovery proceedings against a purchaser of a premises for the outstanding electricity dues of the vendor of the premises, in the absence of any contract to the contrary.
10. 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 previous owner/occupant, should be cleared Page 25 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined before the electricity supply is restored to the premises or a fresh connection is provided to the premises. If any statutory rules govern the 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.
11. A stipulation by the distributor that the dues in regard to the electricity supplied to the premises should be cleared before electricity supply is restored or a new connection is given to a premises, cannot be termed as unreasonable or arbitrary. In the absence of such a stipulation, an unscrupulous consumer may commit defaults with impunity, and when the electricity supply is disconnected for non- payment, may sell away the property and move on to another property, thereby making it difficult, if not impossible for the distributor to recover the dues. Having regard to the very large number of consumers of electricity and the frequent moving or translocating of industrial, commercial and residential establishments, Page 26 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined provisions similar to clause 4.3(g) and (h) of Electricity Supply Code are necessary to safeguard the interests of the distributor. We do not find anything unreasonable in a provision enabling the distributor/supplier, to disconnect electricity supply if dues are not paid, or where the electricity supply has already been disconnected for non-payment, insist upon clearance of arrears before a fresh electricity connection is given to the premises. It is obviously the duty of the purchasers/occupants of premises to satisfy themselves that there are no electricity dues before purchasing/occupying a premises. They can also incorporate in the deed of sale or lease, appropriate clauses making the vendor/lessor responsible for clearing the electricity dues up to the date of sale/lease and for indemnity in the event they are made liable. Be that as it may....."
ii) Special Officer, Commerce, North Eastern Electricity Company of Orissa (NESCO) v.
Raghunath Paper Mills Private Ltd. reported in (2012) 13 SCC 479, wherein the Hon'ble Supreme Court held as under:
"16) In Isha Marbles vs. Bihar State Electricity Board and Another (1995) 2 SCC 648, a three-Judge Bench of Page 27 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined this Court had an occasion to consider a similar question, viz., whether the auction-purchaser is liable to meet the liability of old consumer of electricity to the premises which is purchased by him in the auction sale from Bihar State Financial Corporation under Section 29(1) of the State Financial Corporations Act, 1951. After considering relevant provisions of the Electricity Act and the Regulations, this Court held as under:-
"56. From the above it is clear that the High Court has chosen to construe Section 24 of the Electricity Act correctly. There is no charge over the property. Where that premises comes 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. What matters is the contract entered into by the erstwhile consumer with the Board. The Board cannot seek the enforcement of contractual liability against the third party. Of course, the bona fides of the sale may not be relevant.
61. ...It is impossible to impose on the purchasers a liability which was not incurred by them.Page 28 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023
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62. No doubt, from the tabulated statement above set out, 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.
63. We are clearly of the opinion that there is great reason and justice in holding as above. Electricity is public property. Law, in its majesty, benignly protects public property and behoves 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....."Page 29 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023
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17) In Paschimanchal Vidyut Vitran Nigam Ltd. & Ors. vs. DVS Steels & Alloys Pvt. Ltd. & Ors. AIR 2009 SC 647= (2009) 1 SCC 210, the question whether the supplier can recover electricity dues from the purchaser of a sub-divided plot was considered by this Court. The following conclusion is relevant:-
"9. The supply of electricity by a distributor to a consumer is "sale of goods". The distributor as the supplier, and the owner/occupier of a premises with whom it enters into a contract for supply of electricity are the parties to the contract. 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. The supplier can therefore neither file a suit nor initiate revenue recovery proceedings against a purchaser of a premises for the Page 30 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined outstanding electricity dues of the vendor of the premises in the absence of any contract to the contrary.Learned counsel for the appellant heavily relied on para 10 of the very same judgment which reads as under:-
10. But the above legal position is not of any practical help to a purchaser of 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 previous 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 conditions relating to sanction of a connection or supply of electricity, the distributor can insist upon fulfilment 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 Page 31 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined long as such rules and regulations or the terms and conditions are not arbitrary and unreasonable, courts will not interfere with them." If we apply the above principles as pointed out by Mr. Tripathy, learned counsel for the appellant, undoubtedly, respondent No. 1-purchaser of the premises is liable to pay entire arrears or outstanding of power dues. However, as pointed out by Mr. P.P. Rao, learned senior counsel, respondent No. 1 is not a party to the contract with the supplier, i.e., the NESCO. We have already quoted the relevant clauses, particularly, sub-Clause 10(b) of Regulation 13 of the Electricity Supply Code, which is not applicable to respondent No. 1 herein. In other words, as mentioned in the earlier paras, in the case on hand, respondent No. 1 has not applied for transfer of service connection from the name of the erstwhile company to its name but applied for a fresh connection to its Unit after purchasing the same from the Official Liquidator.
18) It is also relevant to refer a decision of a three-Judge Bench of this Court reported in Ahmedabad Electricity Co. Ltd. vs. Gujarat Inns Pvt. Ltd. and Others, (2004) 3 SCC 587. This Court, after finding that the cases are of fresh Page 32 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined connection, in para 3, held as under:-
"3.....We are clearly of the opinion that in case of a 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....."
19) In a recent decision, i.e. in Haryana State Electricity Board vs. Hanuman Rice Mills, Dhanauri and Others, (2010) 9 SCC 145, this Court, after referring to all the earlier decisions including Isha Marbles (supra) and Paschimanchal Vidyut Vitran Nigam Ltd. (supra) etc., summarized the position in the following manner which is as under:- "12. ....(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 in character, authorise the supplier of electricity to demand from the purchaser of a property claiming reconnection Page 33 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined 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."
20) In the light of the above discussion, specific factual details regarding the position of respondent No. 1 which purchased the said premises under court auction sale from the Official Liquidator on "as is where is" and "whatever there is"
basis and in the light of the regulations quoted above, particularly, sub-clause 10(b) of Regulation 13, we hold that the request was not for the transfer from the previous owner to the purchaser, on the other hand, it was a request for a fresh connection for the Unit of respondent No. 1 herein. We are in entire agreement with the decision arrived at by learned single Judge as affirmed by the Division Bench of the High Court."
iii) Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/s. Paramount Polymers Pvt. Ltd reported in AIR 2007 Supreme Court 2, wherein the Hon'ble Supreme Court held as under:
"13. We must observe that the decision in Isha Marbles (supra) is Page 34 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined by itself not an answer to the validity of clause 21A of the terms and conditions inserted by notification. Under section 49 of the Supply Act, the licensee or rather, the Electricity Board, is entitled to set down terms and conditions for supply of electrical energy. In the light of the power available to it, also in the context of Section 79(j) of the Supply Act, it could not be said that the insertion of clause 21A into the Terms and Conditions for supply of electrical energy is beyond the power of the appellant. It is also not merely contractual. This Court in M/s Hyderabad Vanaspati Ltd. Vs. Andhra Pradesh State Electricity Board and others [(1998) 2 S.C.R. 620] has held that the Terms and Conditions for Supply of Electricity notified by the Electricity Board under Section 49 of the Electricity (Supply) Act are statutory and the fact that an individual agreement is entered into by the Board with each consumer does not make the terms and conditions for supply contractual. This Court has also held that though the Electricity Board is not a commercial entity, it is entitled to regulate its tariff in such a way that a reasonable profit is left with it so as to enable it to undertake the activities necessary. If in that process in respect of recovery of dues in respect of a premises to which supply had been made, a condition is inserted for its recovery from a transferee of Page 35 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined the undertaking, it cannot ex facie be said to be unauthorized or unreasonable. Of course, still a court may be able to strike it down as being violative of the fundamental rights enshrined in the Constitution of India. But that is a different matter. In this case, the High Court has not undertaken that exercise.
14. The position obtaining in Isha Marbles (supra) was akin to the position that was available in the case on hand in view of the Haryana Government Electrical Undertakings (Dues Recovery) Act, 1970. There was no insertion of a clause like clause 21A as in the present case, in the Terms and Conditions of Supply involved in that case. The decision proceeded on the basis that the contract for supply was only with the previous consumer and the obligation or liability was enforceable only against that consumer and since there was no contractual relationship with the subsequent purchaser and he was not a consumer within the meaning of the Electricity Act, the dues of the previous consumer could not be recovered from the purchaser. This Court had no occasion to consider the effect of clause like clause 21A in the Terms and Conditions of Supply. We are therefore of the view that the decision in Isha Marbles (supra) cannot be applied to strike down the condition imposed and the first respondent has to make out a Page 36 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined case independent on the ratio of Isha Marbles (supra), though it can rely on its ratio if it is helpful, for attacking the insertion of such a condition for supply of electrical energy. This Court was essentially dealing with the construction of Section 24 of the Electricity Act in arriving at its conclusion. The question of correctness or otherwise of the decision in Isha Marbles (supra) therefore does not arise in this case especially in view of the fact that the High Court has not considered the question whether clause 21A of the terms and conditions incorporated is invalid for any reason."
iv) Gujarat Electricity Board v. Jaisal Silk Mills Pvt. Ltd. (Judgment dated 18.07.2005 passed in Letters Patent Appeal No.691 of 2003), wherein this Court held as under:
"An ancillary question which remains to be considered is whether Clause 2(1) of the Conditions of Supply is violative of Article 14 and 19 (1)
(g) of the Constitution. In this context it is appropriate to observe that the writ petitioners have not laid factual foundation to support their plea of discrimination. They have neither pleaded nor any material has been produced on the Page 37 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined record of these cases to show that the impugned clause seeks to divide persons belonging to the same class into two distinct groups and there is no rational reason for doing so.
Rather, it is an admitted position that, the impugned condition is being enforced by the Board against all those who apply for restoration of earlier connection or for issuance of fresh connection. Every such applicant is required to deposit the arrears of electricity dues as a condition precedent to the entertaining of application. Therefore the plea of discrimination is liable to be rejected.
We also do not find anything manifestly arbitrary in the Board's insistence on the deposit of the arrears of electricity charges/dues as an condition precedent for restoration of the supply or release of fresh connection. Clause 2(j) of the Conditions of Supply has been framed by the Board with a view to ensure that unscrupulous consumers are not able to dupe it of lakhs and crores of rupees. It was felt that in the absence of such a condition, unscrupulous consumers were avoiding payment of the electricity charges. In large number of cases the consumers resorted to legal mechanics for being declared sick or sold by public auction in furtherance of decrees passed by the Courts and the Tribunals or in furtherance of the provisions like Section 29 of the State Financial Page 38 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined Corporation Act. The absence of such a statutory provision had prompted the Supreme Court to quash the demand of arrears raised by the Bihar State Electricity Board from the prospective consumers. Therefore, what the Board has done by framing Clause 2(f) of the Conditions of Supply is to remove the loopholes from the scheme of supply of electrical energy and we do not find any justification to strike down the same on the ground of arbitrariness more so because the interest of the applicants has been amply safeguarded by making a provision for payment of the amount which may be recovered by the Board from the erstwhile consumer by availing appropriate legal remedies.
The challenge to Clause 2(1) of Conditions of Supply on the ground of violation of Article 19 (1) (g) is liable to be rejected summarily because the respondents in the Letters Patent Appeals and the petitioners in the Special Civil Applications have not been able to show as to how the impugned condition can be treated as unreasonable restriction on their right to carry on trade or business."
v) Jitendrabhai Babubhai Patel (supra), wherein this Court held as under:
Page 39 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined "15. There is another aspect, which requires to be addressed i.e. with regard to alternative remedy. The Apex Court in the case of Reliance Energy Ltd and Ors. (supra), while examining the provision of Section 42(5) of the Act has observed thus:
"33. As per the aforesaid provision, if any grievance is made by a consumer, then they have a remedy under Section 42(5) of the Act and according to sub-section (5) every distribution licensee has to appoint a forum for redressal of grievances of the consumers.
In exercise of this power the State has already framed the Maharashtra Electricity Regulatory Commission (Consumer Grievance Redressal Forum and Ombudsman) Regulations, 2003 (hereinafter referred to as "the 2003 Regulations") and created Consumer Grievance Redressal Forum and Ombudsman. Under these 2003 Regulations a proper forum for redressal of the grievances of individual consumers has been created by the Commission. Therefore, now by virtue of sub- section (5) of Section 42 of the Act, all the individual Grievances of consumers have to be raised before this forum only. In the fact of this statutory provision we fail to understand how could the Commission acquire jurisdiction Page 40 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined to decide the matter when a forum has been created under the Act for this purpose. The matter should have been left to the said forum. This question has already been considered and decided by the Division Bench of the Delhi High Court in Suresh Jindal v. BSES Rajdhani Power Ltd. and Dheeraj Singh v. BSES Yamuna Power Ltd and we approve of these decision. It has been held in these decisions that the forum and ombudsman have power to grant interim orders. Thus a complete machinery has been provided in Section 42(5) and 42(6) for redressal of grievances of individual consumers. Hence wherever a forum/ombudsman have been created the consumers can only resort to these bodies for redressal of their grievances. Therefore, not much is required to be discussed on this issue. As the aforesaid two decisions correctly lay down the law when an individual consumer has a grievance he can approach the forum created under sub-section (5) of Section 42 of the Act.
34. In this connection, we may also refer to Section 86 of the Act which lays down the functions of the State Commission. Sub-section (1)(f) of the said section lay down the adjudicatory function of the State Commission which does not encompass within its domain Page 41 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined complaints of individual consumers. It only provides that the Commission can adjudicate upon the disputes between the licensees and generating companies and to refer any such dispute for arbitration. This dies not include in it an individual consumer. The proper forum for that is Section 42(5) and thereafter Section 42(6) read with the Regulations of 2003 as referred to hereinabove."
16. The Apex Court has held that by virtue of Section 42(5) of the Act, all the individual grievances of consumers have to be raised before the forum only and in the face of this statutory provision, the Commission cannot acquire jurisdiction to decide the matter when a forum has been created under the Act for this purpose and the matter should have been left to the said forum.
17. In the present case, the partners of the petitioner-Company has directly approached this Court, without availing the remedy as envisaged under Section 42(5) of the Act."
vi) Torrent Power A.E.C. Ltd. v. Gayatri Intermediates Pvt. Ltd reported in 2006(2) GLR 1580, wherein this Court held as under :
Page 42 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined "19.3 In view of the provisions of Section 172(b), it is clear that licenses in favour of the GEB and the AEC under the repealed laws continued to be valid till 9.12.2004 (for a period not exceeding one year from the appointed date which was 10.12.2003 for the State of Gujarat) and, therefore, the contention urged on behalf of the licensees must be accepted without any difficulty for the period upto 9.12.2004. Hence, as regards the cases where theft was detected prior to 10.12.2004, the matters will be governed by the Conditions of Supply and Miscellaneous Charges for supply of Electrical Energy framed by the GEB or by the AEC, as the case may be. Since, during this period, the consumers were governed by the Conditions of Supply and Miscellaneous charges and not by the provisions of the new Act, the question of ouster of jurisdiction of Civil Court would not arise in cases where theft was detected before 10.12.2004. But while deciding applications for interim injunction, Civil Court shall have to consider the principles laid down by this Court in Kiran Industries v. GEB 1995 (2) GLR 1158."
7.Having heard the learned advocates for the Page 43 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined respective parties and having considered the material on record, it appears that the facts of the case are not in dispute. The petitioners purchased the property in question from respondent no.1-GSFC in the auction held in the year 2010 after making payment of sale consideration of Rs.12,02,000/- in the year 2011 on "As is where is" basis under section 29 of the SFC Act.
8.The industrial concern which was purchased by the petitioners belonged to one M/s. Vaishnav Fabrics Pvt. Ltd who had executed equitable mortgage by depositing the title deeds of the said property for securing term loan advanced by the respondent no.1 Gujarat State Financial Corporation.
9.It appears that registered sale deed was executed in favour of the petitioners for the Page 44 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined property in question on 28.03.2022 in the office of Sub-Registrar, S.R.O. Mangrol.
10. After registration of the sale deed in favour of the petitioners, an application was made to get the electric connection by petitioner no.6 on 04.07.2022 wherein reference was made to the G.R. dated 07.02.2004. Respondent no.1- GSFC by letter dated 25.05.2022 has clarified that amount of Rs. 1,16,000/- was paid to the GUVNL on 28.03.2012 as per Government Resolutions dated 07.02.2004 and 05.09.2005 by apportionment of the amount out of sale consideration of Rs.12,02,000/- on pro-rata basis towards electric dues.
11. Government Resolution dated 07.02.2004 stipulates that when the sale is made under section 29 of the SFC Act then the amount left after adjusting the expenses of Page 45 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined property, GSFC as well as Sales Tax Department and Electricity Department, the sale consideration shall be apportioned on pro-rata basis towards their outstanding dues and the purchaser shall not be liable to make the payment of outstanding dues of the erstwhile owner whose property is auctioned under section 29 of the SFC Act. Section 29 of the SFC Act reads as under:
"29. Rights of Financial Corporation in case of default.--
(1) Where any industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any instalment thereof [or in meeting its obligations in relation to any guarantee given by the Corporation] or otherwise fails to comply with the terms of its agreement with the Financial Corporation, the Financial Corporation shall have the [right to take over the management or possession or both of the industrial concerns], as well as the [right to transfer by way of lease or sale] and realise the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation."Page 46 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023
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12. Thus under the powers vested with the respondent no.1- GSFC, the property is sold to recover the outstanding dues of the borrower. Therefore, the question which is arising for consideration is whether the circular dated 07.02.2004 would continue to operate even after coming into force of the Act, 2003 and the Supply Code framed by GERC under the said Act.
13. Relevant provisions of the Act, 2003 and the Supply Code are reproduced here in below:
"43. Duty to supply on request.-(1) [Save as otherwise provided in this Act, every distribution] licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to such premises, within one month after receipt of the application requiring such supply:
Provided that where such supply requires extension of distribution mains, or commissioning of new sub- stations, the distribution licensee Page 47 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined shall supply the electricity to such premises immediately after such extension or commissioning or within such period as may be specified by the Appropriate Commission:
Provided further that in case of a village or hamlet or area wherein no provision for supply of electricity exists, the Appropriate Commission may extend the said period as it may consider necessary for electrification of such village or hamlet or area.
Explanation - For the purposes of this sub-section, "application" means the application complete in all respects in the appropriate form, as required by the distribution licensee, along with documents showing payment of necessary charges and other compliances.
(2) It shall be the duty of every distribution licensee to provide, if required, electric plant or electric line for giving electric supply to the premises specified in sub-section (1):
Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of electricity for any premises having a separate supply unless he has agreed with the licensee to pay to him such price as determined by the Appropriate Commission.
(3) If a distribution licensee fails to supply the electricity within the period specified in sub-section(1), he Page 48 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined shall be liable to a penalty which may extend to one thousand rupees for each day of default.
45. Power to recover charges.-(1) Subject to the provisions of this section, the prices to be charged by a distribution licensee for the supply of electricity by him in pursuance of section 43 shall be in accordance with such tariffs fixed from time to time and conditions of his licence.
(2) The charges for electricity supplied by a distribution licensee shall be-
(a) fixed in accordance with the methods and the principles as may be specified by the concerned State Commission;
(b) published in such manner so as to give adequate publicity for such charges and prices.
(3) The charges for electricity supplied by a distribution licensee may include-
(a) a fixed charge in addition to the charge for the actual electricity supplied;
(b) a rent or other charges in respect of any electric meter or electrical plant provided by the distribution licensee.
(4) Subject to the provisions of section 62, in fixing charges under Page 49 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined this section a distribution licensee shall not show undue preference to any person or class of persons or discrimination against any person or class of persons.
(5) The charges fixed by the distribution licensee shall be in accordance with the provisions of this Act and the regulations made in this behalf by the concerned State Commission.
46. Power to recover expenditure. The State Commission may, by regulations, authorise a distribution licensee to charge from a person requiring a supply of electricity in pursuance of section 43 any expenses reasonably incurred in providing any electric line or electrical plant used for the purpose of giving that supply.
185 Repeal and Saving -
......
(2) Notwithstanding such repeal,
(a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any appointment, confirmation or declaration made or any licence, permission, authorisation or exemption granted or any document or instrument executed or any direction given under the repealed laws shall, in so far as it is not inconsistent with the provisions of this Act, be deemed to Page 50 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined have been done or taken under the corresponding provisions of this Act.
Clause-4.30 of Supply Code reads as under:-
"4.30 An application for new connection, reconnection, addition or reduction of load, change of name or shifting of service line for any premises need not be entertained unless any dues relating to that premises or any dues of the applicant to the Distribution Licensee in respect of any other service connection held in his name anywhere in the jurisdiction of the Distribution Licensee have been cleared. Provided that in case the connection is released after recovery of earlier dues from the new applicant and in case the licensee, after availing appropriate legal remedies, get the full or part of the dues from the previous consumer/owner or occupier of that premise, the amount shall be refunded to the new consumer/ owner or occupier from whom the dues have been recovered after adjusting the expenses to recover such dues."
14. As reproduced hereinabove, Clause No.7 of the sale deed refers to Government Resolutions dated 07.02.2004, 21.05.2005 and 05.09.200. However, respondent no.3 - Dakshin Page 51 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined Gujarat Vij Company Ltd. is not a party to the sale deed. It is also not in dispute that it has received Rs. 1,16,000/- from respondent no.1-GSFC without a demur in the year 2012.
15. It is also pertinent to note that respondent nos. 3 and 4 have not raised any claim against the petitioners who are the purchasers of the property in question in auction for more than 10 years for recovery of dues of M/s. Vaishnav Fabrics Pvt. Ltd. As per Clause no. 4.30 of the Supply Code which is akin to Clause No.2(j) of condition of supply which was inserted by notification dated 10.08.2001 issued under section 49 of the Act,2003 stipulates that an application for new connection need not be entertained unless any dues relating to that premises or any dues of that applicant to the Distribution license in respect of other Page 52 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined service connection held in his name anywhere in the jurisdiction of the Distribution Licensee have been cleared. However, such condition is subject to Government Resolution dated 07.02.2004 which is acted upon by the respondents inter-se. Therefore, the contention raised on behalf of the respondent nos. 3 and 4 that such resolution would not be applicable on enactment of the Act, 2003 and Clause no. 4.30 of the Supply Code, cannot be accepted.
16. When the petitioners purchased the property in auction under section 29 of the SFC Act, the Act, 2003 was in force.
Therefore, when the sale was made subject to the Government Resolution dated 07.02.2004, it is respondent no.1 GSFC is liable to make the payment of outstanding dues of the electricity of M/s. Vaishnav Fabrics Pvt.
Ltd. on pro-rata basis from the sale Page 53 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined consideration realised and the petitioners cannot be saddled with the liability to make the payment of outstanding dues, if any.
Moreover, communication dated 16.07.2022 of respondent no.3 demanding Rs. 17 lakhs plus overdue charges and interest which is not quantified is per-se illegal and arbitrary inasmuch as such demand for giving new connection to the petitioners is not tenable in view of the facts of the case that respondent no.1-GSFC has paid Rs. 1,16,000/-
on pro-rata basis out of sale consideration to GUVNL, the parent company of respondent no.3, which is never questioned by respondent no.3 at any point of time. Therefore, respondent nos.3 and 4 are estopped from claiming any amount from the petitioners towards outstanding dues of M/s. Vaishnav Fabrics Pvt. Ltd. relying upon the provisions of the Act, 2003 or the Supply Code.
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17. Reliance placed on the decision in case of Telangana State Southern Power Distribution Company Limited and another (supra) would not be applicable in facts of the case inasmuch as the Apex Court was dealing with a case wherein there was a Clause no.26 in the auction notice which stipulated that the authorised officer will not be responsible for any charge, lien, encumbrance, property tax dues, electricity dues or any other dues of the Government, local authority or anybody in respect of the property under sale whereas in the facts of the present case, the auction sale has taken place subject to the Government Resolutions dated 07.02.2004 and 21.05.2005 which provides that the purchaser in auction sale would not be liable to pay the outstanding dues of the electricity of the property in question in auction under section 29 of the SFC Act and the GSFC would be reqquired to Page 55 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined apportion the sale consideration amongst various Government department on pro-rata basis. GSFC in accordance with such resolutions has apportioned such amount and paid Rs. 1,16,000/- in the year 2012.
Therefore, respondent nos. 3 and 4 cannot demand outstanding dues of the erstwhile consumer from the petitioners who have purchased the property in auction under section 29 of the Act, 2003.
18. Reliance placed by learned advocate Ms. Bhaya upon the decisions with regard to alternative remedy as well as applicability of the Act, 2003 also would be of no help and would not come in way of the petitioners to get electric connection for the property purchased in auction subject to Government Resolution dated 07.02.2004 because the Act, 2003 provides for repeal and saving whereas condition of Supply Code is in respect of Page 56 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined giving connection by licensee whereas Government Resolution dated 07.02.2004 refers to sale of property under section 29 of the SFC Act and dues of the electricity is also made subject to such sale consideration received in auction so as to see that the purchaser of the property in question is not put to any further liability to make payment of the outstanding dues of the electricity, sales tax etc. of the defaulter who failed to make payment of loan taken from the State Financial Corporation. As the petitioners have purchased the property in question in auction is subject to G.R. dated 07.02.2004, the sale tax liability or electricity dues which are attached with the property have been severed by the resolution passed by the State Government so as to see that the purchaser gets the clear title to the property and enjoy the same after payment of the highest bid amount in auction conducted Page 57 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined under section 29 of the SFC Act.
19. In view of the object and purport of the Government Resolutions to see that the auction purchaser is not put to any further liability of payment of outstanding dues of sales tax or electricity, immunity is granted to the successful purchaser from payment of outstanding liability and the purchaser of the property in auction under section 29 of the SFC Act is therefore, entitled to get the benefits of such resolutions of the State Government. The provisions of the Act, 2003 and the Supply Code would therefore, be subject to stipulation in such resolutions and respondent nos. 3 and 4 are bound by such Government Resolutions.
20. It is pertinent to note that respondent no. 3 is the State-owned company and any resolution passed by the State would be Page 58 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined binding upon it irrespective of the provisions of the Act and the Supply Code.
The State Government has passed the resolution in the year 2004 followed by subsequent resolutions to facilitate the sale of the properties in auction under section 29 of the SFC Act so as to recover the outstanding dues of the respondent no.1 -
GSFC which is also a State Government entity and thereby the liability of outstanding dues of sales tax, electricity dues are not fastened upon the successful purchaser of the property in auction. Respondent no.3 therefore, cannot demand any dues of the erstwhile consumer from the successful purchaser in auction of the property.
21. Reliance placed on the decision of the Apex Court in case of Paschimachal Vidyut Vitran Nigam Ltd. & others (supra) would also not be applicable as the same also refers to Page 59 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined the provisions of the Supply Code, 2006.
However, in facts of the case, respondent no.3 cannot independently rely upon the provisions of Act, 2003 or the Supply Code ignoring Governent Resolution dated 07.02.2004, more particularly, when it has received pro-rata amount of Rs.1,16,000/-
from the sale consideration paid by the petitioners to respondent no.1 - GSFC in the year 2012. The petitioners are therefore, entitled to get electric connection without making any further payment to respondent nos.
3 and 4.
22. In view of the foregoing reasons, the impugned communication dated 16.07.2022 is quashed and set aside. Respondent nos. 3 and 4 are directed to give electric connection to the petitioners in accordance with the rules and as per the provisions of Supply Code without insisting for payment of outstanding Page 60 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023 NEUTRAL CITATION C/SCA/18942/2022 CAV JUDGMENT DATED: 18/08/2023 undefined dues of M/s. Vaishnav Fabrics Pvt. Ltd. from the petitioners.
23. The petition therefore succeeds. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 61 of 61 Downloaded on : Sun Sep 17 01:32:54 IST 2023