Madras High Court
M/S.Kaleidoscope Energy Limited vs The Tamil Nadu Electricity Board on 1 September, 2022
Author: Mohammed Shaffiq
Bench: Mohammed Shaffiq
W.P. No.27348 of 2005
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 11.07.2022
Pronounced on : 01.09.2022
CORAM
THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ
W.P.No.27348 of 2005
and WMP.No.29768 of 2005
M/s.Kaleidoscope Energy Limited,
I-F, Century Plaza,
560-562, Anna Salai,
Teynampet, Chennai-600 018
Rep. by its Director ... Petitioner
Versus
1.The Tamil Nadu Electricity Board,
Rep. by its Chairman,
800, Anna Salai, Chennai-2.
2.The Chief Engineer,
Tamil Nadu Electricity Board,
Vellore.
3.The Superintending Engineer,
Tamil Nadu Electricity Board,
Vellore Electricity Distribution Circle,
Gandhi Nagar, Vellore-6.
4.The Junior Engineer,
Tamil Nadu Electricity Board,
SIPCOT, Ranipet. ... Respondents
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W.P. No.27348 of 2005
PRAYER: Writ petition filed under Article 226 of the Constitution of India
praying to issue a Writ of Certiorarified Mandamus calling for the records
of the 3rd Respondent herein in
Lr.No.017283/SEV/RCS/AS/A1/F.HTSC/1022/2005 dated 27.07.2005,
quash the same and forthwith direct respondents 1 to 4 herein to provide
Electricity Service Connection to the petitioner in respect of plot Nos.31, 32
and 47 in the Industrial Estate, SIPCOT, Ranipet.
For Petitioner : Mr.A.R.L.Sundaresan,
Senior Advocate
for M/s.AL.Ganthimathi and
Mr.AR.Karthik Lakmanan
For Respondents : Ms.Keerthana R.Shenoi
for Mr.L.Jai Venkatesh
Advocate
ORDER
The writ petition is filed for a Writ of Certiorarified Mandamus to quash the proceedings of the 3rd respondent dated 27.07.2005 and to further direct respondent Nos.1 to 4 to provide electricity service connection to the petitioner in respect of Plot Nos.31, 32 and 47 Industrial Estate, SIPCOT, Ranipet.
2. BRIEF FACTS:-
(a)The petitioner is a start-up company and was incorporated with the object of carrying on business in generation of electricity, manufacture of 2/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 castings.
(b) On 02.01.2004, there was an advertisement in Economic Times regarding sale of properties pursuant to the order dated 17.12.2003 of this Hon’ble Court in OSA Nos.254 & 255 of 2003 in liquidation proceedings.
(c) The petitioner turned out to be the successful bidder in the Tender Cum Open Auction. The petitioner offered a sum of Rs.4.65 crores as bid amount for purchase of the aforesaid auction properties. The sale was confirmed and the entire consideration was paid and duly acknowledged by ICICI Bank and the same was duly transmitted to the Official Liquidator for being kept to the credit of C.P.No.263 of 2001, in terms of the orders of this Court in the above O.S.A.Nos.254 & 255 of 2003.
(d) The properties purchased under the above auction by the petitioner originally belonged to M/s.Secals Limited. Pursuant to the above sale, possession of the aforesaid auction property including the immovable property together with plant and machinery was handed over to the petitioner on 19.04.2004.
(e) The petitioner as the lawful owner of the auction properties 3/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 applied to the 1st Respondent for grant of electricity service connection. The petitioner was then informed that the application for electricity connection would be considered only if the arrears in respect of the said premises is cleared/paid.
(f) The petitioner vide letters dated 29.11.2004 and 28.12.2004 addressed to the 2nd and the 3rd Respondents, brought to their notice that the previous occupant/owner viz., M/s. Secals Limited was in liquidation and the amounts paid as sale consideration by the petitioner in respect of the auction properties was lying in the hands of the Official Liquidator and the dues if any for the period during which M/s. Secals Limited was in occupation/possession could be recovered from the Official Liquidator and that the default by M/s.Secals Limited ought not to be a reason for denying the petitioner its right to be granted electricity service connection.
(g) In the mean while, the third respondent submitted an application before the Official Liquidator lodging its claim for arrears of electricity consumption charges and belated payment of surcharge.
(h) The petitioner's application for service connection was kept pending without any progress prompting the petitioner to submit yet another 4/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 representation dated 27.05.2005 to the third respondent to provide new LT/HT power connectivity. It did not evoke any response either, compelling the petitioner to file yet another representation dated 11.07.2005 this time to the first respondent requesting provision for new electricity service connection.
(i) The third respondent vide letter dated 27.07.2005 informed the petitioner that the request for effecting new service connection can be considered only if the petitioner pays the entire arrears in respect of the above properties/premises and that though a claim was preferred with the Official Liquidator which was also been assigned a number viz., 27 there has neither been any communication for payment of arrears nor has any amounts been received from the Official Liquidator. In support of the above claim of the demand in the hands of the petitioner in their capacity as subsequent purchaser reliance was sought to be placed on Clause 6.10 of the Terms and Conditions of Electricity Supply Code framed in exercise of the powers conferred under Section 49 of the Electricity Supply Act, 1948.
Aggrieved by the refusal of the Respondent Nos.1 to 4 to provide 5/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 electricity connection to the petitioner and demanding clearance of arrears of the petitioner’s predecessor in title and reliance on Clause 6.10 of the Terms and Conditions of Supply, in support of the impugned proceedings dated 27.07.2005 is challenged in this writ petition as being arbitrary, illegal and ultra vires, Electricity Act, 2003 inter alia on the following grounds: -
(a) That the petitioner having purchased the property pursuant to and in the course of liquidation proceedings and the entire sale consideration having been paid by the petitioner, the recovery of dues with regard to the electricity consumed by the previous occupant/predecessor in title ought to be made by the Respondents by pursuing the remedies before the Official Liquidator or by filing a Civil Suit.
(b) The reliance on the Terms and Conditions of Supply which has been framed under Section 49 of the Electricity Act, 1948, is misconceived inasmuch as the said Act has been repealed and in its place, there is a new enactment namely Electricity Act, 2003 which came into force with effect from 01.06.2003. Consequent to the repeal of the Electricity Supply Act , 1948, all the Rules and Regulations under the erstwhile Act stands obliterated repealed except to the extent saved by Section 185 of the 6/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 Electricity Act, 2003.
(c) Section 43 of the Electricity Act, 2003 casts a duty on the first respondent to give connection for electricity supply within a month from receipt of application requiring such connection. Importantly Section 43 (3) of the 2003 Act provides for penalty in the event of failure to grant electricity supply within the prescribed period, once the connection charges are paid. The Electricity Act, 2003 does not enable the first respondent to recover arrears from the successor in title to a property with regard to arrears relating to the predecessors in title. Thus, the refusal on the part of the respondents to grant electricity supply connection to the petitioner is arbitrary and without jurisdiction.
(d) It is further submitted that huge amounts of money have been invested with a view to set up a foundry. However, in view of the refusal by the respondents to grant a electricity connection, the same is non-functional thus even if tested on principles of equity and fairness, the action of the respondents would not pass the muster and thus unsustainable.
3. To the contrary, it was submitted by the Respondent resisting the 7/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 prayer interalia on the following grounds: -
(a) The notice for sale of assets was only on “as is where is basis” and “as is what is basis”. The above would clearly indicate that the confirmation of sale and handing over of possession would include the electricity dues attached to the said property.
(b) That clause 6.10 of the terms and conditions of the electricity supply framed under the Electricity Act, 1948 was relied upon to submit that in case of service disconnected/dismantled for non-payment of arrears and service connection is sought to be availed in respect of the same premises, either by purchase, transfer, auction or on lease basis, services will be effected only on clearance of outstanding due against such disconnected/dismantled service by the intending consumers. However, admittedly the arrears of the predecessor in title viz., M/s.Secals Limited has neither been settled by the petitioner nor by the Official Liquidator despite the fact that the respondents had lodged a claim for recovery of dues with the Official Liquidator in respect of the electricity consumed, thus representing that sums are legitimately due to the respondents.8/29
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(c) The submission of the petitioner that pursuant to the repeal of the Electricity Act, 1948 and the enactment of Electricity Act, 2003 there is no provision similar to Clause 6.10 which enables the respondents to recover arrears due in respect of the erstwhile predecessors in title is misconceived. With the introduction of Electricity Act, 2003, the Tamil Nadu Electricity Regulatory Commission had introduced Tamil Nadu Electricity Code, 2004 and Tamil Nadu Electricity Distribution Code, 2004 effective from 01.09.2004. Regulation 17 of the Tamil Nadu Electricity Supply Code, 2004 contains provisions pari materia to Clause 6.10 of the Terms and Conditions of Supply of electricity.
4.Heard both sides and perused the material on record.
5. The first question that arises is whether Section 185 of the 2003 Act, insofar as it provides for express saving under certain circumstances can be understood as curtailing the operations of Section 6 or 24 of the General Clauses Act.
In the present case, there is no dispute as to the fact that the dues 9/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 relate to the electricity consumed by M/s. Secals Limited and not by the petitioner herein. The recovery is sought to be made on the basis of the terms and conditions of supply entered into between the Board and the erstwhile owner/consumer i.e.,M/s. Secelas Limited. It may be relevant to bear in mind that the notice of sale was issued on 02.01.2004 and the sale/delivery letter in favour of the petitioner is dated 19.04.2004 consequent to the petitioner being the successful bidder in the auction. It may be relevant to note that the terms and condition of supply entered into between M/s. Secelas Limited and the respondent contains a clause wherein it is provided that in case service has been disconnected/dismantled for non- payment of arrears and if other parties intend to avail the services in respect of the same premise either by auction/lease then in such cases services will be effected only on the clearance on the dues outstanding against such disconnected/dismantled services by the intending consumer. The relevant portion is extracted below:-
“The Board will refuse to supply electricity to an intending consumer who has defaulted in payment of dues to the Board in respect of any other service connection held in his name.10/29
https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 In case of services which have been disconnected/dismantled for non-payment of arrears and if the services are to be availed by other parties in the same premise either by purchase or transfer or in auction or on lease basis then in such cases “the services will be effected” only on clearance of the dues outstanding against such disconnected/dismantled service by the intending [Chairman, Tamil Nadu Electricity Board shall have powers to allow instalment payments subject to a maximum of ten monthly instalments based on the amount and merit of the case for those consumers who come forward to avail supply on closure of accounts as a new connection but to pay the old arrears in instalments. The first instalment should be paid along with charges for new service connections and the consumer must agree and undertake to pay the monthly instalment arrears along with the respective monthly consumption bills.] (emphasis supplied)
6. It may be relevant to note that the Terms and Conditions of Supply are framed and contracts entered into between the consumer and the Board pursuant to Section 49 of the Electricity Supply Act,1948 clause (i) which reads as under:-
“49. Provision for the sale of electricity by the Board to 11/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 persons other than licensees.
(1). Subject to the provisions of this Act and of regulations, if any made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs.”
7. The question that arises is whether the recovery in respect of the dues under the 1948 Act ought to be made in terms of 2003 Act or in terms of the 1948 Act itself. It is the submission learned Senior Counsel for the petitioner that the Electricity Supply Act, 1948, on being repealed, the same must be understood as having never ever existed as having been obliterated except to the extent its operations are saved under Section 185 of the Electricity Act, 2003. The above submission may have to be rejected for it is well settled that on repeal of Central enactment, Section 6 of the General Clauses Act, 1895 would apply. Importantly to decide/determine whether the liability/operation of the repealed Act is saved the line of inquiry ought to be not whether there is an express saving of the operation of the repealed Act but whether there is any intention to the contrary.
8. Importantly, Section 185 (5) of the Electricity Act, 2003 expressly provides that the saving Clause shall not be held to prejudice or affect the 12/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 applicability of the General Clauses Act, 1895 with regard to the effect of repeal. It may be relevant to refer to Section 185 of the Electricity Act, 2003 Section 6 and 24 of the General Clauses Act, 1895.
“Section 185. (Repeal and saving):-
(1) Save as otherwise provided in this Act, the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998 are hereby repealed.
(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 have been done or taken under the corresponding provisions of this Act.
(b) the provisions contained in sections 12 to 18 of the Indian Electricity Act, 1910 and rules made thereunder shall have effect until the rules under section 67 to 69 of this Act are made;.
(c) the Indian Electricity Rules, 1956 made under section 37 of the Indian Electricity Act, 1910 as it stood before such repeal shall continue to be in force till the regulations under section 53 of this Act are made.
(d) all rules made under sub-section (1) of section 69 of the Electricity (Supply) Act, 1948 shall continue to have effect until such rules are rescinded or modified, as the case may be;
(e) all directives issued, before the commencement of this Act, by a State Government under the enactments specified in the Schedule shall continue to apply for the period 13/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 for which such directions were issued by the State Government.
(3) The provisions of the enactments specified in the Schedule, not inconsistent with the provisions of this Act, shall apply to the States in which such enactments are applicable.
(4) The Central Government may, as and when considered necessary, by notification, amend the Schedule.
(5) Save as otherwise provided in sub-section (2), the mention of particular matters in that section, shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897, with regard to the effect of repeals."
(emphasis supplied) Section 6 of The General Clauses Act, 1987
6. Effect of repeal. —Where this Act, or any 4 [Central Act] or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not
(a) revive anything not in force or existing at the time at which the repeal takes effect; or
(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or
(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or
(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, 14/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.
Section 24 of The General Clauses Act, 1897
24. Continuation of orders, etc., issued under enactments repealed and re-enacted.—Where any [Central Act] or Regulation, is, after the commencement of this Act, repealed and re-enacted with or without modification, then, unless it is otherwise expressly provided any [appointment notification,] order, scheme, rule, form or bye-law, [made or] issued under the repealed Act or Regulation, shall, so far as it is not inconsistent with the provisions re-enacted, continue in force, and be deemed to have been[made or] issued under the provisions so re-enacted, unless and until it is superseded by any[appointment notification,] order, scheme, rule, form or bye-law, [made or] issued under the provisions so re-enacted [and when any [Central Act] or Regulation, which, by a notification under section 5 or 5A of the 8 Scheduled Districts Act, 1874, (14 of 1874) or any like law, has been extended to any local area, has, by a subsequent notification, been withdrawn from the re-extended to such area or any part thereof, the provisions of such Act or Regulation shall be deemed to have been repealed and re-enacted in such area or part within the meaning of this section.
9. If we read the above three provisions harmoniously, it leaves no room for any doubt that Section 185 though provides for saving of certain actions expressly arising out of the repealed enactment, it does not in any manner curtail/ whittle down the operation of Section 6 of the General 15/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 Clauses Act which provides for saving of the matters enumerated therein in the event of repeal. The scope and operation of Section 6 of the General Clauses Act is much wider and is not intended to be whittled down/curtailed by Section 185 of the Electricity Act, 2003, this is evident from Sub-Section (5) to Section 185 of the Electricity Act, 2003. Section 6 of the General Clauses Act, 1895 makes it clear that a repeal shall not affect the previous operation nor would it affect any right/obligation acquired or incurred under the repealed enactment. Section 24 of the General Clauses Act, 1895, provides that where any Central Act or Regulation is repealed and re-enacted with or without modification then unless expressly provided any notification order/scheme/form or by law made or issued under the provisions so re-enacted shall insofar as it is not inconsistent with the re- enactment continue in force and be deemed to have been made under the provisions so re-enacted.
10. It thus seems that the argument of the petitioner that Electricity Act, 1948 stands obliterated except to the extent it is expressly saved under Section 185 of the Electricity Act, 2003 does not have merit and thus liable 16/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 to be rejected.
11. Liability of subsequent auction purchaser with regard to electricity charge dues of previous owner:
The liability of a subsequent purchaser through an auction in respect of the dues of the previous consumer had come up for consideration on earlier occasions. It may therefore, by necessary to examine those decisions to appreciate the contentions now put forth by the petitioner which is resisted by the respondent. The Hon'ble Supreme Court in Isha Marbles & Bihar State Electricity Board and Anrs. (1995) 2 SCC 648 had while dealing with the question as to whether an auction purchaser in a sale made under Section 29 (1) of the State Financial Corporation Act can be held liable for non-clearance of consumption charges by the previous consumer/owner. It was held that the auction purchaser of the premises would not be liable to discharge/clear the liability/dues of the previous consumer to secure re-connection. The above conclusion was arrived at by the Hon'ble Supreme Court on the strength of the following reasons:
(a). Section 24 of the Electricity Supply Act, 1948 would be invoked only against the consumer i.e., the person who is supplied with the energy. 17/29
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(b). The Board cannot insist upon the respondent to pay the arrears owed by the erstwhile consumer as a condition precedent to provide electricity connection. Importantly it was found that there was no condition which stipulates that if the arrears of the electricity owned by an erstwhile consumer is not paid then it would lead to discontinuation of supply of electricity. In this regard, the following observations of the Hon'ble Supreme Court are relevant and is extracted below:
“In so far as this respondent had not consumed electricity, it was merely seeking re-connection and there being no statutory dues towards consumption charges, the Board cannot insist upon the respondent to pay the arrears owing by the erstwhile consumer, is a condition precedent to provide electricity connection. On the contrary, there is an obligation under Section 3(2) (f) and Section 22 of the Electricity Act read with Clause VI of the Scheme 1 thereof to supply electricity. The said Clause VI Schedule 1 contains conditions under which supply can be discontinued. These conditions do not stipulate that the supply will be discontinued if the arrears of the electricity owing by an erstwhile consumer in the premises are not paid first.
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.
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. But, the law, as it 18/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 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 lacs and lacs of rupees and each one of them can easily say that he is not liable for the liability of the predecessor in interest. No doubt, dishonest consumers cannot be allowed to play truant with the public property but inadequacy of the law can hardly be a substitute for overzealousness.”
12. It may also be relevant to refer to the judgment (2006) 13 SCC 101 name in Dakshin Haryana Bijli Vitran Nigam Ltd. Vs. Paramount Polymers Pvt. Ltd., wherein after referring to Isha Marbles & Bihar State Electricity Board and Anrs. (1995) 2 SCC 648 the Court while dealing with, Clause 21 A which was inserted to the Terms and Conditions of the Supply of electrical energy found that the above Clause enables recovery from the transferee amounts outstanding even prior to its transfer. The relevant clauses are extracted below 21 A & B:-
"21-A (a) When there is transfer of ownership or right of occupancy of a premises, the registered consumer shall intimate the transfer of right of occupancy of the premises within 15 days to the Assistant Engineer/Assistant Executive Engineer concerned. Intimation having been received; the service shall be disconnected unless application for transfer is 19/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 allowed. If the transferee desires to enjoy the service connection, he shall pay the outstanding dues, if any, to the Nigam and apply for transfer of the service connection within 30 days and execute fresh agreement and furnish fresh security. New Consumer number shall be allotted in such cases canceling the previous number.
(b) Reconnection or new connection shall not be given to any premises where there are arrears on any account due to the Nigam unless these are cleared in advance. If the new owner/occupier/allottee remits the amount due from the previous consumer, the Nigam shall provide reconnection or new connection depending upon whether the service remains disconnected/dismantled as the case may be. The amount so remitted will be adjusted against the dues from the previous consumer."
It was found/held that the re-connection as well as the arrears is in relation to the premises. The Hon'ble Supreme Court after finding that the sale was on “as is where is basis” was of the view that Clause 21 A of the Terms and Conditions of the Supply would apply to the auction purchaser seeking a fresh connection and the recovery was permissible from the subsequent purchaser. While examining the validity of Clause 21 A, in the light of the decision in ISHA Marbles, it was held that the terms and conditions of supply is not merely contractual but are statutory though individual agreements are entered into between the Board and each consumer. It was held that the Board is entitled to regulate its Tariff and, in 20/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 that process, it was permissible to insert a condition for recovery of dues from a transferee of an undertaking, such condition cannot ex-facie be said to unauthorized or unreasonable, the following portion of the judgment makes it clear:-
“15. We must observe that the decision in Isha Marbles (supra) is 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 21/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 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 the undertaking, it cannot ex facie be said to be unauthorized or unreasonable…..”
13. It may also be relevant to refer to the judgment of the Hon'ble Supreme Court in CA No.185 of 2020, wherein while dealing with an auction purchaser under SARFAESI Act on “as is where is basis, whatever there is and without recourse basis” and whether it was permissible for recovery of electricity dues from the successful bidder and purchaser in the auction. The Hon'ble Supreme Court held that electricity dues par-take the character of statutory dues under Electricity Act, 2003 read with the General Clauses Act, 1895. The Hon'ble Supreme Court after referring to the judgment in ISHA Marbles and Southern Power Distribution Company clarified that in ISHA Marbles the Hon'ble Supreme Court held that the subsequent purchaser was not a consumer and the liability to pay electricity in terms of Section 24 of the Electricity Act, 2003 was only on the 22/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 consumer. It was further clarified that the Hon'ble Supreme Court had held in Hyderabad Vanaspati that the electricity dues are not purely contractual. The Hon'ble Supreme Court, proceeded to refer to the judgment of High Court wherein it was held that in event of a specific clause which enables recovery of dues from a subsequent purchaser it was permissible to do so. For the above position reliance was also sought to be placed upon Paschimanchal Vidyut Vitran Nigam Limited Vs. DVS Steels and Alloys (P) Ltd. in (2009) 1 SCC 210. After considering all the above judgments, the Hon'ble Supreme Court was pleased to summarize the position, which reads as under:
“12. 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 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 23/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 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.
13. 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, provisions similar to Clauses 4.3(g) and (h) of the Electricity Supply Code are necessary to safeguard the interests of the distributor.
14. 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 24/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 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.
15. In this case, when the first respondent, who was the purchaser of a sub-divided plot, wanted a new electricity connection for its premises, the appellant informed the first respondent that such connection will be provided only if the electricity dues are paid pro rata. They were justified in making the demand. Therefore, it cannot be said that the collection of Rs 8,63,451 from the first respondent was illegal or unauthorised. It is relevant to note that when the said amount was demanded and paid, there was no injunction or stay restraining the appellant from demanding or receiving the dues.” (emphasis supplied) From a reading of the above, it is clear that the views of the Hon'ble Supreme Court as to the right of the Board to recover arrears from a subsequent purchaser has been the subject matter of debate and consideration in a number of matters and on a reading of the judgments, the following position appears to emerge:
(i) A transferee of the premises or a subsequent occupant of the premises with whom the supplier has no privity of contract cannot be 25/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 required to pay the dues of his predecessor in title or possession.
(ii) Electricity arrears does not constitute a charge over the properties;
therefore, the transferee of the premises cannot be made liable for the dues of the previous owner/occupier.
(iii) However, if the subsequent purchaser approaches the distributor seeking electricity connection it is open to the distributor to stipulate the terms subject to which electricity would be supplied, one such condition which could be stipulated is that the arrears due with regard to the premises when it was in occupation by the previous owner/occupant ought to be cleared. In other words, if the statutory rules or Terms and Conditions of the Supply authorizes or enables the distributor/supplier of the electricity to recover the arrears from the subsequent owner/occupant in respect of the arrears due from the previous owner/occupant then the subsequent purchaser right to seek a fresh connection would be subject to compliance/fulfilling of the above condition.
14. In the present case, this Court finds that there is an express clause in terms of Clause 6.10 which enabled recovery from the subsequent 26/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 purchaser in respect of dues relating to previous owner/occupier for grant of electricity connection, the above condition in the light of the judicial pronouncements discussed above appears to suggest that the action of the respondent in proceeding against the petitioner is justified.
15. In view of the above, this writ petition is dismissed. No costs. Consequently, connected miscellaneous petition is closed.
01.09.2022 Index : Yes/No Speaking/Non-Speaking Order nst 27/29 https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 To:
1.The Chairman, Tamil Nadu Electricity Board, 800, Anna Salai, Chennai-2.
2.The Chief Engineer, Tamil Nadu Electricity Board, Vellore.
3.The Superintending Engineer, Tamil Nadu Electricity Board, Vellore Electricity Distribution Circle, Gandhi Nagar, Vellore-6.
4.The Junior Engineer, Tamil Nadu Electricity Board, SIPCOT, Ranipet.28/29
https://www.mhc.tn.gov.in/judis W.P. No.27348 of 2005 MOHAMMED SHAFFIQ, J., nst Pre-Delivery Order in W.P. No.27348 of 2005 and W.M.P. No.29768 of 2005 01.09.2022 29/29 https://www.mhc.tn.gov.in/judis