Gujarat High Court
J.B. Chemicals And Pharmaceuticals ... vs Dakshin Gujarat Vij Company Limited on 31 March, 2023
Author: Biren Vaishnav
Bench: Biren Vaishnav
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17582 of 2017
With
R/SPECIAL CIVIL APPLICATION NO. 19007 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 1224 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 443 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 8095 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 9160 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 2089 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BIREN VAISHNAV
==========================================================
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 ? ========================================================== J.B. CHEMICALS AND PHARMACEUTICALS LIMITED Versus DAKSHIN GUJARAT VIJ COMPANY LIMITED & 1 other(s) ========================================================== Appearance:
Petitioners:
MR SAURABH SOPARKAR, SR COUNSEL assisted by MR AMAR N BHATT(160) for the Petitioner(s) No. 1 in SCA Nos.17582/2017 & 19007/2018 Page 1 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 MR ABHISHEK M MEHTA (160) for the Petitioner(s) No. 1 in SCA No.443/2021 MS LILU BHAYA, for the Petitioner(s) No. 1 in SCA Nos.8095/2021, 2089/2022 & 9160/2021 MS.NISHA OZA, ADVOCATE for M/S. WADIA GANDHY & CO. for the Petitioner(s) No. 1 in SCA No.1224/2019 Respondents:
MS LILU K BHAYA(1705) for the Respondent(s) No. 1 in SCA Nos.19007/2018, 1224/2019, 17582/2017, 443/2021 MR NACHIKET D MEHTA, for the Respondent(s) No. 1 in SCA No.8095/2021 MR KAUSHAL H PATEL, for the Respondent(s) No. 1 in SCA Nos.9160/2021 & 2089/2022 MR ANAL S SHAH, for the Respondent(s) No. 2 - 3 in SCA No.443/2021 ========================================================== CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV Date : 31/03/2023 COMMON CAV JUDGMENT
1. All these petitions raise a common question -
Whether a distribution licensee can compel a consumer of electricity who has separate connections as an HT Consumer can be compelled to merge his connections as one by operation of Clause 4.1.17 and/ or Clause 4.28 of the Electricity Code, 2005. The Page 2 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 other consequential question in addition to this that arises in some petitions is whether it is open for the Electricity Company to issue notices for payment of tariff on the basis of consumption of energy calculated as if merger is in force and assess amounts beyond a period of three years.
2. Facts of each Special Civil Application are set out as under:
Special Civil Application No. 17582 of 2017 2.1 Prayers in the petition read as under:
(A) Issue writ of certiorari and/or any other appropriate writ, order or direction and quash and set aside the bills at Annexure A and B and the order of the respondent No. 2 at Annexure -
H and further command the respondent No. 1 to complete the merger of electric connection No. 39255 with 39222 within such time as the Hon'ble Court may deem appropriate and restrain the respondent No. 1 from raising supplementary bills.
Page 3 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 (AA) Direct the respondent No. 1 to refund to the petitioner an amount of Rs.73,84,132.12 + 8,66,689.10 totalling to Rs. 82,50,821.22 along with interest @ 13% from the date of payment of the same till realization.
(III) Quash and set aside the supplementary bill at Annexure V and restrain the respondent No. 1 from coercively recovering any amount in respect of the supplementary bill at Annexure V. (IV) Command the respondent No. 1 to merge of electric connections Nos. 39255 and 39222 expeditiously and within such time as the Hon'ble Court may deem appropriate and further restrain the respondent No.1 from raising any supplementary bills in respect of electric connection No. 39255, 39222 and 40744 on the grounds of non-merger thereof.
2.2 Facts as per the petition are as under:
2.3 The petitioner was allotted plot no. 129/a in Gujarat Industrial Development Corporation (GIDC), Ankleshwar. Similarly, for the purpose of Unique Pharmaceuticals Ltd. (Unique) and IFIUNIK Pharmaceuticals Ltd. (IFIUNIK), were allotted plots Page 4 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 no. 128/1 and 128/1/1 respectively by GIDC, Ankleshwar. the erstwhile Gujarat Electricity Board (GEB) granted 3 electric connections bearing connection nos. 39222, 39255 and 39271 to the petitioners Unique and IFIUNIK respectively. the said companies were carrying on business separately until November 2000.
2.4 On 08.11.2000, the Bombay High Court passed an order in Company Petition No. 869 of 2000 whereby Unique and IFIUNIK were ordered to be merged into the petitioner. Pursuant to the merger the connection nos.39222 and 39255 were transferred in the name of the petitioner. 2.5 On 22.01.2008, the petitioner vide its letter requested the respondent no. 1 to discontinue electric connection no. 39271. On 09.02.2011, the petitioner requested for a new connection for plot no. 128/1/1 Page 5 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 and the respondent no. 1 granted new connection no. 40744 for the said plot no. 128/1/1. 2.6 The respondent no. 1 for the first time vide letters dated 07.03.2014 and 21.04.2014 informed the petitioner inter alia asking it to merge all the three connections into one connection. the petitioner relied on clause 4.1.17 of the Electricity Supply Code, 2005. 2.7 On 07.05.2014, the petitioner replied to the said letters dated 07/03/2014 and 21/04/2014 to the respondent No.1 interalia pointing out that the said clause 4.1.17 of the Electricity Supply Code, 2005 was not applicable to the petitioner. the said letter dated 07/05/2014 of the petitioner was not replied to by the respondent No.1.
2.8 On 24.09.2015, the Electricity Supply Code, 2015 came into force wherein clause 4.28 was akin to Page 6 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 clause 4.1.17 of the Electricity Supply Code, 2005. 2.9 On 06.01.2016 and 25.01.2017, the respondent No.1 carried out inspection of all the three connections of the petitioner.
2.10 On 02.02.2017, the respondent No.1 sent a letter to the petitioner calling upon the petitioner to merge the three connections within 7 days. the said letter was received by the petitioner on 10/02/2017. 2.11 On 15.02.2017, the petitioner replied to the said letter dated 02/02/2017 inter alia stating that, if necessary, the petitioner is willing to merge the three connections and requested for 4 months' time to undertake necessary electric works for merger of the three connections. Respondent No.1 wrote letters to the petitioner to merge the connections. Page 7 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 2.12 On 18.02.2017, the petitioner replied to the letter dated 15/02/2017 of the respondent No.1 inter alia pointing out about the letter dated 15/02/2017 of the petitioner what was stated by the petitioner in its letter dated 15/02/2017 was reiterated. 2.13 On 11.03.2017, the petitioner informed Respondent No.1 inter-alia that pursuant to the oral discussions, the petitioner will surrender connection No.40744 and requested the respondent No.1 to do the needful to merge connection No.39255 into 39222.
2.14 On 03.04.2017 the petitioner submitted documents for merger. the petitioner incurred expenses of Rs. 25 Lakhs.
2.15 On 15.04.2017, petitioner's letter to the respondent inter alia to give credit of security deposit Page 8 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 for connection no. 40744 & 39255.
2.16 On 16.05.2017, the respondent No.1 all of a sudden issued a bill for Rs.73,84,132,12 which is annexed at Annexure-A based on the ground that the petitioner has failed to merge three connections into one.
2.17 On 24.05.2017, the petitioner under protest paid the amount of Rs.73,84,132.12 and raised objections to the bill dated 16/05/2017.
2.18 On 06.07.2017, the petitioner filed a Complaint before the respondent No.2 inter- alia for quashing of the bill dated 16/5/2017.
2.19 On 11.08.2017, the respondent No.2's order inter-alia holding that the bill dated 16/05/2017 of the respondent No.1 should be revised with effect from Page 9 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 24/09/2015 i.e. the date on which the Electricity Supply Code, 2015 came into force. In the same month, the respondent No.1 mechanically issued a Supplementary Bill demanding Rs. 8,66,689/- from the petitioner.
2.20 On 11.09.2017, the petitioner made further payment of Rs. 8,66,689/- under protest. Special Civil Application No. 19007 of 2018
3. Prayers in the petition read as under:
"(AA) issue writ of certiorari and/or any other appropriate writ, order or direction and command the respondent to grant additional power for its connection No.39725 as requested by the petitioner at Annexure-E1 hereto forthwith and without insisting for payment of supplementary bill at Annexure-A hereto.
(i) stay the implementation, operation and execution of the Bill at Annexure-A hereto;
(ii) restrain the respondent No.1 from taking any coercive steps in respect of the electricity Page 10 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 connection Nos.39415 and 39416 of the petitioner and further restrain the respondent No.1 from raising any supplementary bills; and
(iii) Direct the respondent to merge connection No.39664 into 39415 forthwith and without insisting for payment of the demand at Annexure A as a precondition for such merger.
B(iv) Direct the respondent to grant additional power for its connection No.39725 as requested by the petitioner at Annexure-E1 hereto forthwith and without insisting for payment of supplementary bill at Annexure-A hereto"
3.1 Facts as per the petition are as under:
3.2 On 05.10.1989, the petitioner was allotted Plot No.215 and 216 at GIDC, Panoli.
3.3 On 09.11.1990, the petitioner was allotted Plot No.217 at GIDC, Panoli.
3.4 On 10.01.1993, the petitioner was allotted Plot No.218 and 219 at GIDC, Panoli.Page 11 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 3.5 On 30.06.1993, the petitioner was allotted Plot No.308 to 310 at GIDC, Panoli.
3.6 All the aforementioned plots at GIDC, Panoli are being used by the petitioner to manufacture tablets, liquids and capsules. Erstwhile GEB granted connection No. 39415 for the said Plot Nos. 215 to 219, 309 and 310 and the same has been existing in the name of the petitioner since 1992.For the purpose of manufacturing injectable ointment the petitioner set up a separate division called Unique Pharmaceutical Laboratories (for short "Unique"). 3.7 On 15.02.1997, Unique was allotted Plot Nos. 304 and 305 to at GIDC, Panoli.
3.8 On 07.04.1998, Plot Nos.306 and 308 were transferred in the name of Unique.
Page 12 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 3.9 On 23.11.2000, Unique was declared as a 100 % EOU by the office of the Development Commissioner, Kandla Free Trade Zone, Government of India vide letter No.KFTZ/467/2000-01.
3.10 On 08.09.2001, Unique was granted Connection No.39664 for Plot No. 304 to 307. the said connection No.39664 has been existing in the name of the Unique.
3.11 On 28.01.2005, Electricity Code came into force. Clause 4.1.17 provided for merger of 2 connections in the name of one entity.
3.12 On 15.10.2010, Guideline of GUVNL provided that in case of an EOU there was no restriction for releasing the second connection in the same name/same owner.
Page 13 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 3.13 On 15.04.2015, Unique exited from 100% EOU on 14.04.2015.
3.14 On 24.09.2015, Electricity Code 2005 was replaced by a new Code.
3.15 On 23.10.2018, the respondent issued a notice to the petitioner inter alia informing the petitioner that the two connections ought to have been merged in view of Clause 4.28 of the Electricity Supply Code, 2015 and called for proof for requirement of separate connection.
3.16 On 19.11.2018, the petitioner addressed a letter to the respondent inter alia stating that the two divisions were required to be treated as separate entities and submitted several documents in support thereof. the petitioner also informed that the petitioner is willing to merge the said two connections Page 14 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 and that the petitioner was ready for discontinuing Connection No.39664 while continuing connection 39415 and requested the respondent to carry out the procedure for merger of connections. 3.17 On 29.11.2018, without considering the requests and representation of the petitioner, the respondent decided to issue supplementary bill claiming Rs. 2,81,51,934.15/- from the petitioner with retrospective effect from 2005 on the assumption that the petitioner was required to and has failed to merge electric connections into one connection. 3.18 On 10.12.2018, the interim relief was granted by this Hon'ble Court in this SCA on condition that the petitioner deposits an amount of Rs. 1,20,00,000/-. Which the petitioner has deposited. Special Civil Application No. 1224 of 2019 Page 15 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
4. The prayer in this petition is to quash and set aside the impugned notice dated 09.10.2018. By the aforesaid notice, the petitioner was informed by the respondent Electricity Company that while checking the installation and the location, there was breach of Clause 4.2.8 of their Supply Code 2015 and therefore, the petitioner was called upon to prove that the connections in the name of M/s.Agropack and M/s.Trimurty Corporation based on the documents for different legal entities so as to be eligible for separate connections. the case of the petitioners was that the petitioner was carrying on manufacturing activities at plot nos.226/2, 227/1 and 226/1 at Panoli, GIDC, Ankleshwar. That, they were different legal entities entitled to separate connections. Special Civil Application No. 443 of 2021
5. The prayers in the petition are to set aside the notice dated 18.12.2014 issued by the Executive Page 16 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 Engineer (Rural) Paschim Gujarat Vij Company, Bhavnagar, order dated 15.07.2015 passed by the CGRF rejecting the challenge to this notice, challenge to the order dated 17.10.2015 and 19.02.2016 passed by the Electricity Ombudsman confirming the order of the CGRF and order dated 21.12.2019 passed by GERC dismissing the petition and confirming the merger notice issued by the Electricity Company. Also under challenge is the bill dated 30.03.2020 for recovery of an amount of Rs.45,33,613.45 and disconnection notice.
5.1 It is the case of the petitioner that it established its first unit by the name of Acrysil Ltd. which was provided with an HT connection No.23140 with a contract demand of 200 KVA which was released on 14.08.1989 by the then Gujarat Electricity Board. the petitioner, in view of the benefits provided under the Foreign Trade Policy of 2004-2009, decided to Page 17 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 establish a separate unit i.e. an Export Oriented Unit (EOU), which unit was to specifically cater to the goods manufactured and to be exported out of the country. the EOU of the petitioner which was by the name of Acrysil Limited (EOU) was established as per the requirements of the EOU Rules, which was supposed to be a separate bonded warehouse and to be an independent area having an independent entry or exit from a public area and having no other entry or exit. A separate Excise Registration no. of Acrysil Ltd. and Acrysil Ltd. (EOU) and a separate demarcation was provided. Application was made to erstwhile GEB for release of separate connection in the name of EOU unit.
5.2 A circular dated 28.01.2005 was issued by erstwhile GEB granting permission for issuance of Separate Connection to two separately established entities, though adjacent to each other. the Circular Page 18 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 provides the requirements of releasing two connections which includes showing separate sales tax number, rent deed as also separate premises demarcating wall, etc. On 31.05.2005, GERC Regulation no. 11 of 2005 issued by the respondent no. 01. On 15.09.2010, Respondent No.6 - GUVNL issued circular pointing out that as per GERC Supply Code, "two connections can be released in the same name / same owner in two separate premises provided the condition of being separate premises are fulfilled and there should be clear-cut physical demarcation since separate connection in separate premises may be required for various reasons as they are separate profit centres with different products and one unit is EOU whereas other is not EOU. 5.3 On 18.12.2014, the petitioner received notice from Respondent no. 05 - PGVCL for the merger of electricity connection No.23140 and No.23715. the Page 19 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 petitioner challenged the notice dated 18.12.2014 before the respondent no. 04 - CGRF by way of case no. 06/15-16 but the same was rejected by way of order dated 15.07.2015. The petitioner challenged the aforesaid order dated 15.07.2015 before Respondent no. 03- Ombudsman vide case no. 103/2015 but the same was rejected. The petitioner preferred a review petition before Ombudsman and the same also came to be rejected by stating that Clause 4.1.17 was under
consideration before this Hon'ble Court and that the interpretation of the same can only be given by the respondent No.2 GERC and that the respondent No.3 is not the competent authority to interpret the said provision notified by GERC. The petitioner thereafter approached the respondent no. 02 - GERC vide petition no. 1566 of 2016 which came to be disposed of.
5.4 On 30.03.2020, pursuant to order dated Page 20 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 21.12.2019, a Supplementary bill issued by the respondent no. 05- PGVCL for recovery of amount of Rs. 45,33,613.45. thereafter, on 26.05.2020, notice issued by Respondent no. 05 - PGVCL threatening disconnection in case of non-payment of the said amount. On 30.05.2020, the amount of Rs.
45,33,613.45/- was paid by the petitioner under protest to the respondent no.5.
Special Civil Application No. 2089 of 2022
6. In this petition, Dakshin Gujarat Vij Company has prayed for quashing and setting aside the order dated 23.12.2019 passed by the Electricity Ombudsman in Case No.97 of 2019 insofar as it has not permitted the petitioner to issue bill and recover from the respondent no. 1 on account of non-merging of two HT connections from the date of relief of the second connection. Though the Electricity Ombudsman held Page 21 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 that the action of the company of merger of load of both the connections and issuing a single energy bill was valid in light of the decision in Letters Patent Appeal No. 1483 of 2013, it prevented the company from recovering the amounts.
6.1 The case of the respondent no.1 before the Electricity Ombudsman was that it was having two connections released in the year 1995 and 2002 respectively. Both were in separate plots being plot numbers 57 and 58 having a separate independent legal status. Action of merger by operation of Clause 4.1.17 of the Electricity Code, 2005 was challenged and also the retrospective operation thereof. Special Civil Application No. 8095 of 2021
7. The prayer on behalf of a petition at the hands of the Electricity Company was to quash and set aside the order dated 23.12.2019 passed by the Electricity Page 22 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 Ombudsman in Case No. 98 of 2019 directing the petitioner to cancel the bill for Rs.9,65,584.75 ps. Special Civil Application No. 9160 of 2021
8. The prayer here too, on behalf of the Electricity Company was to quash and set aside the order dated 23.12.2019 in Case No. 99 of 2019 directing the petitioner to cancel the supplementary bill for Rs.37,35,548.05 ps. In all these three petitions, namely Special Civil Application No. 2089 of 2022, 8095 of 2021 and 9160 of 2021, the Electricity Company's challenge was to the three orders of the Electricity Ombudsman though accepting the legality of merger notices but the bills were set aside on the ground of they being for retrospective periods.
9. In Special Civil Application No.17582 of 2017 and Special Civil Application No. 19007 of 2018, Shri Page 23 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 S.N. Soparkar, learned Senior Advocate appearing with Mr. Amar Bhatt, learned advocate for the petitioners would submit that as far as though ratio on the question of interpretation of clause 4.17 and clause 4.28 of settled in view of the Division Bench decision, the demand raised in the bills is not tenable for the following reasons:
(i) In response to the respondent No. 1's letter dated 21.01.2014, the petitioner already made a representation dated 07.05.2014 to which nothing was heard from respondent no. 1.
(ii) Even during inspection between 2014 and 2017, the petitioner was never informed regarding requirement of merger.
(iii) It is submitted that in view of (i) and (ii) above, the petitioner was entitled to have Page 24 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 legitimate expectation that the representation of the petitioner dated 07.05.2014 was accepted by the respondent No. 1. On the ground of promissory estoppel and doctrine of legitimate expectation, the respondent No. 1 is not entitled to recover the amount of the bills in question.
(iv) Under the threat of disconnection, the petitioner made payment under protest and therefore the same is liable to be refunded.
Even on the principle of unjust enrichment the respondent is liable to refund the amount.
(v) Without prejudice to what is stated above, it is submitted that as per the order of the respondent no. 1 dated 11.08.2017, the respondent was required to issue a revised bill with effect from 24.09.2015. No such bill is received from the respondent and therefore the Page 25 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 bills are liable to be quashed and set aside. 9.1 So far as Special Civil Application No.19007 of 2018 is concerned, Shri S.N. Soparkar, learned Senior Advocate would submit that from 2005 to 2015, the petitioner was EOU and therefore the clause for merger would not apply to the petitioner under the guidelines dated 15.09.2010 and that the bill raising demand from 2005 is arbitrary and contrary to the guideline of GUVNL. 9.2 Mr. Soparkar would submit that even otherwise the said bill contains demand from 2005 which is clearly time barred. the demand raised in the bill is on an erroneous assumption that the connections were required to be merged. the demand itself being wrong, the amount of bill is also not recoverable under Section 56(2) of Electricity Act, 2003. Page 26 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 9.3 Mr. Soparkar, learned Senior Advocate, without prejudice would submit that as per the decision of CGRF in Special Civil Application No. 17852 of 2017, the CGRF has directed the respondent herein to revise the bill from 24.09.2015 i.e. the date on which the GERC Code came into force. the said decision is not challenged by the respondent and that at any rate the recovery cannot be affected from April 2005 when the clause 4.28 of the new Code is notified in September 2015 and the amount paid by the petitioner is liable to be refunded.
10. In Special Civil Application No. 443 of 2021, Mr. Abhishek Mehta, learned counsel for the petitioners would submit that both the units i.e. petitioner no. 1 and petitioner no. 2 were established on separate dates. the petitioner no. 1 unit was catering to the domestic market whereas the petitioner no. 2 was established as an EOU solely for the purposes of Page 27 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 exports. there was a clearly demarcated boundary between the two establishments. Even otherwise the EOU unit was established for the purposes of export and the very requirement of EOU Rules is that the unit has to be run in form of a bonded warehouse and having a boundary with only one entry and exit. the two premises are distinct and separate and Excise registration is also separate.
10.1 Mr. Mehta submitted that Clause 4.1.17 of the GERC Supply Code is to be read in the facts of the case and not de hors the facts of the case. Clause 4.1.17 provides for a separate connection i.e. two separate meters if the two units have separate legal entity for which documents "such as" separate income tax, sales tax, ration card, etc. are to be considered. the list is not limited but exhaustive and the intention is to see to it the two units for which two separate connections are being provided are having Page 28 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 separate legal identity like in the present case one is EOU unit registered under the Foreign Trade Policy 2004-2009 in which EOU units are required to be set up in the country which are separately governed by EOU Rules.
10.2 Mr. Mehta would submit that the respondent No.4 erred in ignoring the earlier Circular dated 28.01.2005 which was in force when the connection was released. As per the condition no. 1.6 of the Circular dated 28.01.2005, in order to release separate connection to adjoining premises, there is a pre-requirement of a Separate Main entrance which is duly fulfilled in the case of the petitioner. 10.3 Mr. Mehta would further submit that the respondent No.4 erred in seeking to apply the order of this Court in Special Civil Application No.15262 of 2012 in the case of Modern Denim Ltd. Vs. UGVCL, Page 29 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 when the facts of the aforesaid case were completely different to the facts of the petitioners' case. 10.4 Mr. Mehta would submit that the conduct of the respondents more particularly of the respondent No.5 in issuing merger notice in the year 2015 for merging connections of the petitioners which have been separate since the year 2005 amounts to gross illegality and is hit by vice of delay and laches and is an act of illegality which amounts to causing prejudice to the petitioners. That the word merger is not defined anywhere in the Electricity Code or the Electricity Act and the respondent in fact had no power to issue directions to merge two separate and distinct connections.
10.5 It is Mr. Mehta's submission that the respondent authorities ought to have appreciated that the EOU unit of the petitioner was, by legal fiction, a separate Page 30 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 entity and provided the status of a separate entity in view of the having been established under the provisions of the Foreign Trade policy prevalent the relevant point of time as a "EOU". This itself was sufficient for the authorities to hold that the petitioner was a separate and distinct entity and therefor the requirement of two connections. 10.6 The bills/ notice issued by the respondent No.5 PGVCL towards differential charges being an outcome of the illegality on the part of the respondent No.5 PGVCL and the said demand being unsustainable in law and violative of Article 14 and 19(1)(g) of the Constitution of India, are required to be quashed and set aside.
10.7 Mr. Mehta submitted that the Notifications of the GERC for that matter of fact, the relevant clause 4.1.17 or other equivalent clauses in subsequent Page 31 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 notifications do not in any manner state that the 2 nd connection cannot be granted. they merely lay down that 2nd connection can be granted only under certain circumstances and not otherwise. Whether the 2 nd connection can be granted or was rightly or wrongly granted has to be considered as per the facts of the case and for which the judgments relied upon by the respondents is inconsequential as the said judgments consider the clause of the Notifications as per the facts of the case and therefore, the said judgments cannot be applied in toto. Considering the facts of the present case, it is evident that it is governed by the Circular dated 15.09.2010 of respondent GUVNL in respect of 2nd connection for EOU unit. the Notification of the GERC lays down a general proposition regarding release of two connections which can be released on case-to-case basis depending on the considered facts. In the present case, the two units of the petitioner are separate Page 32 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 entities and have been rightly granted separate connections and therefore, the merger notice which is impugned in the present petition as well as other impugned orders are required to be set aside and the impugned notice / bill dated 30.03.2020 for recovery of an amount of Rs.45,33,613.45 and disconnection notice are required to be set aside and the amount which has been deposited under protest is required to be refunded consequentially.
11. Ms. Lilu Bhaya, learned advocate in support of her submissions as a respondent in the petitions challenging the notices of merger and where the petitioner company has had to challenge the order of the Electricity Ombudsman would make common submissions as under:
(a) In Special Civil Application No. 464 of 2013 in case of Aarvee Denims & Exports Ltd. Vs. Page 33 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 UGVCL decided on 12.8.2013 identical issue had come up before this Court wherein amalgamation dated 7.11.2012 and 8.10.2012 were challenged.
It was specific case of the petitioner therein that they were having two separate electric connections but in view of Clause No.4.1.17, the Electricity Company in absence of separate legal entity having separate Income-tax number, Sales- tax number, ration card number, rent receipt had to amalgamate the units. This was on the basis of audit remarks that the bill was issued. This Court in the said judgment has referred to various provisions of Electricity Act,2003 and in para-10 referred to various definitions under the Act and considering tariff loss which has been worked out as mentioned in Para-12 if individual metering demand charges calculation for single meter which has been amalgamated and after merging both the figures have been worked out Page 34 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 to show that what will be the loss of revenue if in one premises two connections are allowed. the Court came to the conclusion that unless they show separate entity as provided under the Act, they have to merge the connections as mentioned in Para-13 & 14. Licenses issued under Factories Act and Excise Act have no bearing qua supply of electricity under the Electricity Act, 2003. the said judgment has been confirmed by the Division Bench in Letters Patent Appeal No.1483 of 2013 decided on 21.6.2019.
(b) The same view has been taken in Special Civil Applications No.15262 of 2012 and 15263 of 2012 in case of Modern Denim Ltd. Vs. UGVCL decided on 12.8.2013. the said judgment was confirmed in Letters Patent Appeal No.1069 of 2013 with Letters Patent Appeal No.1068/2013 Page 35 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 decided on 17.9.2013, considering the submissions of the consumer that they were having connections since 1990 and they were enjoying connections in different names.
(c) In Special Civil Application No.15105 of 2012 in case of Lakhani Filaments Pvt. Ltd. Vs. DGVCL decided on 8.4.2015, this Court has considered in Para-6 retrospective effect that if the connection is released prior to 2005 that the Company can recover the dues. In Paras-21.2 & 22, this Court has specifically dealt with the issue whether electricity company is justified in raising the bill and claiming bill for the past period prior to issuance of notice and connection and action of clubbing is justified or not. In Para- 23, the Court came to the conclusion that it does not have any retrospective effect. This Court has in detail interpreted Clauses No.4.1.7 and 3.5.1 Page 36 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 of Supply Code.
(d) Regarding the period, reliance is placed on the judgment of Hon'ble Supreme Court reported in 2021(11) Scale 743 in case of Prem Cottex Vs. Uttar Haryana Bijlee Vitran Nigam Ltd. An identical issue arose that dues can be recovered from the date of notice or prior to that. the Apex Court has considered the provisions of Sec.56. In Para-16 of the said judgment, the Apex Court has interpreted the words first due means the date on which the bill is raised. In Para-17, the Hon'ble Court also distinguished Rahamatullah Khan and came to the conclusion in Para-18 that it was distinguishable on facts and finally in Para-23 the Hon'ble Court has interpreted the sub-section(1) and sub-section(2) of Sec.56. It has been held that the bottom line of Sub section (1) is the negligence of any person to Page 37 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 pay any charge for electricity. Subsection (1) starts with the words "where any person neglects to pay any charge for electricity or any some other than a charge for electricity due from him". In para-24 it is held that Subsection (2) uses the words "no sum due from any consumer under this Section". therefore, the bar under Sub- section (2) is relatable to the sum due under Section 56. This naturally takes us to Subsection (1) which deals specifically with the negligence on the part of a person to pay any charge for electricity or any sum other than a charge for electricity. What is covered by section 56, under subsection (1), is the negligence on the part of a person to pay for electricity and not anything else nor any negligence on the part of the licensee. It is concluded that consequently, any claim so made by a licensee after the detection of their mistake, may not fall within the mischief, Page 38 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 namely, "no sum due from any consumer under this Section", appearing in Subsection (2). the Apex Court held that the matter can be examined from another angle as well. Sub section (1) of Section 56 as discussed above, deals with the disconnection of electric supply if any person "neglects to pay any charge for electricity". the question of neglect to pay would arise only after a demand is raised by the licensee. If the demand is not raised, there is no occasion for a consumer to neglect to pay any charge for electricity. Sub- section (2) of Section 56 has a nonobstante clause with respect to what is contained in any other law, regarding the right to recover including the right to disconnect. therefore, if the licensee has not raised any bill, there can be no negligence on the part of the consumer to pay the bill and consequently the period of limitation prescribed under Subsection (2) will not start Page 39 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 running. So long as limitation has not started running, the bar for recovery and disconnection will not come into effect. Hence the decision in Rahamatullah Khan and Section 56(2) will not come to the rescue of the appellant.
(e) As per the submission of Ms. Bhaya, this is how the Hon'ble Supreme Court has confirmed that the law of limitation will not come in the way of electricity company and interpreted Sec.56(1) & 56(2) which does not leave any room that whether the electricity company can recover the dues or nor. therefore right of recovery is not limited for a period of two years or three years. Once the supplementary bill is raised the amount has become first due and therefore the contention that it is after 17 years does not have any bearing. there is continuous violation of tariff and it has been held by the Hon'ble Supreme Page 40 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 Court while deciding the issue in case of Prem Cottex, Lakhani Filaments Pvt. Ltd. and Special Civil Application No.10734 of 2017 filed by Gujarat Shalimar Hotels Vs. State of Gujarat & ors. decided on 10.10.2018.
(f) In the affidavit in reply filed by the Electricity Company, it was their case that the ownership of all connections was one. Merely because the plots were adjacent to each other, they cannot be eligible for separate connections. the petitioner had failed to produce any documents such as PAN card, income tax returns to satisfy the authority that they were separate legal entities.
12. Mr. Nachiketa Mehta and Mr. Kaushal Patel, learned advocates for the respondents in the petitions at the hand of the Electricity Company would submit Page 41 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 that admittedly there were two separate connections released at two different points of time. these connections were issued after examining all the documents. Show-cause notices for merger were bad. the petitioners have acted in contravention of clause 4.76 which provides for re-classification of the consumer category. Even clause 3.51 of the code only gives power to the licensee to reclassify the consumers but have no right to issue any supplementary bills. there was a period of limitation and it cannot be the case of the company that they had no knowledge. the issue was that the supplementary bill was delayed and the licensee cannot take shelter of bona-fide mistakes. the question of issuing a supplementary bill has never been examined by this court in its judgement in the case of Lakhani Filaments Pvt. Ltd. (supra).
13. Having considered the submissions made by the Page 42 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 respective counsels, the answer to the question whether notices to the respective consumers compelling them to merge two or more separate connections though in the perception of such consumers they had distinct and unique identity individually and therefore were entitled to separate connections is what is at the heart of the controversy. 13.1 Clauses 4.1.17, 4.28 and 3.51 of the Electricity Code, 2005 and Section 56 of the Indian Electricity Act, 2003 have been a matter of deliberation even on earlier occasions before this court in a similar set of facts and circumstances. the distribution licensee i.e. the respective electricity companies had issued notices to the consumers invoking clauses 4.1.17 and/ or 4.28 of the GERC Supply Code, 2005 taking a stand that they will not provide more than one connection/meter for one premises. the consumers opting for second meter will have to produce proof of Page 43 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 they being separate legal entities such s documents of separate income tax no./ pan card/sales tax no./ ration card and rent or lease agreement. the case of the consumers was that their initial connections were granted in different plots at respective different times. the premises were separate, either divided through a wall or separate buildings. It was their case that separate GPCB consents, separate licences under excise laws were issued.
13.2 In the case of the petitioners of Special Civil Application No. 443 of 2021, it was their case that the two units were separate, one catering to a domestic market and the other an EOU which was completely export oriented unit. There was therefore no question of merging such connections. Moreover, in Special Civil Application No. 443 of 2021 reliance was also placed on order/circular dated 15.09.2010 where two connections can be released in the same name in two Page 44 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 separate premises where there is a clear physical demarcation as of their case.
13.3 In the petitions at the hands of the company, the only question that was held against them was on the aspect of retrospective application of clauses 4.1.17 and 4.28 in light of clause 3.51 of the code and the consequential recovery with retrospective effect beyond a period of three years.
14. In the case of Aarve Denims and Exports Ltd vs. Uttar Gujarat Vij Company Ltd. in Special Civil Application No. 464 of 2013, this court was considering the action of the Electricity Company which wanted the consumers to merge the electric connections. the Electricity company's case was that in accordance with clause 4.1.17 of the Electricity Code, 2005, in absence of any document that all the entities were different and merely because of a Page 45 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 communication addressed by the CAG denial of two separate connections was arbitrary. the court found that mere licence in the form of excise or sales tax by itself would not show any separate existence in law as required for supply of electricity, fixing of tariff and charges for consumption of electricity. the court held as under:
"10. Upon consideration of the submissions advanced by learned Counsels appearing for both the parties and on perusal of the records of the case, the following definitions of the Act, 2003 as also relevant definitions under Regulations, 2011 are necessary to be reproduced :-
PART I PRELIMINARY
2. Definitions. -
(13) Company means a company formed and registered under the Companies Act, 1956 (1 of 1956) and includes any body corporate under a Central, State or Provincial Act; (15) Consumer means any person who is supplied with electricity for his own use by a licensee or the Government or by any other person engaged in the business of supplying Page 46 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 electricity to the public under this Act or any other law for the time being in force and includes any person whose premises are for the time being connected for the purpose of receiving electricity with the works of a licensee, the government or such other person, as the case may be;
(47) open access means the non-
discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission;
(49) person shall include any company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person;
(51) premises includes any land, building or structure;
PART VII TARIFF
61. Tariff regulations. - the Appropriate Commission shall, subject to the provisions of this Act, specify the terms and conditions for the determination of tariff, and in doing Page 47 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 so, shall be guided by the following, namely :-
(a) The principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees;
(b) The generation, transmission, distribution and supply of electricity are conducted on commercial principles;
(c) The factors which would encourage competition, efficiency, economical use of the resources, good performance and optimum investments;
(d) Safeguarding of consumers' interest and at the same time, recovery of the cost of electricity in a reasonable manner;
(e) The principles rewarding efficiency in performance;
(f) Multi-year tariff principles;
[(g) That the tariff progressively reflects the cost of supply of electricity and also reduces cross-subsidies in the manner specified by the Appropriate Commission;] Page 48 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
(h) The promotion of co-generation and generation of electricity from renewable sources of energy;
(i) The National Electricity Policy and tariff policy:
Provided that the terms and conditions for determination of tariff under the Electricity (Supply) Act, 1948 (54 of 1948), the Electricity Regulatory Commissions Act, 1998 (14 of 1998) and the enactments specified in the Schedule as they stood immediately before the appointed date, shall continue to apply for a period of one year or until the terms and conditions for tariff are specified under this section, whichever is earlier.
REGULATIONS, 2011 CHAPTER 1 PRELIMINARY Definitions Open Access means the non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with these regulations and includes long-term access, medium-term open access and short-term open access. Page 49 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 Open access customer means a consumer, trader, distribution licensee or a generating company who has been granted open access under these regulations.
CHAPTER 4
APPLICATION PROCEDURE AND
APPROVAL
12. Application procedure for Open Access (1) All applications for open access shall be made in the prescribed Form and submitted to the Nodal agency in accordance with these regulations.
(2) All applicants seeking open access shall submit an undertaking of not having entered into Power purchase agreement (PPA) or any other bilateral agreement with more than one person for the capacity (quantum of power) for which open access is sought. (3) Subject to the provisions of these regulations, the Nodal agency, Application fee, Documents to accompany the application and time frame for disposal of application shall be specified in the following Tables:
11.That a perusal of the above definitions prescribe what 'open access' is about, who is eligible and entitled to have 'open access'.Page 50 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 To find out the answer, one has to see the definition of 'consumer', defined under Section 2.(15) of the Act, 2003 which also includes any person who is supplied with electricity for his own use by the licensee and also any person whose premises are for the time being connected for the purpose of receiving electricity with the works of a licensee, the Government or such other person, as the case may be.
12.If the above definition of 'consumer' is considered, alongwith Section 2(49) about definition of a person which includes any Company or Body Incorporate or Association or Body of individuals whether incorporated or not or artificial Juridical person and the definition of Section 2.(51) about 'premises' which includes any land, building or structure, the above definitions if considered conjointly would establish that electricity is to be supplied no doubt to premise, but such premise is to be owned and occupied by a person, who is also a consumer and having a separate legal identity.
the above definitions are considered with the object and purpose of the Act and other provisions of the Act including determination of tariffs, functions and duties cast upon GERC would mean that alongwith protection of interests of consumers of electricity, distribution licensees and other Page 51 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 such licenses, functioning of licensees are also to be kept in mind, viz. Cost-
effectiveness, competitive profit and efficiency etc. If a consumer like the petitioner are allowed to have different meters and supply of electricity, it would certainly have effect on the distribution of electricity and and contracted demand and also will have bearing on fixation of tariff and consumption charges. the above fact is correctly demonstrated by the illustrative example of demand and consumption charges in case of single meter and of two meters by one legal entity.
Formula for calculation of energy bill :-
(A) With individual metering (1) Demand charge calculation :-
Consume Actual Rate per Total Charges r no Demand KVA in Rs.
17243 1501 KVA Rs.100 x 500 Rs. 50,000
KVA
Rs.200 x 500 Rs.1,00,000
KVA
Rs.270 x 400 Rs.1,08,000
KVA
Rs.370 x 101 Rs. 37,370
KVA
Total 1501 KVA Rs.2,95,370
Consumer Actual Rate per KVA Total Charges in
Page 52 of 85
Downloaded on : Fri Mar 31 20:51:39 IST 2023
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
no Demand Rs.
17363 1816 Rs.100 x 500 Rs. 50,000
KVA KVA
Rs.200 x 500 Rs.1,00,000
KVA
Rs.270 x 816 Rs.2,20,320
KVA
Total 1816 KVA Rs.3,70,320
Total of demand charges- Rs.2,95,730 + Rs.3,70,320 = Rs.6,65,690 (2) Energy charge calculation :-
Consume KWH Rate per Total Charges r no Drawl KWH in Rs.
17243 831060 Rs.4.20 per Rs.34,90,452
KWH unit
17363 991179 Rs.4.20 per Rs.41,62,951
KWH unit
Total of Energy Charges- Rs.34,90,452 + Rs.41,62,951 = Rs.76,53,403.
Grand Total of Energy bill = Demand Charge + Energy Charge = Rs.6,65,690 + Rs.76,53,403 = Rs.83,19,093/-
(B) With Single meter (After merging) :-
(1) Demand charge calculation :-
Consume Actual Rate per KVA Total Charges Page 53 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 r no Demand in Rs.
17243 & 3317 Rs.100 x 500 Rs. 50,000
17363 KVA KVA
Rs.200 x 500 Rs.1,00,000
KVA
Rs.270x 2317 Rs.6,25,590
KVA
Total 3317 KVA Rs.7,75,590
(2) Energy charge calculation :-
Consum KWH Rate per Total
er no Drawl KWH Charges in
Rs.
17243 & 1822239 Rs.4.30 per Rs.78,35,628
17363 KWH unit
Grand Total of Energy Bill
Demand charge + Energy charge
= Rs.7,75,590 + Rs.78,35,628
= Rs.86,11,218/-
13.Thus, upon overall consideration of provisions of the Act, 2003, Rules and Regulations made therein and Clause No.4.1.17 of the Code, it certainly envisages two meters in a case of consumer using electricity facility shall have to satisfy conditions enumerated therein which may not only include separate Income Tax No., Page 54 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 PAN Card No., Sales Tax No. but also about legal entities so defined in the definition of person and consumer under Section 2.(15) and 2.(49) of the Act.
14.Thus, contentions raised by learned Counsel for the petitioner about furnishing the documents in the form of Licenses issued under Excise or Factory Act or similar such Act, have no bearing towards supply of electricity and the duty cast upon distribution companies under Section 42 of the Act. That Audit Report by the Comptroller and Auditor General of India was a reminder to the distributing licensees about practices followed by such a licensee which was contrary to law and provisions of the Act, 2003 and the action taken in this regard rejecting the application of the petitioner for extra and/or extension and/or separate meter cannot be said to be in any manner contrary to law. That order produced and passed by GERC in which none of the above provisions was taken care of and conclusions were drawn on the basis of separate premises and entitlement of consumer to have open access by misreading the provisions of the Act, 2003 and the Regulations, 2011."
14.1 The Division Bench by its CAV judgement dated 21.06.2019 in Letters Patent Appeal No. 1483 of 2013 Page 55 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 confirmed the order of the learned Single Judge. Paragraph no. 25 of the Division Bench in the appeal read as under:
"25. We are in total agreement with the conclusion arrived at by the learned Single Judge. the appellant has admittedly not produced any documents establishing even prima facie that it is a separate entity and the respondent electricity company has rightly acted upon the objections raised by the Accountant General and if the interpretation which is put forward by the appellant is accepted, the same would also affect the public exchequer at large. the provisions of Regulation 4.1.17 provides for inbuilt requirements which are absent in the case on hand and what is decided by the GERC is entirely on different set of circumstances and provisions of the Act and Regulations. Apart from the dictionary meaning of "one premises" what is to be seen is in light of definition of word "consumer" as defined under the Electricity Act, 2003 and the requirements of Regulation 4.1.17 and considering the relevant provisions, the learned Single Judge has rightly come to the conclusion that the appellant is not entitled for a separate Page 56 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 meter. As the appellant is not a separate legal entity and documents as provided under Regulation 4.1.17 are not furnished by the appellant, the decision taken by Electricity Company is legal and proper and in accordance with regulations and rules. the learned Single Judge has committed no error in dismissing the petition. the facts considered by the Hon'ble Apex Court in the case of Associated Cement Companies, Ltd. (supra) are totally different and only because there are two separate factory buildings, it cannot be gainsaid that they are independent establishment more particularly keeping in mind the provisions of the Electricity Act and the definition of the word "consumer" under the Electricity Act and the requirement of Regulation 4.1.17 of the GERC. the issue decided by GERC relates to open access and tariff and the same would not taken the case of the appellant any further. the respondent electricity company has rightly considered the objection of the Accountant General. the respondent electricity company is a public utility company and if any decision taken by it manned by human error, the Accountant General is within his jurisdiction and duty to point out the same as ultimately it results into loss of public exchequer and acting on the same, the Page 57 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 respondent electricity company and upon examining the issue, has correctly interpreted Regulation 4.1.17 and has taken decision in accordance with the Act, Regulations and Rules.
26. Consequently therefore, the conclusion arrived at by the learned Single Judge is correct interpretation of the provisions of the Electricity Act, and Regulations of 2005. None of the contentions raised by the learned counsel appearing for the appellant deserve any merit. the appeal therefore fails and is hereby dismissed. However, in facts of this case, there shall be no order as to costs."
14.2 The author of the judgement of Special Civil Application No. 464 of 2013 reiterated the same in the case of Modern Denim Limited vs. Uttar Gujarat Vij Company Ltd in Special Civil Application No. 15262 of 2012 with Special Civil Application No. 15263 of 2012 decided on 12.08.2013. 14.3 In Special Civil Application No. 15105 of 2012 decided on 08.04.2015 in the case of Lakhani Page 58 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 Filaments Pvt Ltd vs. Daxin Gujarat Vij Co. Ltd., this court was considering a challenge to the order of the Ombudsman who had rejected the appeal of the consumer to a challenge to the merger notices. The only grounds of challenge was to the fact that code cannot be given retrospective effect. 14.4 This is also one of the grounds that was raised in the present group of petition during the course of arguments. the other contention with regard to Section 56(2) of the Electricity Act was also dealt with in the case of Lakhani Filament (supra) in paras 11 to 14.5 which read as under:
"11. I have considered the submissions made by learned advocates for the respective parties and the reply filed by the learned advocate for the respondents and also considered the material available on record.
12. It is not in dispute that from time to Page 59 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 time, the respondents accepted said three applications of the petitioner and granted/ released three separate connections to the petitioner. the details are summarized in the communication dated 07.10.2010:-
The Under Secretary, Finance Depatt, Gandhinagar has sent draft paragraph on loss of revenue due to non amalgamation of below mentioned three numbers of H. T.connections.
01.M/s. Lakhani Filaments petitioner. Ltd. H.T.No.39594 C.D 475 KVA
02.M/s. Lakhani Filaments petitioner. Ltd. H.T.No.11174 C.D 400 KVA
03.M/s. Lakhani Filaments petitioner. Ltd. H.T.No.11308 C.D 475 KVA It was pointed out that your premises is a single unit having different plot number and defined power boundary and within that power boundary you have availed H. T.connections as above for running textile machineries. Previously, you Page 60 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 have explained that these connections are availed just to get tariff benefit and to keep your contract demand within 500 KVA.
Your above contention is not agreed with and you are required to submit your reply for clubbing of your three numbers of H.T connections in a single one. For these, you will have to procure your own circuit breaker, lightening arresters etc. as required for H.T Connections above 500 KVA.
Your clarification in above is expected within 10 days and on expiry of this period, D.G.V.C.L will start issuing one bill by clubbing all H.T. Connections D.G.V.C.L also reserves the right to issue supplementary bill for loss endured on account of above reason.
Thanking You, Yours faithfully I/c. Executive Engineer (O&M) DGVCL, IND.DN.Pandesara 12.1 According to the learned advocate for the petitioner, HT connection no.39594 was granted and released in July-1998 and additional load was granted in the Year- 2002. So far as HT connection No.11174 is Page 61 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 concerned, according to the petitioner, the respondents released and granted the said higher tension connection in June-2003 and additional load was granted in February- 2005, whereas third connection i.e. HT Connection No. 11308 came to be granted and released by the respondents in March- 2006 and additional load came to be approved / granted in June-2006.
12.2 In the light of the facts given out by the learned advocate for the petitioner, it becomes clear that even according to the petitioners own claim and contention, the objection raised by the petitioner does not hold good so far as the third HT connection i.e. HT Connection 11308 is concerned inasmuch as, the Notification No.11/05 is notified on 31.03.2005, whereas the said third connection is granted and released in March-2006 and additional load for said connection was approved and granted in June-2006.
12.3 Under the circumstances, even by its own submission, the objection raised against the respondents action with regard to the third connection does not hold good.
13. So as to support and justify their action and their communication dated 07.10.2010, the respondent Electricity Company has relied on Clause No.3.5.1 and Clause Page 62 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 No.4.1.17 of the Electricity Supply Code and submitted that action of the respondent Electricity Company is in light of and in pursuance of said two provisions. the said two provisions read thus:-
3.5.1 If it is found that a consumer has been classified in a particular category erroneously, or the purpose of supply as mentioned in the distribution service Agreement has changed or the consumption of power has exceeded the limit of that category or any order of reduction or enhancement of contract demand has been obtained, the distribution licensee may reclassify him under appropriate category after issuing notice (with minimum notice period of 30 days) to him to execute a fresh Agreement on the basis of the altered classification or modified Contract Demand. If the Consumer odes not take steps within the time indicated in the notice to execute a fresh Agreement, the distribution licensee may, subject to the provisions of the Acts, Rules and Regulations for the time being inforce, after issuing a clear 21 days show cause notice and after considering his explanation, if any, disconnect the supply of power.
Further, the Distribution Licensee Page 63 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 shall dispose all of such applications for change tariff class by a Consumer within maximum period of 7 days after receipt of such application regarding the change of tariff class or communicate the reasons for not changing the tariff class, as applicable. In case of any dispute, the matter shall be referred to Forum for redressal of consumer grievance.
4.1.17 the Distribution Licensee will not provide more than one connection/meter for one premises. the consumers opting for second meter will have to produce separate legal entity such as documents of separate Income Tax No / Sales Tax No, ration cared and rent or lease agreement.
13.1 Learned advocate for the petitioner also referred to and relied on the said clause (which are relied on by the learned advocate for the respondents) and claimed that the said provision came into effect upon publication being Notification No.11/05 with effect from 31.03.2005 and since the said provisions are not retrospective, any action under the said provision is not warranted and not unjustified.
14. the submission raised on the ground of Page 64 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 retrospective operation of the rules is misconceived and unsustainable.
14.1 Though, it is true that the factual aspects i.e. the first HT connection came to be granted and released in favour of the petitioner in July-1998 and second HT connection granted and released in favour of the petitioner in June-2003 and third HT Connection came to be granted and released in favour of the petitioner in July- 2006 is not disputed even by the respondents, it is equally true that since the dates on which the said connections came to be released and granted, the petitioner is enjoying the said connections and even on the date of which the communication / notice dated 07.10.2010 came to be issued, the petitioner was operating said three Electricity Supply Connections.
14.2 According to the respondent Company, the petitioner made such arrangement only with a view to escaping appropriate and applicable tariff.
14.3 At this stage, it is appropriate to consider the observations and reasons recorded by the Ombudsman. It is observed and recorded in the order that:-
4.0 On the basis of representations and documents submitted by the Page 65 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 Appellant and Respondent, may findings are as under:-
1.As per the tariff applicable to High Tension supply, the rate of demand charges, energy changes and time of use charges continue to increase for the supply having Contract Demand about 500 KVA and about 1000 KVA when compared to the supply for the Contract Demand less than 500 KVA.
2.Refer to letter No.647 dated 17.01.2005 of Para No.3.5, the respondent neither amalgamated the two connections for started issuing single bill as contemplated. On the contrary, the respondent had not only allowed the enhancement of Contract Demand to 400 KVA in connection No.11174 in February,2005, but also released a third connection No.11308 with Contract Demand of 250 KVA in March,2006 and permitted extension of Contract Demand to 475 KVA in June,2006, in the Page 66 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 same premises.
3.Physical verification of premises needs to be done by Executive Engineer personally to ascertain the separate individual legal entity of the exclusive premises. Such nothing should be done in technical proposal by the respective Engineer.
This condition No.1.7 of Commercial Circular No.769 dated 28.01.2005 is not at all followed while releasing the connection and while granting extension of Contract Demand.
4.During most of period of billing, Maximum Demand billed as per sum of three meters is less than 85% of aggregated contract demand in KVAA. there is 3 to 7.5% deviation in MD billed and MD a per MRI data.
5.the licensee had issued the Notice on 17.01.2005 as per Para No.4.2 amalgamation of the connections. thereafter, no procedure was adopted as per supply code Clause No.3.5.1 to Page 67 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 regularise the connections.
6.the Appellant could not produce separate documents that it is separate legal entity I.e separate Income Tax Number, Sales Tax number etc. All the three HT connections are adjacent to each other i.e. they are in the same premises.
All the connections are used for producing single and product.
the name of firm and Directors of Boards are also same.
the supplementary bill issued as per Paragraph No.3.8 is in accordance with provisions of Regulations and it is recoverable.
Thus, even before the forum and before the Ombudsmen, the petitioner failed to establish that three entities are separate legal entities. the petitioner did not and could not produce separate documents to establish the factual aspect etc." 14.4 Learned advocate for the respondents contended that, despite the fact that the Page 68 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 petitioner owns/runs single entity, it artificially operated its establishment/undertaking on lower tariff. 14.5 According to the respondents, the petitioner is single entity and enjoying three connections despite being single entity it availed and enjoyed three connections and that therefore, the load of three HT connections is required to be clubbed/ merged and on that basis, the Electricity Consumption had to charged. However, by seeking and securing three separate connections, the petitioner artificially managed to keep the contracted demand on lower side, though the de-facto the petitioner was consuming higher load and that therefore, the petitioner was informed that three connections shall be clubbed and billing for the consumption shall be done accordingly."
14.5 On the aspect of retrospectivity and on clause 3.5.1 the court held as under:
"15.6 the said expression clarifies and emphasises that even if any action had been taken at any prior point of time and if by virtue of such action, any consumer came to be classified in particular category, which is Page 69 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 not proper as per the electricity code (which came into force by Notification No.11/05), then in such circumstances, the licensee is obliged to reclassify such consumer and bring the connection / consumer in consonance with the Rules.
15.7 From the said provision, it becomes clear that power and authority to reclassify a consumer after the code came into force is conferred on the licensee even in case of those consumers who were reclassified in different category, before the Code came into force.
23. So far as the contention that the said provision does not have retrospective effect is concerned, the said contention, for the foregoing reasons, the said contention is found to be without merits.
23.1 So far as the decisions on which learned Counsel for the petitioner relied, are concerned, it is relevant to mention that in view of the facts involved in present case and more particularly in view of Clause 3.5.1 and Clause No.4.1.17 of the Electricity Supply Code ( which are applicable in present case and on which learned counsel for the petitioner has placed reliance), the said decisions are not applicable and they do not render any assistance to the case of Page 70 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 the petitioner. the facts involved in the case decided by the decisions on which learned counsel for the petitioner relied are materially and substantially different from the facts in present case, more particularly, in view of the fact that neither the said two clause no.3.5.1 and Clause No.4.1.17 nor any clause similar to the said two clauses was not under consideration before the Hon'ble Court in the cited decisions. Thus, the petitioner cannot derive any support from the said decisions. In light of the said clauses the contention on the ground that the provision cannot be applied retrospectively is not sustainable. Having regard to the said two clauses, it cannot be said that the company has given retrospective effect to the said Rules. the said provision contemplates and requires rectification / correction of existing / prevailing position in respect of the supply connections which have been granted and that therefore, the said contention cannot be entertained.
23.2 Actually, in present case, the said provisions empower and enable, rather oblige, the respondent Electricity Company to take appropriate actions i.e. corrective measures, so as to reclassify the consumer in whose favour more than one supply connection (contrary to the provisions contained under clause No.4.1.17 read with Page 71 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 3.5.1) is granted. the electricity company / licensee under the Act is obliged by the said provision to take corrective measures in those cases where more than one supply connections are granted to the one consumer though the units/undertakings (in respect of which such additional connections are granted) of said consumer are not, and cannot be treated as, independent legal entities. the respondent Company has taken the impugned action in view of the requirements prescribed by said two clauses. the facts of the cases in the cited decisions do not arise from or involve said or similar clauses. therefore, the said two decisions relied on by learned counsel for the petitioner do not help the case of the petitioner. In this view of the matter, the said contention fails and is rejected."
15. All the arguments therefore raised by the learned counsels for the petitioners in the present group of matters including that of Special Civil Application No. 443 of 2021 which in the case are two separate entities as the second one being an EOU are also answered in these decisions. the fact that there are Page 72 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 no other documents and merely because one premises is an EOU would not make his case better. Even the circular pressed in service will not be of any assistance once the courts have held the statutory regulations of the GERC (Code) as valid.
16. That brings me to answer the challenge at the hands of consumers in Special Civil Application No. 17582 of 2017 and Special Civil Application No. 19007 of 2018 to the challenge to the bills raised beyond three years. Even the Electricity Company has in Special Civil Application No. 2089 of 2022 and Special Civil Application No.8095 of 2021 have challenged the findings of the Ombudsman where recovery was restricted to a three year period.
17. the Apex Court in the case of Assistant Engineer (D1), Ajmer Vidyut Vitran Nigam Limited & Anr. vs. Rahmatullah Khan alias Page 73 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 Rahamjulla rendered in Civil Appeal No. 1672 of 2020 was considering the meaning of "first due" in Section 56 of the Electricity Act and whether recourse to disconnection can be taken after two years. Also the question of whether in case of a mistake, the starting point of limitation should be the date when the mistakes was discovered. Relevant paras are reproduced as under:
"7.4 the period of limitation of two years would commence from the date on which the electricity charges became "first due"
under sub-section (2) of Section 56. This provision restricts the right of the licensee company to disconnect electricity supply due to non-payment of dues by the consumer, unless such sum has been shown continuously to be recoverable as arrears of electricity supplied, in the bills raised for the past period.
If the licensee company were to be allowed to disconnect electricity supply after the expiry of the limitation period of two years after the sum became "first due", it would defeat the object of Section 56(2).
8. Section 56(2) however, does not preclude the licensee company from raising a Page 74 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 supplementary demand after the expiry of the limitation period of two years. It only restricts the right of the licensee to disconnect electricity supply due to non- payment of dues after the period of limitation of two years has expired, nor does it restrict other modes of recovery which may be initiated by the licensee company for recovery of a supplementary demand.
9. Applying the aforesaid ratio to the facts of the present case, the licensee company raised an additional demand on 18.03.2014 for the period July, 2009 to September, 2011.
The licensee company discovered the mistake of billing under the wrong Tariff Code on 18.03.2014. the limitation period of two years under Section 56(2) had by then already expired.
Section 56(2) did not preclude the licensee company from raising an additional or supplementary demand after the expiry of the limitation period under Section 56(2) in the case of a mistake or bona fide error. It did not however, empower the licensee company to take recourse to the coercive measure of disconnection of electricity supply, for recovery of the additional demand.
As per Section 17(1)(c) of the Limitation Act, 1963, in case of a mistake, the limitation Page 75 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 period begins to run from the date when the mistake is discovered for the first time." 17.1 the Apex Court categorically held that Section 56(2) of the Electricity Act, 2003 did not preclude the licensee company from raising an additional or supplementary demand expiry of the limitation period.
18. In the case of M/s. Prem Cottex (supra), the Apex Court in paras 14 to 27 held as under:
"14. But a careful reading of Section 56(2) would show that the bar contained therein is not merely with respect to disconnection of supply but also with respect to recovery. If Sub- section (2) of Section 56 is dissected into two parts it will read as follows:-
(i) No sum due from any consumer under this Section shall be recoverable after the period of two years from the date when such sum became first due; and Page 76 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
(ii) the licensee shall not cut off the supply of electricity.
15. therefore, the bar actually operates on two distinct rights of the licensee, namely, (i) the right to recover; and (ii) the right to disconnect. the bar with reference to the enforcement of the right to disconnect, is actually an exception to the law of limitation. Under the law of limitation, what is extinguished is the remedy and not the right. To be precise, what is extinguished by the law of limitation, is the remedy through a court of law and not a remedy available, if any, de hors through a court of law. However, section 56(2) bars not merely the normal remedy of recovery but also bars the remedy of disconnection. This is why we think that the second part of Section 56(2) is an exception to the law of limitation.
16. Be that as it may, once it is held that the term "first due" would mean the date on which a bill is issued, (as held in para 6.9 of Rahamatullah Khan) and once it is held that the period of limitation would commence from the date of discovery of the mistake (as held in paragraphs 9.1 to 9.3 of Rahamatullah Khan), then the question of allowing licensee to recover the Page 77 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 amount by any other mode but not take recourse to disconnection of supply would not arise. But Rahamatullah Khan says in the penultimate paragraph that "the licensee may take recourse to any remedy available in law for recovery of the additional demand, but barred from taking recourse to disconnection of supply under sub- section (2) of section 56 of the Act".
17. It appears from the narration of facts in paragraph 2 of Rahamatullah Khan (supra) that this Court was persuaded to take the view that it did, on account of certain peculiar facts. the consumer in that case was billed under a particular tariff code for the period from July-2009 to September-2011. But after audit, it was discovered that a different tariff code should have been applied. therefore, a show cause notice was issued on 18.03.2014 raising an additional demand for the period from July2009 to September-2011. then a bill was raised on 25.05.2015 for the aforesaid period. therefore, the consumer successfully challenged the demand before the District Consumer Forum, but the Order of the District Forum was reversed by the State Commission on an appeal by the licensee. the National Commission on a Page 78 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 revision filed by the consumer, set aside the order of the State Commission and restored the order of the District Forum. It was this Order of the National Commission that was under
challenge before this Court in Rahamatullah Khan (supra).
18. Eventually, this Court disposed of the appeals, preventing the licensee from taking recourse to disconnection of supply, but giving them liberty to take recourse to any remedy available in law for recovery of the additional demand. therefore, the decision in Rahamatullah Khan (supra) is distinguishable on facts.
19. Even otherwise there are two things in this case, which we cannot overlook. the first is that the question whether the raising of an additional demand, by itself would tantamount to any deficiency in service, clothing the consumer fora with a power to deal with the dispute, was not raised or considered in Rahamatullah Khan (supra). the second is the impact of Subsection (1) of Section 56 on Sub- section (2) thereto.
20. the fora constituted under the Consumer Protection Act, 1986 is entitled to deal with the complaint of a consumer, either in relation to defective Page 79 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 goods or in relation to deficiency in services. the word "deficiency" is defined in Section 2(1)(g) of the Consumer Protection Act, 1986 as follows:
"2(1)(g) "deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service;
21. the raising of an additional demand in the form of "short assessment notice", on the ground that in the bills raised during a particular period of time, the multiply factor was wrongly mentioned, cannot tantamount to deficiency in service. If a licensee discovers in the course of audit or otherwise that a consumer has been short billed, the licensee is certainly entitled to raise a demand. So long as the consumer does not dispute the correctness of the claim made by the licensee that there was short assessment, it is not open to the consumer to claim that there was any Page 80 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 deficiency. This is why, the National Commission, in the impugned order correctly points out that it is a case of "escaped assessment" and not "deficiency in service".
22. In fact, even before going into the question of Section 56(2), the consumer forum is obliged to find out at the threshold whether there was any deficiency in service. It is only then that the recourse taken by the licensee for recovery of the amount, can be put to test in terms of Section 56. If the case on hand is tested on this parameter, it will be clear that the respondents cannot be held guilty of any deficiency in service and hence dismissal of the complaint by the National Commission is perfectly in order.
23. Coming to the second aspect, namely, the impact of Sub-section (1) on Sub-section (2) of Section 56, it is seen that the bottom line of Sub-section (1) is the negligence of any person to pay any charge for electricity. Sub- section (1) starts with the words "where any person neglects to pay any charge for electricity or any some other than a charge for electricity due from him".
24. Sub-section (2) uses the words "no sum due from any consumer under this Section". therefore, the bar under Sub- Page 81 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 section (2) is relatable to the sum due under Section 56. This naturally takes us to Sub-section (1) which deals specifically with the negligence on the part of a person to pay any charge for electricity or any sum other than a charge for electricity. What is covered by section 56, under sub-section (1), is the negligence on the part of a person to pay for electricity and not anything else nor any negligence on the part of the licensee.
25. In other words, the negligence on the part of the licensee which led to short billing in the first instance and the rectification of the same after the mistake is detected, is not covered by Sub-section (1) of Section 56.
Consequently, any claim so made by a licensee after the detection of their mistake, may not fall within the mischief, namely, "no sum due from any consumer under this Section", appearing in Sub-section (2).
26. the matter can be examined from another angle as well. Sub section (1) of Section 56 as discussed above, deals with the disconnection of electric supply if any person "neglects to pay any charge for electricity". the question of neglect to pay would arise only after a demand is raised by the licensee. If Page 82 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 the demand is not raised, there is no occasion for a consumer to neglect to pay any charge for electricity. Sub- section (2) of Section 56 has a non-
obstante clause with respect to what is contained in any other law, regarding the right to recover including the right to disconnect. therefore, if the licensee has not raised any bill, there can be no negligence on the part of the consumer to pay the bill and consequently the period of limitation prescribed under Sub-section (2) will not start running. So long as limitation has not started running, the bar for recovery and disconnection will not come into effect. Hence the decision in Rahamatullah Khan and Section 56(2) will not go to the rescue of the appellant.
27. therefore, we are of the view that the National Commission was justified in rejecting the complaint and we find no reason to interfere with the Order of the National Commission. Accordingly, the appeal is dismissed. However, since the appellant has already paid 50% of the demand amount pursuant to an interim order passed by this Court on 19.08.2014, we give eight weeks time to the appellant to make payment of the balance amount. there shall be no order as to costs."
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19. These decisions therefore would support the contentions of the counsel for the Electricity Company that the bar with reference to the enforcement of the right to disconnect is actually an exception to the law of limitation. Therefore, the law of limitation will not come in the way of the Electricity Company to recover dues for a period beyond three years.
20. The submissions of Mr. S.N. Soparkar, learned Senior Counsel in Special Civil Application No. 17582 of 2017 and Special Civil Application No. 19007 of 2018 have therefore to be answered in the negative on these aspects too. the findings of the Electricity Ombudsman, Gujarat State in Cases No. 97, 98 and 99 of 2019 and the order dated 23.12.2019 are not sustainable in light of the decision of the Apex Court in the case of Prem Cottex (supra).
21. For all the aforesaid reasons, Special Civil Page 84 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023 C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023 Application No. 17582 of 2017, Special Civil Application No. 19007 of 2018, 1224 of 2019 and Special Civil Application No. 443 of 2021 are dismissed. Accordingly, Special Civil Application No. 2089 of 2022, Special Civil Application No. 8095 of 2021 and Special Civil Application No. 9160 of 2021 are allowed.
(BIREN VAISHNAV, J) FURTHER ORDER After pronouncement of the judgement / order, learned counsel Mr.Amar Bhatt in SCA No.19007 of 2018 and Ms. Nisha Oza learned counsel appearing for M/s.Wadia Gandhi & Co for the petitioner in SCA No.1224 of 2019 requests the Court that the interim relief granted earlier may be continued. Ms.Bhaya, learned counsel appearing for the respondent - Electricity Company has vehemently opposed to the extension of interim relief.
Interim relief granted earlier in SCA No.19007 of 2018 is extended upto 17.04.2023.
(BIREN VAISHNAV, J) ANKIT SHAH Page 85 of 85 Downloaded on : Fri Mar 31 20:51:39 IST 2023