Karnataka High Court
M/S Sri Balaji Agro Industries vs The Managing Director & Ors on 7 August, 2017
Author: G.Narendar
Bench: G. Narendar
1 R
IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 7TH DAY OF AUGUST, 2017
BEFORE
THE HON'BLE MR. JUSTICE G. NARENDAR
WRIT PETITION NOS. 202710/2017
& 202739/2017(GM-KEB)
BETWEEN
M/S SRI. BALAJI AGRO INDUSTRIES
CHICKSUGUR INDUSTRIAL GROWTH CENTER,
CHIKSUGUR, RAICHUR,
THROUGH ITS AUTHORIZED
SIGNATORY PARTNER.
... PETITIONER
(BY SRI LIYAQAT FARID USTAD, ADV.)
AND
1. THE MANAGING DIRECTOR,
GESCOM, KALABURAGI-585103.
2. THE SUPERINTENDENT ENGINEER
(ELE) O & M, CIRCLE,
GESCOM, RAICHUR-585103.
3. ASSISTANT EXECUTIVE ENGINEER
(ELE) O & M, RURAL SUB DIVISION,
GESCOM, RAICHUR-585103.
... RESPONDENTS
(BY SRI RAVINDRA REDDY, ADV.)
THESE WRIT PETITIONS ARE FILED UNDER ARTICLES
226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
ISSUE THE WRIT OF CERTIORARI AND QUASH THE DEMAND
NOTICE DATED 17.03.2017 VIDE ANNEXURE-C AND DEMAND
NOTICE DATED 21.06.2017 ISSUED BY THE RESPONDENT NO.3
VIDE ANNEXURE-L VIDE RR NO.HTR 153 ETC.
2
THESE PETITIONS COMING ON FOR PRELIMINARY
HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
Heard the learned counsel for the petitioner and the learned counsel for the respondents.
2. The petitioner is before this Court being aggrieved by the demand notice dated 21.06.2017 marked at Annexure-L to the writ petition. That the petitioner is an Agro based industry carrying on its activities at Chicksugur Industrial Growth Center, Raichur and for the power supply, the respondents have installed meter bearing No.HTR-153 with sanctioned load of 120 KVA. That on the written request of the consumer i.e., the petitioner herein, the load capacity was enhanced to 200 KVA. The enhancement was done with effect from 23.11.2009 and in this regard a contract also came to be executed by the petitioner which is produced at Annexure R1 with the statement of objections. From the said date of installation, the 3 petitioner was classified as a HT-2(A) consumer and as per the terms of the contract, he was required to pay meter rates on a constant of MC-200.
3. It is submitted by the learned counsel for the petitioner that on 21.01.2017, the petitioner was shocked to receive the demand notice claiming a sum of Rs.22,28,665/- and upon enquiry the petitioner was informed by the officer of the respondents' organisation that on account of miscalculation by the meter reader, the meter constant was calculated at a constant of MC 150 instead of the constant at MC 200 and that the mistake had commenced in August, 2012 and subsisted till December, 2016 and hence the present demand in view of the short claim on account of an account of an inadvertent act.
4. It is further submitted that by another demand notice dated 17.03.2017 the said officer once again issued a demand notice claiming back billing charges, this time around the sum claimed was 4 Rs.23,54,231/- which is produced at Annexure-C to the writ petition. Thereafter, by letter dated 18.03.2017 the respondents have clarified the demand dated 17.03.2017 and admitted that the mistake was on account of omission and hence neither penalty nor interest is levied.
5. It is submitted that thereafter the respondents issued present demand notice dated 31.03.2017 calling upon the petitioner to file his objections if he so desires to the provisional demand. In response to the same, the petitioner has also filed detailed objections and one of the prime ground of the defence was that the demand is more than two years old from the date of the amount first becoming due and hence in terms of the provisions of Section 56(2) of the Electricity Act, the respondent/Corporation is not entitled to demand payment of the same and is barred by limitation.
56. The learned counsel for the petitioner would contend that thereafter the respondents by communication dated 08.05.2017 intimated the petitioner that in the event of demand is not settled within seven days, the power connection to the petitioner premises would be disconnected. It is contended by the learned counsel for the petitioner that vide objections dated 31.03.2017 he has set out his objections in detail with regard to the demand on account of short claim to his installation and that in response to the same, the 3rd respondent had once again reiterated the demand dated 21.06.2017.
Aggrieved by the same, the petitioner is before this Court.
7. It is contended that the demand is barred by limitation in view of the provisions of Section 56(2) of the Electricity Act, which reads as follows:
"Section 56(2) of the Electricity Act, 2003 - Notwithstanding anything contained 6 in any other law for the time being in force, no sum due from any consumer, under this section shall be recoverable after the period of two years form the date when such sum became first due unless such sum has been shown continuously as recoverable as arrear of charges for electricity supplied and the licensee shall not cut off the supply of the electricity."
8. It is further contended that the demand is also contrary to the provisions of Regulation No. 29(3) of the Conditions of Supply of Electricity and Distribution of Licences. That 15 days notice has not been granted in terms of the said regulation. It is further contended that the signatory to the demand notice has no authority or competency to issue the demand notice produced at Annexure-L to the writ petition.
The petitioner has not produced any material to demonstrate the same, hence the said contention has to be rejected and is accordingly rejected.
79. The learned counsel for the petitioner has placed reliance on the decision of this Court and a ruling rendered by the High Court of Punjab & Haryana and Chandigarh rendered in Writ petition No. 17699/2014 dated 19.12.2015. On perusal of the same, it is seen that the contention raised by the petitioner has been clarified by the Bench vide Regulation No.05/2006-07 whereby it is clarified that the provisions of Section 56(2) of the Electricity Act will become applicable from the date of detection of mistake by an officer or the date on which demand was first raised. In the light of the clarification by a Circular, the same has been accepted by the Court and the petition is ordered accordingly and hence the said ruling is of no avail to the case canvassed by the petitioner. On the contrary the said finding is adverse to the case of the petitioner.
810. Nextly, the learned counsel for the petitioner would rely upon the order passed by this Court in Writ petition No. 6330/2006. The facts of the case reveal that primary contention in the proceedings was whether the subsequent purchaser of immovable properties/ premises are liable for the electricity dues of the previous owner and as to whether the electricity dues constitute charge on the property.
This Court after considering the issue in detail has been pleased to hold that electricity dues do not constitute a charge on the property. In this regard, reliance is placed on the ruling of the Hon'ble Apex Court and while so, holding, the learned Judge has also referred to the provisions of sub-section (2) of Section 56 of the Electricity Act and held that the BESCOM ought to have recovered the dues within two years from coming into force of the Electricity Act 2003, that is this Court held that dues of erstwhile KEB ought to have been recovered within the two years from the date of 9 coming into force of the Act i.e., the Electricity Act, 2003. On a closer examination, it is seen that the Court had not entered upon and interpreted the provisions of Section 56(2) of the Electricity Act as contended by the petitioners counsel.
11. Per contra, the learned counsel for the respondents would contend that the petition is not maintainable and that the short comings came to light when audit objections were raised. He would contend that in the month of August, 2012, a new sub-station came to be established and on account of which there was a change of jurisdiction of RR installation and that on account of the transfer of the installation from one jurisdiction to another, the files were misplaced and mistakes occurred and on account of such an in-
advertent act by the new office, the demand instead of being shown as MC-200 was wrongly shown as MC-150.
That the position continued from August, 2012 to 10 December, 2016 and bills were accordingly issued and thereby resulting in a short claim.
12. It is further contended by the learned counsel for the respondents that the petitioner cannot be permitted to take undue advantage of the clerical errors and mistakes. He would contend that there is no bonafide on the part of the petitioner as the petitioner had executed a written undertaking to pay meter bills calculated at a constant of MC-200 and was well aware of his liability, despite and independent of the error of the meter reader.
13. He would further contend that it is not the case of the petitioner that he ever attempted to rectify the mistake pointed out by the respondent - Board. He would contend that if the petitioner is permitted to retain the said amount which is due to the public exchequer, it would amount to unjust enrichment of the petitioner at cost of the State exchequer. He would 11 submit that the issue is no more res-integra and has been settled by the pronouncement by various High Courts, more particularly, the order of this Court rendered in W.P.No.17255/2007 disposed off on 05.11.2008 and by the High Court of Bombay in W.P.No.264/2006 decided on 18.01.2007.
14. The Bombay High Court while disposing of the writ petition No. 264/2006 has been pleased to hold as follows in Paragraph Nos. 8, 9, 10 and 11:
"8. The reference to a charge for electricity due from a person to the licensee or, a generation company occurs in two contexts in the provisions of Section 56. The first context is Sub-section(1) of Section 56 in which a neglect to pay a charge for electricity due to a licensee or a generating company can form the basis of a disconnection of supply of electricity if a notice of 15 clear days is given. The second context is Sub-section(2) of Section 56 in which the recovery of a sum due from the consumer under the section is 12 restricted to a period of two years from the date when such sum first became due. In construing the expression "due" the interpretation that is to be placed must be harmonized so as to be applicable both in the context of Sub-section (1) and Sub-section (2) of Section 56. A sum cannot be said to be due from the consumer unless a bill for the electricity charges is served upon the consumer. Any other construction would give rise to a rather anomalous or absurd result that a disconnection of supply would be contemplated even without the service of a bill. Though the liability of a consumer arises or is occasioned by the consumption of electricity, the payment falls due only upon the service of a bill. Thus, for the purposes of Sub-section (1) and Sub-section (2) of Section 56, a sum can be regarded as due from the consumer only after a bill on account of the electricity charges is served upon him. In fact, under the later part of Sub-section (2) of Section 56 an exception is carved out to the principle that no sum due from the consumer shall be recoverable after a period of two years 13 from the date when such sum became due. The exception is that when such sum is shown continuously as recoverable as arrears of charges for electricity supply. In other words where a bill continues to show the sum recoverable as arrears of charges for electricity supplied, the sum due can fall for recovery even after the expiry of a period of two years.
9. The interpretation which has been placed above on the expression "sum due" has also been accepted in a judgment of a Learned Single Judge of the Delhi High Court in H.D.Shourie's case. Mr. Justice B.N. Kirpal (as the Learned Chief Justice then was) construed the provisions of Section 24(1) of the earlier Electricity Act, 1910 under which an enabling provision was made for disconnection of electricity supply if a person neglected to pay any charge for energy which is due from him. The Learned Judge held that the expression "due" in Section 24 would not refer to the consumption of electricity but as being payable after a valid bill has been sent to the consumer The Court held as follows:14
As I read Section 24 of the Electricity Act and Section 28 of the Corporation Act, it appears to me that the amount of charges would become due and payable only with the submission of the bill and not earlier. As has been mentioned herein above, it is the bill which stipulates the period within which the charges are to be paid. The period which is provided is not less than 15 days after the receipt of the bill. If the word "due" in Section 24 is to mean consumption of electricity, and if the argument of the learned counsel for the petitioner is correct, it would mean that electricity charges would become due and payable the moment electricity is consumed and if charges in respect thereof are not paid then even without a bill being issued a notice of disconnection would be liable to be issued u/s 24. This certainly could not have been the intention of the Legislature. Section 24 gives a right to the licensee to issue not less than 7 days' notice if charges due to it or not paid The word "due" in this context must mean due and payable after a valid bill has been sent to the consumer. It cannot mean 7 15 days notice after consumption of the electricity and without submission of the bill.
Even though the liability to pay may arise when the electricity is consumed by the petitioner, nevertheless it becomes due and payable only when the liability is quantified and a bill is raised. Till after the issue and receipt of the bill the respondents have no power or jurisdiction to threaten disconnection of the electricity which has already been consumed but for which no bill has been sent.
10. Section 50 of the Electricity Act, 2003 empowers the State Commission to specify an electricity supply code to provide for recovery of electricity charges, intervals for billing of electricity charges, disconnection of supply of electricity for non-payment, restoration of supply and other cognate matters. In exercise of the power conferred by Section 50 the State Commission has framed the Maharashtra Electricity Regulatory Commission (Electricity supply Code and Other Conditions of Supply) Regulations, 16 2005 Regulation 15 provides for billing. Regulation 15.2 provides for the details of a bill. A bill is inter alia required to provide information of the date of the bill and the due date of payment. The due date of payment is therefore prescribed in the bill itself and obviously it is upon the dispatch of the bill that a due date is expected to occur. The bill is also required to provide for the arrears. The Regulations which were enacted in 2005 provide a clear indicator in respect of the due date for the payment of a bill Clause 15.5.1 provides thus:
15.5.1. The due date for the payment of a bill shall be mentioned on the bill and such due date shall be not less than twenty-one days from the bill date in the case of residential and agricultural consumer, and not less than fifteen days in the case of other consumers.
11. Clearly, therefore the Regulations demonstrate that a bill falls due for payment on the date mentioned in the bill which is not to be less than 21 days and 15 days respectively from the bill date in the case of 17 residential and agricultural consumers on one hand and the other consumers on the other hand. The Ombudsman was therefore clearly in error in postulating that the claim was barred on the ground that the arrears for consumption became due immediately on the usage of energy. This finding is ex facie contrary to the provisions of Sub-section (2) of Section 56. The provisions contained in the Regulation fortify this conclusion which independently emerges on a plain and grammatical interpretation of the provisions of Section 56."
15. Further this Court while disposing off W.P.No.17255/2007 has specifically framed the following points for consideration with reference to the interpretation that ought to be placed on provisions of Section 56(2) of the Electricity Act.
1. Whether the period of 2 years mentioned in C1.29.08 has to be reckoned from the date of service of installation from which date there is a short claim on account of wrong classification or 2 years has to be reckoned 18 from the date of notice of wrong classification by the petitioner-company?
2. Whether in the absence of a third member to the Forum, order passed by R-2 has to be quashed and matter requires to be re- considered by R-2?
3. Whether there is any efficacious alternate remedy available to the petitioner in order to direct the petitioner to go before the Ombudsman?
16. The Court has placed reliance on the rulings of the Division Bench reported in AIR 2007 Bombay 52 (Awadesh S.Pandey - vs - Tata Power Co. Ltd. And Others) and was pleased to hold as follows in paragraph Nos. 9, 10, 11 and 12 as follows :-
9. So far as point No.1 is concerned, it is purely an interpretation of provisions of C1.29.08.
C1.29.03 of the conditions of supply of Electricity of Distribution Licensees in the state of Karnataka reads as hereunder:
19"Supplemental claims: For preferring the supplemental claims, the Licensee shall serve a provisional assessment order with 15 days notice to the consumer to file his objections, if any, against the provisional assessment order on account of faulty meter of short claims caused due to erroneous billing and obtain his reply. After considering; the objections of the Consumer, the Licensee shall issue the final order. The consumer shall be intimated to make the payment within 15 days of the date of payment within 15 days of the date of intimation, failing which, the power supply to the installation shall be disconnected and such amount shall be deemed to be arrears of electricity charges. The licensee shall indicate in the final order, the provisions of K.E.R.C. (Consumer Grievance Redressal Form and Ombudsman_ Regulations, 2004.
Note: 1) If the due date happens to be a holiday for the office of issue, the next working day shall be deemed to be the due date.
2) Any complaint with regard to errors in the bill shall be made either in person or in writing to the office of issue and the amount of such bill shall be paid under protest within the due date. The Licensee shall accept the cash/cheque/D.D. at the cash counter, if the payment is made under protest."20
From the reading of the above clause, it is clear to the Court that the petitioner-company either on account of faulty meter or short claim caused due to erroneous billing can raise a demand for supplemental claims in accordance with C1.29.03. Even though the petitioner-company has raised the bill regularly based on wrong classification from the date of installation still the petitioner is empowered to raise a supplemental claim under c1.29.03. This fact is not disputed by the counsel for R-1. The only dispute is in regard to the powers of the petitioner to raise a demand for more than two years prior to the issuance of supplemental bill.
10. Division Bench of Bombay High Court while interpreting Sec.56 of the Electricity Act, 2003 in AWADESH S.PANDEY Vs. TATA POWER CO. LTD. AND OTHERS (A.I.R.2007 BOMBAY-52) has ruled as under:
"7. We then come to the next issue as to whether the demand made by R-1 is contrary to the provision of Section 56 of the Electricity Act. We have already narrated the facts. The Electricity 21 Ombudsman by his order of 18th July, 2006, held that the respondent No.1 is entitled to recover past dues by correcting multiplying factor. The question posed by the Electricity Ombudsman to itself was whether the recovery could be made for the entire period of 26 months i.e., for a period from October, 2003 to November, 2005 and that too belatedly in January, 2006. After considering the various provisions including the regulations, the Ombudsman held, only those charges for a period of two years previous to the demand could be recovered and that the arrears for the consumption in January, 2004 became first due in February, 2004 as supplementary bill was raised in 2006 and these dues having been within two years are recoverable under the provisions of Section 56(2) of the Electricity Act.
Submission of counsel for the petitioner is that the provisions of Section 56 do not empower respondent No.1 to recover any amount if the period of two years has elapsed no can electricity supply be cut off for non-payment of those dues. In other words, what is sought to be contended is that if the demand or part of the demand is time barred the provisions of Sec.56 would not be attracted. We are afraid, we cannot subscribe to that proposition. Section 56(1) is a special provision, enabling the generating company or the licensee to cut off supply of electricity until such charges or sum as 22 demanded under Section 56(1) is paid. Relying on sub-section (2), it was strenuously urged that Section 56(1) cannot be resorted to after the period of two years from the date when such demand became first due. In our opinion, sub-section (2) only provides a limitation, that the recourse to recovery by cutting of electricity supply is limited for a period of 2 years from the date when such sum became due. As long a sum is due, which is within two years of the demand and can be recovered, the licensee of the generating company can exercise its power of coercive process of recovery by cutting of electricity supply. This is a special mechanism provided to enable the licensee or the generating company to recover its dues expeditiously. The Electricity Act has provided that mechanism for improvement of supply of electricity and to enable the licensee or generating company to recover its dues. Apart from the above mechanism, independently it can make recovery by way of a suit. In our opinion, therefore, the impugned order passed by the Electricity Ombudsman does not suffer from any error apparent on the face of the record and consequently there is no merit in this petition."
But in the similar circumstances in M/s TATA STEEL LTD. AND ETC. Vs. JHARKHAND STATE ELECTRICITY BOARD AND OTHERS (A.I.R.2008 JHARKHAND-60) Jharkhand High Court has ruled 23 that in case of wrong classification provisions of Sec. 56(2) does not apply and short claim can be demanded at any time. This judgment has been rendered by following the judgment of Delhi High Court in H.D. SHOURIE Vs. MUNICIPAL CORPORATION OF DELHI AND ANOHTER (A.I.R.1967 DELHI-219). Delhi High Court had an occasion to consider whether the bill for consumption of electricity can be sent even three years after the electricity has been consumed and the Delhi High Court has ruled that even after two years also a demand can be raised. A similar view is also taken by this Court in BANHATTI CO- OPERATIVE SPINNING MILL LTD. Vs. KARNATAKA ELECTRICITY BOARD (I.L.R.1990 KAR.-3518) which reads as under:
"9. It is relevant to notice that a claim may be barred by time but nevertheless it does not disappear nor it is extinguished. In the event the claim is barred by time, all that happens is that such a claim cannot be enforced in a Court of Law by way of a suit or other proceeding to which the Limitation Act applies. The expiry of the period of limitation prescribed for a suit to recover the amount due, does not destroy the right to the amount. It only bars the remedy. Section 27 of the Limitation Act, 1963 24 only provides that at the determination of the prescribed period of limitation limited to any person for instituting a suit for possession of any property, his right to such property shall be extinguished. Thus Section 27 in terms applies only where a suit for possession of property has become barred by Limitation. The Limitation Act with regard to person actions bars the remedy without extinguishing the rights. It is only in the case of recovery of possession of any property on the determination of the period of limitation prescribed by the Limitation Act, not only the remedy is lost but the right is also extinguished. But it is relevant to notice that there is a distinction between actions for recovery of debts and those for recovery of possession of property. A debt does not cease to be due merely because it cannot be recovered through a Court of Law by filing a suit, after the expiration of the period of limitation prescribed under the Act for instituting the suit. Thus in all person actions, the right subsists although the remedy is no longer available. It is on this principle, a creditor whose debt becomes barred by time by reason of expiry of the period of limitation can even realize the debt by any other method other than by way of a suit. The Limitation Act does not prevent a creditor from recovering lawful debt due to him by any other mode available other than a suit. In this connection it is relevant to notice Section 60 of the Contract Act 25 which enables a creditor to apply the payment made by a debtor, without any specific direction as to application of such payment, towards any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits.
The following are the observations made by the Supreme Court in BOMBAY DYSING AND MONUFACTURING CO.
LTD. Vs. THE STATE OF BOMAY AND OTHERS:
"....On this, the question arises for consideration whether a debt which is time barred can be the subject of transfer and if it can be, how it can benefit the Board to take it over if it cannot be realized by process of law. Now it is the settled law of this country that the statute of Limitation only bars the remedy but does not extinguish the debt. Section 28 of the Limitation Act Provides that when the period limited to a person for instituting a suit for possession of any property has expired, his right to such property is extinguished. And the authorities have held-and rightly, that when the property is incapable of possession, as for example, a debt, the Section has no application and lapse of time does not extinguish the right of a person thereto. Under Section 25(3) of the Contract Act, a barred debt is good consideration for a fresh promise to pay 26 the amount. When a debtor makes a payment without any direction as to how it is to be appropriated, the creditor has the right to appropriate it towards a barred debt (vide Section 60 of the Contract Act). It has also been held that a creditor is entitled to recover the debt from the surety, even though a suit on it is barred against the principal debtor .... And when a creditor has a lien over goods by way of security for a loan, he can enforce the lien for obtaining satisfaction of the debt even though an action thereon would be time barred."
In M/s BHARAT BARREL AND DRUM MANUFACTURING CO. PVT. LTD. Vs. THE MUNICIPAL CORPORATION OF GREATER BOMBAY AND ANOTHER while considering the power to discontinue supply of energy to a consumer who neglects to pay the charge or sum due, it has been held that the word 'due' occurring in Section 24 of the Indian Electricity Act, cannot be interpreted in a narrow sense as only restricting the amount within the period of limitation or which could be successfully claimed by a suit. It has also been further held that there is no logical basic for preferring a narrow construction to the ordinary construction viz., the wider construction. Thus it has been held to mean all moneys owed or payable even though their recovery may be barred by the law of limitation.
Therefore, even if it is supposed that the KEB is not entitled to recover the amount 27 through a suit, filed in a Court of Law, the right to recover it otherwise than by way of a suit is neither extinguished nor in any way it is affected by the provisions of the Limitation Act. The very liability of the petitioner to pay the amount is not extinguished.
10. There is also another approach the case. Even for the sake of argument it is presumed that the provisions of the Limitation Act are applicable, the limitation will commence or begin to run only from the date of the demand. No doubt, electricity is 'goods' and it is a moveable commodity. But the sale of it and recovery of the value of it are governed by the Regulations and the KEB is under an obligation to follow the procedure prescribed under the KEB Supply Regulations, 1988 (hereinafter referred to as 'Supply Regulations') and demand the amount towards the energy consumed in accordance with the Supply Regulations. The value of the energy consumed does not become payable under the Supply Regulations no sooner it is consumed, whereas it becomes due and payable only on issuing the bill. Regulation 30 of the Supply Regulations provides for 'Power Supply Charges'. According to the said Regulation 30, the KEB has to furnish to the consumer every month or at such intervals as proscribed by the KEB from time to time, the power supply bills for the actual or in its absence the assessed demand and/or 28 consumption, either at the spot or by post and the bill amount has to be paid within 15 days from the date of presentation of the bill. The mode of payment is also provided by Regulation 30.4, of the Supply Regulations. According to it, the consumer shall have to pay the power supply charges at the office of the issue or at the jurisdictional cash counters in cash or demand draft/cheque issued in favour of Karnataka Electricity Board. There is also a provision for issuing an additional or supplemental bill. Clause (8) of Regulation 30 of the Supply Regulations Provides that if at any time during verification of he consumer's ledger accounts any erroneous claims are noticed, the consumer is liable to pay the difference in case the revised claims are more than the claims already made.
Thus clause(8) of the Regulation 30 of the Supply Regulations enables the KEB to issue additional bill/s in case it notices on verification of consumer's ledger accounts any erroneous claims. In such an event, the consumer is liable to pay the difference in case the revised claims are more than the claims already made. Sub-clause (c) of Clause (8) thereof further provides that the supplemental claims shall be payable within 30 days from the date of intimation of he claim, failing which the installation is liable for disconnection. Therefore, even if it is construed that even for the demand and recovery of the charges payable towards consumption of electrical energy 29 otherwise than by way of a suit, the period of limitation of three years is applicable; that period commences only from the date of demand made as the charges for consumption of electricity are payable and the same are paid only after the bill is presented. Therefore, it is not possible to hold that the claim is otherwise barred by time.
In H.D.SHOURIE Vs. MUNICIPAL CORPORATION OF DELHI AND ANOTHER while considering the
question as to when the electricity charges become payable, it has been held thus:
"11. As I read Section 24 of the Electricity Act and Section 283 of the Corporation Act, it appears to me that the amount of charges would become due and payable only with the submission of the bill and not earlier. As has been mentioned hereinabove, it is the bill which stipulates the period within which the charges are to be paid. The period which is provided is not less than 15 days after the receipt of the bill. If the word 'due' in Section 24 is to mean consumption of electricity and if the argument of the learned counsel for the petitioner is correct, it would mean that electricity charges would become due and payable the moment electricity is consumed and if charges in respect thereof are not paid, then even without a bill being issued a notice of disconnection 30 would be liable to be issued under Section 24. This certainly could not have been the intention of the Legislature. Section 24 gives a right to the licensee to issue not less than 7 days notice if charges due to it are not paid. The word 'due' in this context must mean due and payable after a valid bill has been sent to the consumer. It cannot mean 7 days notice after consumption of the electricity and without submission of the bill. Even though the liability to pay may arise when the electricity is consumed by the petitioner, nevertheless it becomes due and payable only when the liability is quantified and a bill is raised. Till after the issue and receipt of the bill, the respondents have no power or jurisdiction to threaten disconnection of the electricity which has already been consumed but for which no bill has been sent.
12. Section 455 of the Municipal Corporation Act states that no proceedings for recovery of any sum which is due shall be commenced after the expiry of three years on which the sum becomes due. As I have already observed, the electricity charges become due after the bill is sent and not earlier. This being so, the proviso to Section 455 will apply only when the bill has been sent and the remedy available with the respondents for a suit to recover the said amount would come to an end after three years elapse after the electricity charges 31 have become due and payable. To put it differently, the provisions of Section 455 would come into play after the submission of the bill for electricity charges and not earlier."
The aforesaid decision accords with the view expressed by me above.
11. It is also not possible to hold that either Article 14 of the Limitation Act is applicable. Article 14 of the Limitation Act provides as follows:
Description of Period of Time from which suit Limitation period begins to run
14. For the 3 years The date of the price of goods delivery of goods.
sold and delivered where no fixed period of credit is agreed upon
In the case of supply of electrical energy, the Supply Regulations govern the contractual relationship of the Board and a consumer. The Supply Regulations fix the period for payment of the price of goods sold and delivered i.e., the Electricity sold and delivered. Therefore, Article 14 is not attracted because Supply Regulations framed in exercise of the statutory powers fix the period for payment. However, Article 15 of the Limitation Act, 1963 is attracted because it provides a period of limitation of 3 years, for the price of goods sold and delivered to be paid for after the expiry of 32 a fixed period of credit, when the period of credit expires. The Supply Regulations fix a date for payment of the amount for the electrical energy supplied and consumed. According to the provisions of Supply Regulations, the power charges become payable on the issuance of the Bill and the same has be to paid within a period of prescribed and as indicated in the Bill. The period indicated in the Bill can be taken as the period fixed for credit, because the charge is payable to sooner the bill is presented. Even if it is held that the Limitation Act applies, it is Article 15 of the Limitation Act that is applicable. It that event the Limitation commences after the expiry of the period fixed in the bill for payment of the amount. Annexure-J is issued on 22.01.1989. The period fixed for payment is 21.02.1989. Therefore, the Limitation commences on the expiry of 21.02.1989. Hence it is not possible to hold that the claim made by the KEB is barred by time. For the reasons stated above, points (i) and (ii) are answered as follows:
For making a demand and recovering the amount due representing charges of energy supplied and consumed by a consumer otherwise than by way of a suit, the provisions of the Limitation Act are not applicable. In case the charges for electrical energy supplied or consumed by a consumer are to be recovered by way of a suit, in the light of 33 the provisions contained in the Electricity (Supply Regulations Act, Art. 15 of the Limitation Act, 1963 is attracted and the suit has to be filed within three years on the expiry of the date fixed for payment of the amount demanded under the Bill."
Judgment in Banhatti Co-operative Spinning Mill has been confirmed by the Division Bench of this Court in W.P.2408/1990 dated 10.12.1990.
11. After perusal of the judgments relied upon by both the parties, this Court has to examine whether two years period stipulated under C1:29.08 has to be reckoned from date of wrong classification of the installation or from the date on which petitioner company came to know of such wrong classification. In view of C1.29.03, it is clear that an unfettered right is given to the petitioner-company to raise a supplemental claim on account of faulty meter or short claim caused due to erroneous billing. In the instant case, supplemental claim is made by the petitioner on account of wrong classification. At the time of installation, instead of raising as HT-2A it was wrongly treated as HT-2B as a result of which there was a loss of revenue to the petitioner-
company. This fact was not known to the 34 Petitioner company till the audit wing sent a report to the petitioner calling upon the petitioner to recover the difference amount. The said audit report is produced by the respondent as Annexure-R13. Annexure-R13 is dated 05.03.2007 and thereafter as per Annexure-A on 26.03.2007 a demand is raised. Now this Court has to examine whether the demand made by the petitioner as per Annexure-A dated 26.03.2007 has to be restricted only for the short claim of 2 years prior to 26.3.2007 or from the date of installation from which date there is loss of revenue to the petitioner-company.
12. Clause 29.08(a) reads as hereunder:
"At any time during verification of the Consumer's account, if any short claims caused by erroneous billing are noticed, the consumer is liable to pay the difference. The Licensee shall follow the procedure laid down under Clause 29.03 in such cases for preferring the supplemental claims.
However, the Licensee shall not recover any arrears after a period of 2 years from the date when such sum became first due, unless such sum has been shown continuously in the bill as recoverable as arrears of the charges of electricity supplied.35
In case the verification of the Consumer's account shows excess claims made in the past, the excess amount shall be credited to the consumer's account along with the interest at Bank Rate from the date of payment upto the date of credit. This shall be done within one month from the date of pointing out the excess claims. If for any reason there is delay in crediting the amount to the consumer's account, interest at 2% per month shall be paid to the consumer for the period beyond two months."
Middle paragraph of Cl.29.08 (a) deals with the period of limitation of 2 years. According to Mr.Gupta two years period has to be reckoned on which date short claim was noticed by the petitioner and even after noticing such short claim if the petitioner had slept over the matter for more than two years, in such circumstances, period of 2 years has to be restricted only from the date of demand and so far as the present case is concerned, immediately after noticing short claim based on the audit report, demand is raised as per Annexure-A dated 23.06.2007. Therefore, he contends that petitioner came to know of such short claim and within 2 years from that date 36 billing has been raised, therefore order passed by R-2 has to be quashed. Per contra, Mr.Reddy contends that the same paragraph has to be read holding that two years period has to be reckoned only in respect of the short claim for a period of 2 years from the date of issuance of demand and not earlier to that. If the contention of R-1 is accepted in Cl.29.03 itself, there would not have been restriction in regard to the demand of a short claim. Cl.29.08 has to be considered for the purpose of calculation of period of 2 years only from the date of knowledge and not from the date on which the first sum became due. It is not in dispute that the short claim was made known to the petitioner only when it received the audit report. The same date has to be considered as the date on which such sum became first due. There was no occasion for the petitioner to raise a bill prior to the receipt of the audit report. Therefore, this Court is of the opinion that the period of two years has to be counted from the day on which petitioner-company has come to know of such short claim. This paragraph has to be interpreted to restrict the period of two years if the petitioner- company has slept over the matter even after two 37 years after noticing short claim or wrong classification. Therefore, point No.1 has to be answered in favour of the petitioner.
12. In the result, this petition is allowed. Order passed by R-2 as per Annexure-F is hereby quashed."
17. From the above, it is clear that this Court has conclusively held that the calculation of period of two years is only from the date of knowledge and not from the date on which the first amount became actually due.
18. This Court is in respectful agreement with the reason and interpretation upheld by the learned Single Judge of the Bombay High Court and that of this Court rendered in W.P.No. 17255/2006.
19. Hence, in the light of the law laid down by this Court and Bombay High Court, this Court is of the considered opinion that the case canvassed by the 38 petitioner is devoid of merits and is contrary to settled law.
20. Further, in this regard a useful reference could also be made to the provisions of Section 72 of the Indian Contract Act. which reads as follows.
72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion.-A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
(a) A and B jointly owe 100 rupees to C, A alone pays the amount to C, and B, not knowing this fact, pays 100 rupees over again to C. C is bound to repay the amount to B.
(b) A railway company refuse to deliver up certain goods to the consignee except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive.
19. A Five Judges Bench of the Hon'ble Apex Court in the case of The Sales Tax Officer, Banaras and Others - vs - Kanhaiya Lal Makund Lal Saraf reported in 39 AIR 1959 SUPREME COURT 135 have conclusively held that the term "Mistake used in Section 72 of the Contract Act, has been used without qualification or limitation and comprises within its scope a mistake of law as well as a mistake of fact. That the true principle is that if one party under a mistake, whether of fact or law, pays to another party money which is not due then that money must be repaid.
The Court observed and held in Paras 9, 10 & 24 as follows:-
"9. Section 72 of the Indian Contract Act is in the following terms:
"A person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it."
10. As will be observed the section in terms does not make any distinction between a mistake of law or a mistake of fact. The term "mistake" has been used without any qualification or limitation whatever and comprises within its scope a mistake of law as 40 well as a mistake of fact. It was, however, attempted to be argued on the analogy of the position in law obtaining in England, America and Australia that money paid under a mistake of law could not be recovered and that was also the intendment of S.72 of the Indian Contract Act.
24. We are of opinion that this interpretation put by their Lordships of the Privy Council on S.72 is correct. There is no warrant for ascribing any limited meaning to the word 'mistake' as has been used therein and it is wide enough to cover not only a mistake of fact but also a mistake of law. There is no conflict between the provisions of S.72 on the one hand and Ss. 21 and 22 of the Indian Contract Act on the other and the true principle enunciated is that if one party under a mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise that money must be repaid. The mistake lies in thinking that the money paid was due when in fact it was not due and that mistake, if established, 41 entitles the party paying the money to recover it back from the party receiving the same."
21. This Court further relies on the law laid down by the Hon'ble Apex Court in the case of D.Cawasji & Co. - vs - The State of Mysore & Anr. reported in 1975 AIR 813 wherein the Apex Court while considering the scope of Section 17(1)(c) of the Limitation Act 1963 with reference to payments paid under a mistake, the period of limitation does not remain to run until the party has discovered the mistake. The relevant paragraph reads as under :-
"Section 17(1)(c) of the Limitation Act, 1963, provides that in the case of a suit for relief on the ground of mistake, the period of limitation does not begin to run until the plaintiff has discovered the mistake or could, with reasonable diligence, have discovered it. In a case where payment is made under a mistake of law as contrasted with a mistake of fact, generally the mistake becomes known to the party only when a court makes a declaration as to the invalidity of the law.42
Though a party could, with reasonable diligence, discover a mistake of fact even before a court makes a pronouncement, it is seldom that a person can, even with reasonable diligence, discover a mistake of law before a judgment adjudging the validity of the law."
22. In the light of the law laid down by the Apex Court, the contention of the petitioner that the limitation commences to run within two years from the date on which the first payment became due, cannot be accepted.
23. The Apex Court has clearly held that the period of limitation commences only when the mistake is discovered. In the instant case it is not in dispute that the mistake came to light when auditors of the Company raised objections. Further more the petitioner also lacks bonafides as a consumer and as a contracting party. He was well aware of his dues.
Despite the same he has chosen or remained a mute 43 spectator and has enjoyed the benefits accrued out of the results of short payments.
24. It is nowhere pleaded by the petitioner that the was unaware of the liability to pay at the rate of MC constant-200. The petitioner's conduct alone is responsible for the situation that he has got upon himself. Had he been a bonafide consumer, he would have immediately pointed out the anomaly in the minimum rates being charged.
25. In view of the above, the writ petitions have to be rejected and the same are accordingly, rejected.
In view of the rejection of the writ petitions, I.A.2/2017 for production of additional documents does not survive for consideration.
Sd/-
JUDGE *MK /Srt