Gujarat High Court
Gujarat Electricity Board vs Navyug Steel Industries on 27 June, 2018
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SA/242/2014 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SECOND APPEAL NO. 242 of 2014
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
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1 Whether Reporters of Local Papers may be allowed to YES
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law NO
as to the interpretation of the Constitution of India or any
order made thereunder ?
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GUJARAT ELECTRICITY BOARD
Versus
NAVYUG STEEL INDUSTRIES
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Appearance:
MS LILU K BHAYA(1705) for the PETITIONER(s) No. 1,2
MR CHETAN B ASTIK(6625) for the RESPONDENT(s) No. 1
MR NIRZAR S DESAI(2117) for the RESPONDENT(s) No. 1
MR. KULDEEP D VAIDYA(7045) for the RESPONDENT(s) No. 1
VIRAL K SHAH(5210) for the RESPONDENT(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 27/06/2018
ORAL JUDGMENT
1. This Second Appeal under Section100 of the CPC is at the instance of the original defendants and is directed against the judgment and order dated 06/08/2013 passed by the 2nd Additional District Judge, Page 1 of 25 C/SA/242/2014 JUDGMENT Bhavnagar in the Regular Civil Appeal No.357 of 2003 arising from the judgment and decree dated 29/11/2003 passed by the 2nd Joint Civil Judge, Bhavnagar in the Regular Civil Suit No.231 of 1993.
2. For the sake of convenience, the appellants herein shall be referred to as the original defendants and the respondents shall be referred to as the original plaintiff.
3. The facts giving rise to this Second Appeal as recorded by the lower appellate Court in its judgment and order is as under: 3.1 The plaintiff had filed a Regular Civil Suit No.231 of 1993 against the defendants, namely, Gujarat Electricity Board for declaration and permanent injunction. The facts in nutshell are as under: 3.2 The plaintiff is a registered partnership firm and is running its business at Plots Nos.161 to 164 at Chitra Industrial area in the name and style of M/s. Navyug Steel Industries from 01121991. These units were purchased from M/s. R.K. Surgical Rerolling Mills Division by auction from Gujarat State Financial Corporation. These units were declared sick after purchasing and as per the Government Policy for reestablishing such sick units, it had declared policy of granting exemption from taxes and the Government dues and the present unit was declared as sick unit by the committee on 31071991 and as per section1, the earlier unit had electric connection of GEB and it could not utilise the same even them, the minimum charges were recovered from the said unit. However, the same was decided to be waived. The terms were to be informed within 15 days after the meeting was held and this is how, except GEB, all the Government and SemiGovernment Institutions have passed on the benefit of sick units Page 2 of 25 C/SA/242/2014 JUDGMENT to the present appellant. However, due to rigid attitude of the GEB, it did not provide electricity and the plaintiff could not start its production. The GEB started supplying the electricity on payment of Rs.50,000/ as deposit till the deposit of minimum charge and security was decided by the officers at Gandhinagar of GEB and Industrial and Mines Department. Thus, after starting the unit in the year - 1992, in the month of July, the committee held its meeting for the sick units wherein, the officers of the defendants remained present and had agreed to pass on the benefit available to the sick units. The Joint Industrial Commission who is also member of this committee had written a letter in the year - 1991 to the State Government and to the GEB that as per the decision, taken in meeting, held on 3107 1991, the benefits to be given to the plaintiff, are compulsory and is to be implemented by the Board and again in the meeting in 1992, in the month of July, officers of the Board declared by Resolution to implement and, therefore, they cannot back out from the said Resolution and they cannot reconsider or make changes from the said Resolution. Despite of these facts, the defendants, by a letter dated 21011993, asked the plaintiff to deposit Rs.4,19,285.48ps. And asked for Rs.3,49,000/ as security deposit and further, by a letter dated 15031993 which is second letter, instead of Rs.4,19,000/, asked for Rs.3,68,689.05ps. The plaintiff had asked to withdraw this letter and requested to do so to the Industrial Commissioner as well as the Chief Minister and the officers of the Board. However, vide letter dated 13041993, the Board had issued a notice to the plaintiff to deposit the aforesaid amount within 10 days, failing which, it was threatened that the plaintiff would face disconnection. This action of the defendants is unconstitutional. The Board had filed a Special Civil Suit No.80 of 1989 for recovery of its dues which is pending. Therefore, the plaintiff was constrained to file the present suit inter alia contending that the notice, issued by the Board dated 2341993, is illegal, against their Page 3 of 25 C/SA/242/2014 JUDGMENT own policy and against the principle of natural justice and hence, permanent injunction be granted against the defendants restraining them from disconnecting the electricity, provided to the plaintiff.
3.3 To the aforesaid suit, on issuance of summons, the defendants filed their written statement vide Ex.21 and denied the facts of the plaint and inter alia contended that the plaintiff had entered into undertaking on a Notarized Stamppaper promising to pay a sum of Rs.3 lacs and more and had also promised to pay the sum in 10 equal monthly installments. It was further contended that the plaintiff has become consumer from 01121991 of the defendant - Board and amount of more than Rs.4 lacs was to be recovered from the previous owner for which, the present plaintiff had issued a bond to that effect and had also promised to pay the same installments. However, it failed to pay such amount.
4. The trial Court framed the following issues vide Exh.120.
(1) Whether the plaintiff proves that the person signing the plaint is partner of the firm and whether such partnership firm is registered under the Indian Law?
(2) Whether the plaintiff proves that notice at Mark4/7 is illegal?
(3) Whether the plaintiff has brought the suit on insufficient Court fees?
(4) Whether this Court does not have jurisdiction to conduct the trial of the suit filed by the plaintiff?
(5) Whether the suit of the plaintiff is barred by nonjoinder of party?
(6) Whether the plaintiff is entitled for the reliefs as claimed for in the plaint?
(7) What order and decree?
5. The issues referred to above came to be answered by the trial Page 4 of 25 C/SA/242/2014 JUDGMENT Court as under: (1) In the affirmative.
(2) In the negative.
(3) In the affirmative.
(4) In the affirmative.
(5) In the negative.
(6) In the negative.
(7) As per order.
6. Upon overall appreciation of the oral as well as documentary evidence on record, the trial Court declined to grant the declaration as prayed for by the plaintiff and dismissed the suit. The trial Court took the view that the plaintiff although may be a subsequent purchaser of the property in a public auction, yet would be liable to discharge the liabilities of the erstwhile owner towards the defendants.
7. The plaintiff being dissatisfied with the judgment and order passed by the trial Court dismissing the suit preferred a Regular Civil Appeal No.357 of 2003 in the Court of the 2nd Additional District Judge at Bhavnagar.
8. The lower appellate Court framed the following points for determination of the first appeal.
(1) Whether the judgment passed by the learned Trial Court suffers from inherent lack of jurisdiction because of finding that it did not had pecuniary jurisdiction to try the Suit?
(2) Whether the suit was based on insufficient Court Fee?
(3) Whether the judgment and decree, passed by the Court suffers from patent illegality, more particularly, in view of the judgment, pronounced by the Hon'ble Apex Court in the Case of (M/s.) Isha Marbles v/s. Bihar State Electricity Board (supra) and by the Hon'ble High Court of Gujarat in Torrent Power (supra) and further, not considering the documents and evidences on record in accordance with law?
Page 5 of 25 C/SA/242/2014 JUDGMENT
(4) What order?
9. The points for determination framed by the lower appellate Court came to be answered as under: (1) In the negative.
(2) In the affirmative.
(3) In the affirmative.
(4) As per final order.
10. The lower appellate Court partly allowed the appeal filed by the plaintiff declaring the notice issued by the defendants Exh.139 dated 13/04/1993 seeking to recover an amount of Rs.3,68,689=05ps. as illegal. The defendants were permanently restrained from recovering the said amount from the plaintiff.
11. Being dissatisfied with the judgment and order passed by the lower appellate Court, the original defendants are here with the present Second Appeal formulating the following substantial questions of law in the memorandum of the second appeal.
(1) When the agreement has been arrived at between the parties to pay the dues of the earlier consumer in installments, thereafter withdrawal by one of the parties, will not the principle of promissory estoppel be applicable?
(2) Whether the appellants are entitled to recover the dues of the earlier consumer in view of Conditions of Supply and Electricity Supply Code which empower the appellant electricity company to recover the dues of the earlier consumer?
12. Ms. Lilu Bhaya, the learned counsel appearing for the appellants - defendants vehemently submitted that the plaintiff having filed an Page 6 of 25 C/SA/242/2014 JUDGMENT undertaking in writing on oath to discharge the liability of the erstwhile owner towards the dues of the electricity consumed cannot be permitted to turn around and say that, such undertaking is not binding to him as the same is contrary to the settled position of law as regards the liability of the purchaser of the property so far as the payment of the electricity dues of the erstwhile owner is concerned.
13. Ms. Bhaya in the course of her submission placed on record Exh.160 i.e.the undertaking filed by the original plaintiff dated 10/10/1991. Ms. Bhaya would submit that the original plaintiff is estopped from getting himself discharged from the liability of the erstwhile owner having filed an undertaking in writing on oath in that regard. In such circumstances referred to above, Ms. Bhaya prays that as substantial questions of law are involved in this second appeal, the second appeal may be admitted and allowed.
14. On the other hand, this appeal has been vehemently opposed by the learned counsel appearing for the respondent - plaintiff. The learned counsel would submit that no error not to speak of any error of law could be said to have been committed by the lower appellate Court in partly allowing the appeal and thereby, granting the necessary relief as prayed for in the suit. According to the learned counsel, there is no substantial question of law involved in this second appeal and therefore, the appeal deserves to be dismissed.
15. Having heard the learned counsel appearing for the parties and having considered the materials on record, the only question that falls for my consideration is whether any substantial question of law is involved in the present second appeal.
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16. In the memorandum of the second appeal, two questions have been framed as the proposed substantial questions of law. One is with regard to the principle of promissory estoppel and the other is with regard to the right of the appellants - original defendants to recover the dues of the erstwhile consumer from the subsequent purchaser of the property in terms of the conditions of supply of Electricity Supply Code.
17. In my view, none of the two questions formulated could be termed as substantial questions of law. So far as the second substantial question of law is concerned, as referred to above, the same is squarely covered by two decisions of this Court.
(1) 2012 (1) G.L.H. 525 Govindbhai Somnathbhai Suthar,Proprietor of GSP Industrial Vs. Uttar Gujarat Vij Co. Ltd.
(2) 2013 (1) G.L.H. 363 Sanjay Balvantrai Desai & Ors. Vs. Dakshin Gujarat Vij Company Ltd. & Ors.
18. The Full Bench of this Court decided a pure question of law i.e. Whether Clause 4.1.11 as amended by the Gujarat Electricity Regulatory Commission [Electricity Supply Code and Related Matters] [Third Amendment] Regulations, 2010 is violative of either the Electricity Act, 2003 or Articles 14 or 19[1][g] of the Constitution of India.
19. The Full Bench answered the question of law as under: "On consideration of the entire materials, we, consequently, find that the first part of the Regulation 4.1.11 as amended by the Gujarat Electricity Regulatory Commission [Electricity Supply Code and Related matters] [3rd Amendment] Regulations, 2010, enabling a licensee to recover the dues of defaulted consumer from the subsequent purchaser of the premises where the supply of electricity was given to the defaulted consumer is ultra vires the provisions of Sections 43, 50, Page 8 of 25 C/SA/242/2014 JUDGMENT 56 and 181 of the Electricity Act itself, being inconsistent with those provisions of the Act. We, accordingly, declare the said part of the provision as ultra vires and direct the Respondents not to give effect to the same. The petition is allowed. Let there be also orders in terms of the remaining prayers made in paragraph 22[a] of the petition."
20. In Gondbhai Somnathbhai Suthar [Supra], the petitioner prayed refund of the entire amount recovered by the Electricity Company on the ground that he was otherwise not liable in law or in accordance with the Regulations of the Company to discharge any liability of the erstwhile owner. In the said case, the Electricity Company had demanded dues of the erstwhile owner for the purpose of new electric connection and compelled the auction purchaser [petitioner] to deposit the entire dues of the erstwhile owner. The Electricity Act, 2003 and the Regulation2(J) of the conditions were not in force at the relevant point of time. Having regard to the same, the Division Bench held as under:
6. For the first time in the case of Isha Marbles (supra), the Supreme Court considered the issue as to whether the auction purchaser is liable to meet the liability of the old consumer of electricity to the premises which is purchased by him in the auction sale. The Supreme Court answered this issue in favour of the auction purchaser holding as under :
"56. From the above it is clear that the High Court has chosen to construe Section 24 of the Electricity Act correctly. There is no charge over the property. Where that premises comes to be owned or occupied by the auctionpurchaser, when such purchaser seeks supply of electric energy he cannot be called upon to clear the past arrears as a condition precedent to supply. What matters is the contract entered into by the erstwhile consumer with the Board. The Board cannot seek the enforcement of contractual liability against the third party. Of course, the bona fides of the sale may not be relevant.
57. The form of requisition relating to the contract is in Annexure VIII prescribed under Clause VI of the Schedule to the Electricity Act. They cannot make the auction purchaser liable. In the case of Isha Marbles we have already extracted the relevant Page 9 of 25 C/SA/242/2014 JUDGMENT clause wherein the consumer was asked to state his willingness to clear off the arrears to which the answer was in the negative. Therefore, the High Court has rightly held that the auction purchaser, namely, "the writ petitioner before us is ready and willing to enter into a now contract that the auction purchaser does not intend to obtain the continuance of supply of electrical energy on the basis of the old agreement". It Is true that it was the same premises to which reconnection is to be given. Otherwise, with the change of every ownership new connections have to be issued does not appear to be the correct line of approach as such a situation is brought about by the inaction of the Electricity Board in not recovering the arrears as and when they fall due or not providing itself by adequate deposits.
58. This is a case of sale under Section 29 of the Corporation Act. Of course, what the Corporation seeks to recover are the loans advanced by enforcement of a mortgage. Such sale cannot affect the right of the Board to recover the dues as and when such dues arose, is a point to be put against it.
59. Turning to the instruction issued by the Chairman of the Board and a Circular dated 19.1.72 on which the High Court had relied, in our considered view, is again to be weighed against the Electricity Board.
60. In view of the above, we hold that the decision in the Souriyar Luka (supra) on which reliance is placed by Mr.Gopal Subramaniam is correct. The ruling of National Textile Corporation (M.P.) Ltd., Bhopal (supra) rested on the interpretation. of the provisions of Sick Textile Undertakings (Nationalisation) Act (57 of 1974). That is not relevant, the question with which we are concerned did not directly arise in Bihar State Electricity Board, Patna and others v. M/s. Green Rubber Industries and others 1990 (1) SCC 731. We do not think it is necessary for us to refer to Rant Chandra Prasad Sharma and others v. State of Vihar and another AIR 1967 SC 349 since that case related to coowner.
61. What we have discussed above pears to be the law gatherable from the various provisions which we have detailed out above. It is impossible to impose on the purchasers a liability which was not incurred by them.
62. No doubt, from the tabulated statement above set out, the auction purchasers came to purchase the property after disconnection but they cannot be 'consumer or occupier' within the meaning of the above provisions till a contract is entered Page 10 of 25 C/SA/242/2014 JUDGMENT into.
63. We are clearly of the opinion that there is great reason and justice in holding as above. Electricity is public property. Law, in its majesty, benignly protects public property and behoves everyone to respect public property. But, the law, as it stands, is inadequate to enforce the liability of the previous contracting party against the auction purchaser who is a third party and is in no way connected with the previous owner/occupier. It may not be correct to state, if we hold as we have done above, it would permit dishonest consumers transferring their units from one hand to another, from time to time, infinitum without the payment of the dues to the extent of lacs and lacs of rupees and each one of them can easily say that he is not liable for the liability of the predecessor in interest. No doubt, dishonest consumers cannot be allowed to play truant with the public property but inadequacy of the law can hardly be a substitute for overzealousness. .. .. .."
7. Later on the Supreme Court had an occasion to consider the law as laid down in the case of Isha Marbles (supra) in Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd., reported in (2006) 13 SCC 101. In the case of Paramount Polymers Pvt. Ltd. (supra), the Terms and Conditions of Supply contained a provision (Clause 21A) providing that reconnection or new connection shall not be given to any premises where there are arrears of any amount, unless the arrears are cleared. In light of this provision (Clause 21A), the Supreme Court distinguished from Isha Marbles (supra) on the following reasons :
"7. .. .. ..
"This Court in Hyderabad Vanaspati Ltd. v. A.P. SEB [1998] 2 SCR 620 has held that the Terms and Conditions for Supply of Electricity notified by the Electricity Board under Section 49 of the Electricity (Supply) Act are statutory and the fact that an individual agreement is entered into by the Board with each consumer does not make the terms and conditions for supply contractual. This Court has also held that though the Electricity Board is not a commercial entity, it is entitled to regulate its tariff in such a way that a reasonable profit is left with it so as to enable it to undertake the activities necessary. If in that process in respect of recovery of dues in respect of a premises to which supply had been made, a condition is inserted for its recovery from a transferee of the undertaking, it cannot ex facie be said to be unauthorized or unreasonable. Of course, still a court may be able to strike it down as being violative of the fundamental rights enshrined in the Constitution of India. But that is a Page 11 of 25 C/SA/242/2014 JUDGMENT different matter. In this case, the High Court has not undertaken that exercise. The position obtaining in Isha Marbles (supra) was akin to the position that was available in the case on hand in view of the Haryana Government Electrical Undertakings (Dues Recovery) Act, 1970. There was no insertion of a clause like Clause 21A as in the present case, in the Terms and Conditions of Supply involved in that case. The decision proceeded on the basis that the contract for supply was only with the previous consumer and the obligation or liability was enforceable only against that consumer and since there was no contractual relationship with the subsequent purchaser and he was not a consumer within the meaning of the Electricity Act, the dues of the previous consumer could not be recovered from the purchaser. This Court had no occasion to consider the effect of clause like Clause 21A in the Terms and Conditions of Supply. We are therefore of the view that the decision in Isha Marbles (supra) cannot be applied to strike down the condition imposed and the first respondent has to make out a case independent on the ratio of Isha Marbles (supra), though it can rely on its ratio if it is helpful, for attacking the insertion of such a condition for supply of electrical energy. This Court was essentially dealing with the construction of Section 24 of the Electricity Act in arriving at its conclusion. The question of correctness or otherwise of the decision in Isha Marbles (supra) therefore does not arise in this case especially in view of the fact that the High Court has not considered the question whether Clause 21A of the terms and conditions incorporated is invalid for any reason.""
8. The decision in the case of Paramount Polymers (P) Ltd. (supra) was followed subsequently by the Supreme Court in Paschimanchal Vidyut Vitran Nigam Ltd. v. Excell Buildcon Pvt. Ltd., reported in (2008) 10 SCC 720. Later on once again the Supreme Court in Paschimanchal Vidyut Vitran Nigam Ltd. v. DVS Steel and Alloys Pvt. Ltd., reported in (2009) 1 SCC 210, reiterated the principle that the electricity dues do not constitute a charge on the premises and where the Rules require such payment, the same will be binding on the purchaser. The Supreme Court held in Paschimanchal Vidyut Vitran Nigam Ltd. (supra) as under :
"8. .. ....
"A transferee of the premises or a subsequent occupant of a premises with whom the supplier has no privity of contract cannot obviously be asked to pay the dues of his predecessor in title or possession, as the amount payable towards supply of electricity does not constitute a `charge' on the premises. A purchaser of a premises, cannot be foisted with the electricity dues of any previous occupant, merely because he happens to be Page 12 of 25 C/SA/242/2014 JUDGMENT the current owner of the premises.
When the purchaser of a premises approaches the distributor seeking a fresh electricity connection to its premises for supply of electricity, the distributor can stipulate the terms subject to which it would supply electricity. It can stipulate as one of the conditions for supply, that the arrears due in regard to the supply of electricity made to the premises when it was in the occupation of the previous owner/occupant, should be cleared before the electricity supply is restored to the premises or a fresh connection is provided to the premises. If any statutory rules govern the conditions relating to sanction of a connection or supply of electricity, the distributor can insist upon fulfillment of the requirements of such rules and regulations. If the rules are silent, it can stipulate such terms and conditions as it deems fit and proper, to regulate its transactions and dealings. So long as such rules and regulations or the terms and conditions are not arbitrary and unreasonable, courts will not interfere with them. A stipulation by the distributor that the dues in regard to the electricity supplied to the premises should be cleared before electricity supply is restored or a new connection is given to a premises, cannot be termed as unreasonable or arbitrary. In the absence of such a stipulation, an unscrupulous consumer may commit defaults with impunity, and when the electricity supply is disconnected for nonpayment, may sell away the property and move on to another property, thereby making it difficult, if not impossible for the distributor to recover the dues. Provisions similar to Clause 4.3(g) and (h) of Electricity Supply Code are necessary to safeguard the interests of the distributor.""
9. In a very recent pronouncement of the Apex Court in the case of Haryana State Electricity Board v. M/s.Hanuman Rice Mills and others, reported in JT 2010 (8) SC 619, the Supreme Court once again considered the issue in question by considering all the previous judgments and held that in general law a transferee of a premises cannot be made liable for the dues of the previous owner/occupier, but if statutory rules or terms and conditions of supply authorises the supplier of electricity to demand from the purchaser of a property claiming reconnection or fresh connection of electricity, then the arrears of dues by the previous owner can be recovered from the purchaser. Final conclusion of the Supreme Court as held in paragraph9 is as under :
"9. The position therefore can may be summarized thus :
(i) Electricity arrears do not constitute a charge over the property. Therefore in general law, a transferee of a premises Page 13 of 25 C/SA/242/2014 JUDGMENT cannot be made liable for the dues of the previous owner/occupier.
(ii) Where the statutory rules or terms and conditions of supply which are statutory in character, authorize the supplier of electricity, to demand from the purchaser of a property claiming reconnection or fresh connection of electricity, the arrears due by the previous owner/ occupier in regard to supply of electricity to such premises, the supplier can recover the arrears from a purchaser."
10. Thus, the review of the case law as discussed above makes the position very clear. If there are statutory rules or terms and conditions of supply authorising the supplier of electricity to demand from the purchaser of a property claiming reconnection or fresh connection of electricity, then the purchaser is obliged to make good the arrears due by the previous owner and the respondentCompany can claim and recover arrears from a purchaser.
11. POSITION IN THIS CASE :
In the year 1994 when the present issue cropped up, the Electricity Act, 2003 was not in force. It is an admitted position that Condition 2(j) of the Regulations as relied upon by the respondentCompany was also not in force. In short, there were no statutory rules or terms and conditions of supply statutory in character in the year 1994 authorizing the respondentCompany to demand from the purchaser of a property claiming for fresh connection of electricity, the arrears of dues by the previous owner/occupier in regard to supply of electricity to such premises. It is, therefore, clear that in the year 1994, the demand of the respondentCompany for the arrears of dues of the previous owner M/s.Deep Wires Private Ltd. from the appellant was without any basis and statutory rules. It deserves to be noted that the payments were made by the appellant in October, 1994 by cheques which were realized on January 2, 1995. The appellant informed the respondentCompany that he has already made the payment of Rs.1,43,286/ as demanded by the respondentCompany towards the dues of M/s.Deep Wires Private Ltd. and requested the respondent Company to provide with a new connection on February 3, 1995. Exactly after one month, the Supreme Court in Isha Marbles (supra) made the position of law very clear. The question which we need to address is as to whether the appellant could have relied upon the decision of the Apex Court in the case of Isha Marbles (supra) for the purpose of claiming refund of the amount. It is true that Isha Marbles (supra) is subsequent in point of time i.e. after the payment was made to the respondentCompany. The contention of the learned counsel for the respondentCompany is that the judgment of the Supreme Court in the case of Isha Marbles (supra) cannot be followed retrospectively as Page 14 of 25 C/SA/242/2014 JUDGMENT the same is prospective in nature. In short, the substance of the contention is that where a party has already made payment, such party cannot claim refund relying upon the decision in the case of Isha Marbles (supra).
12. We are of the view that the law declared by the Supreme Court is presumed to be the law at all times. We do not find on plain reading of the entire judgment of the Supreme Court in the case of Isha Marbles (supra) that the same would be applicable prospectively and not retrospectively. Firstly, there is no such clarification in the judgment itself and in absence of such clarification from the Supreme Court, the law has to be applied retrospectively.
13. The Supreme Court in the case of M.A. Murthy v. State of Karnataka and others, reported in (2003) 7 SCC 517, while explaining the doctrine of prospective overruling held as under :
"8. .. .. .. Normally, the decision of this Court enunciating a principle of law is applicable to all cases irrespective its stage of pendency because it is assumed that what is enunciated by the Supreme Court is, in fact, the law from inception. The doctrine of prospective overruling which is a feature of American jurisprudence is an exception to the normal principle of law, was imported and applied for the first time in L.C. Golak Nath and Ors. v. State of Punjab and Anr. (AIR 1967 SC 1643). In Managing Director, ECIL, Hyderabad and Ors. v. B. Karunakar and Ors. (1993 (4) SCC 727) the view was adopted. Prospective overruling is a part of the principles of constitutional canon of interpretation and can be resorted to by this Court while superseding law declared by it earlier. It is a device innovated to avoid reopening of settled issues, to prevent multiplicity of proceedings, and to avoid uncertainty and avoidable litigation. In other words, actions taken contrary to the law declared prior to the date of declaration are validated in larger public interest. The law as declared applies to future cases. (See Ashok Kumar Gupta v. State of U.P. (1997) 5 SCC 201, Baburam v. C.C. Jacob (1999) 3 SCC 362). It is for this Court to indicate as to whether the decision in question will operate prospectively. In other words, there shall be no prospective overruling, unless it is so indicated in the particular decision. It is not open to be held that the decision in a particular case will be prospective in its application by application of the doctrine of prospective over ruling. The doctrine of binding precedent helps in promoting certainty and consistency in judicial decisions and enables an organic development of the law besides providing assurance to the individual as to the consequences of transactions forming part of the daily affairs. .. .. .."Page 15 of 25
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14. Two principles can be culled out from the aforesaid decision of the Supreme Court in the case of M.A. Murthy (supra) :
i. Law declared by the Supreme Court is presumed to be the law at all times i.e. the law from inception. ii. It is for the Court to indicate as to whether the decision in question will operate prospectively or retrospectively. In short, there shall be no prospective overruling unless it is so indicated in a particular decision.
15. By reason of a judgment, as is wellknown, a law is declared.
Declaration of a law may affect the rights of the parties retrospectively. Prospective application of a judgment by the Court must, therefore, be expressly stated. It would not be open for this Court now at this stage to say that though the Supreme Court in Isha Marbles (supra) has not clarified as to whether Isha Marbles (supra) would apply prospectively or retrospectively, but this Court can now say having regard to the nature of the issue that the same would apply prospectively. This is not permissible in light of ruling of the Supreme Court in the case of Sarwan Kumar and another v. Madan Lal Aggarwal, reported in AIR 2003 SC 1475. In Sarwan Kumar's case (supra), the Supreme Court was dealing with an issue as to whether a decree for ejectment passed by a Civil Court qua a commercial tenancy in the State of Delhi before the declaration of law by the Supreme Court in Gian Devi Anand v. Jeevan Kumar, reported in AIR 1985 SC 796, that such a tenancy is heritable, is executable or the judgmentdebtors can successfully object to the execution of the decree on the ground that the same was passed by a Court lacking inherent jurisdiction and, therefore, inexecutable. The Supreme Court while answering this question held in paragraph 13 as under :
"13. For the first time this Court in Golak Nath Vs. State of Punjab, AIR 1967 SC 1643 accepted the doctrine of "prospective overruling". It was held:
"As this Court for the first time has been called upon to apply the doctrine evolved in a different country under different circumstances, we would like to move warily in the beginning. We would lay down the following propositions: (1) The doctrine of prospective overruling can be invoked only in matters arising under our Constitution; (2) it can be applied only by the highest court of the country, i.e., the Supreme Court as it has the constitutional jurisdiction to declare law binding on all the courts in India; (3) the scope of the retroactive operation of the law declared by the Supreme Court superseding its "earlier decisions" is left to its discretion to be moulded in accordance Page 16 of 25 C/SA/242/2014 JUDGMENT with the justice of the cause or matter before it."
The doctrine of "prospective overruling" was initially made applicable to the matters arising under the Constitution but we understand the same has since been made applicable to the matters arising under the statutes as well. Under the doctrine of "prospective overruling" the law declared by the Court applies to the cases arising in future only and its applicability to the cases which have attained finality is saved because the repeal would otherwise work hardship to those who had trusted to its existence. Invocation of doctrine of "prospective overruling" is left to the discretion of the court to mould with the justice of the cause or the matter before the court. This Court while deciding the Gian Devi Anand's case (supra) did not hold that the law declared by it would be prospective in operation. It was not for the High Court to say that the law laid down by this Court in Gian Devi Anand's case (supra) would be prospective in operation. If this is to be accepted then conflicting rules can supposedly be laid down by different High Courts regarding the applicability of the law laid down by this Court in Gian Devi Anand's case (supra) or any other case. Such a situation cannot be permitted to arise. In the absence of any direction by this Court that the rule laid down by this Court would be prospective in operation the finding recorded by the High Court that the rule laid down in Gian Devi Anand's case (supra) by this Court would be applicable to the cases arising from the date of the judgment of this Court cannot be accepted being erroneous."
16. In Dr.Suresh Chandra Verma and others v. The Chancellor, Nagpur University and others, reported in 1990 (4) SCC 55, the Supreme Court held as under:
".. .. .. It is unnecessary to point out that when the Court decides that the interpretation of a particular provision as given earlier was not legal, it in effect declares that the law as it stood from the beginning was as per its decision, and that it was never the law otherwise. .. .. .."
17. In Lily Thomas and others v. Union of India and others, reported in 2000 (6) SCC 224, the Supreme Court held as under :
".. .. .. We are not impressed by the arguments to accept the contention that the law declared in Sarla Mudgal case cannot be applied to persons who have solemnised marriages in violation of the mandate of law prior to the date of judgment. This Court had not laid down any new law but only interpreted the existing law which was in force. It is a settled principle that the Page 17 of 25 C/SA/242/2014 JUDGMENT interpretation of a provision of law relates back to the date of the law itself and cannot be prospective from the date of the judgment because concededly the Court does not legislate but only gives an interpretation to an existing law. .. .. .."
18. Applying the principles of law as explained by the Supreme Court in the aforesaid decisions, we have no hesitation in coming to the conclusion that the respondentCompany could not have demanded the dues of the previous owner M/s.Deep Wires Private Ltd. from the appellant for the purpose of fresh electric connection. We are convinced from the materials on record that the appellant was left with no choice but to deposit the amount with the respondent Company and accordingly the appellant deposited the same in the year 1994. The appellant may have deposited in the name of previous owner M/s.Deep Wires Private Ltd. but as a matter of fact, the payment was actually made by the appellant from his own account. It cannot lie in the mouth of the respondentCompany to say that the arrears were paid by the erstwhile owner and not by the appellant and, therefore, the appellant has no locus to claim for refund of the sum relying on the decision in the case of Isha Marbles (supra). This contention on behalf of the respondentCompany deserves to be rejected outright.
19. We are of the view that on pronouncement of the Supreme Court in the case of Isha Marbles (supra), a legitimate right accrued in favour of the appellant herein to pray for refund of the requisite amount. As a matter of fact, we have noticed that in the earlier round of litigation the stand of the respondentCompany was also the same. The reason being that while disposing of Special Civil Application No.4698 of 1996 on October 28, 2009, the learned Single Judge recorded the submission of the learned counsel for the respondent Company that where the dispute and/or controversy is prior to introduction of Condition 2(j), normally the Gujarat Electricity Board would reconsider the matter.
21. Thus, in view of the above, atleast one thing is clear that the plaintiff being the subsequent purchaser in a public auction conducted by the Gujarat State Financial Corporation was not liable to discharge any liabilities including the payment of the electricity bill of the erstwhile owner. However, according to the defendants, although the plaintiff may not be liable in law to discharge the liabilities of the erstwhile owner, yet having filed an undertaking on oath in writing, Page 18 of 25 C/SA/242/2014 JUDGMENT Exh.160, he is now estopped in law from taking such a plea.
22. Let me look into the undertaking, Exh.160 filed by the plaintiff.
UNDERTAKING I, V.B. Tayal, S/o. Late Sh. Tulsi Ram, residing at AG/3, Ravi Flats, Jail Road, Bhavnagar is a partner in M/s. Navyug Steel Industries, Plot No.161 to 164, G.I.D.C., Chitra, Bhavnagar as karta of M/s. V.B. Tayal & Sons (H.U.F.). I as karta of M/S. V.B. Tayal & Sons (H.U.F.) alongwith Smt. Kiran Tayal W/O. Sh. V.B. Tayal are partners in M/s. Navyug Steel Industries Bhavnagar and has taken over the assets of M/s. R.K. Surgical (ReRolling Mills Division) situated at plot No.161 to 164 in G.I.D.C. Estate Chitra, Bhavnagar from Gujarat State Financial Corporation thrutender.
That we have taken over the possession of assets of M/s. R.K. Surgical (ReRolling Mills Division) on 20th May 91 and as per the Government Resolution No.GIU10913224Ch Dt.20th June - 91 for Scheme for Rehabilitation of Small Scale and NonBIFR Sick Industries, we had applied to the State Level Committee Constituted by the State Government for various incentives and concessions available to the sick and closed industries as per the above Government Resolution.
The State Level Committee held on 31th July91 has approved us a package of incentives and concessions in their meeting and among them one was for the waiver of minimum charges by the G.E.B. for the period for which factory was closed in the past years and to reconnect Power Supply on the basis of old security deposit lying credit to our account with the G.E.B. Accordingly, we had applied to the Gujarat Electricity Board at their H.O. in Baroda to comply with the decision of the State Level Committee and reconnect us Power Supply at the earliest.
The Gujarat Electricity Board vide their letter No.ON/GEB/_/P17N 677/6025, dt.20/09/91 has directed us to pay Rs.3,23,850=22 in installments which was inclusive of certain minimum charges for the period in which factory was closed and also advised us to pay fresh security deposit of Rs.3,49,000/.
In response to the above letter, we have objected to the ___ (com.) Gujarat Electricity Board, Baroda vide our letter dtd.2709/91 and a copy of this letter was forwarded to the Industries Commissioner Page 19 of 25 C/SA/242/2014 JUDGMENT objecting their decision and showed our inability to pay such & __ amount.
Thereafter, a joint meeting was held in the office of Dy. Secretary (Energy) IMED at Gandhinagar on dtd.01/10/91 and it was decided to deposit Rs.50,000/= (Rupees Fifty Thousand) as down payment and to keep the issue for the Board Meeting of the G.E.B. who will decide the matter keeping in view our representation and other legal aspects and as per the Govt. Resolutions issued in this behalf and we will have to file an undertaking with the Board on a Stamp Paper.
Now therefore, we undertake to file this undertaking that we will accept the decision of the meeting of the Board Members of the Gujarat Electricity Board, keeping in view the various Govt. Resolutions and it will be binding on us.
This undertaking is filed on this 10th day of October 1991.
(V.B. Tayal)
23. The question is how far the defendants can enforce such an undertaking on the principle of promissory estoppel. Ms. Bhaya submitted that by filing an undertaking Exh.160, the plaintiff could be said to have waived his legal right to assert that he should not be asked to pay the electricity dues of the erstwhile owner.
24. On the other hand, the case of the plaintiff is that the undertaking was filed by him under a misconception of law as regards his liability to pay the dues towards the electricity bill of the erstwhile owner.
25. The principle of promissory estoppel may be stated thus: Where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow Page 20 of 25 C/SA/242/2014 JUDGMENT him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective whether there is any preexisting relationship between the parties or not. Of course the basic requirement for invoking this principle must be present namely, that the factsituation should be such that :injustice can be avoided only by enforcement of the promise".
The doctrine of promissory estoppel is not really based on the principle of estoppel, but it is a doctrine evolved by equity in order to prevent injustice. There is no reason why it should be given only a limited application by way of defence. It can be the basis of a cause of action.
For attracting the doctrine of promissory estoppel, what is necessary is only that the promisee should have altered his position in relying on the promise. It is not necessary that he should suffer any detriment as well. [See: M/s. Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh And Others; (1979) 2 SCC 409]
26. "Waiver" is a question of fact and it must be properly pleaded and proved. No plea of waiver can be allowed to be raised unless it is pleaded and the factual foundation is laid. "Waiver" means, abandonment of a right and it may be either express or implied from conduct, but its basic requirement is that it must be "an intentional act with knowledge". In the case on hand, there is nothing to show that on the date when the plaintiff filed an undertaking on oath in writing Exh.160, he had full knowledge of his liability to pay the electricity dues of the erstwhile owner. There is no presumption that every person knows the liability. The rule is that "ignorance of the law does not excuse". However, this is a maxim of very different scope and application. This maxim has been discussed and explained by the Supreme Court in the case of M/s. Motilal Padampat Sugar Mills Co. Ltd. (Supra). I may quote the relevant observations as under:
4. The principal argument advanced on behalf of the appellant in support of the appeal was that the 4th respondent had given a categorical assurance on behalf of the State Government that the appellant would be exempt from payment of sales tax for a period of three years from the date of commencement of production and such Page 21 of 25 C/SA/242/2014 JUDGMENT assurance was given intending or knowing that it would be acted on by the appellant and in fact the appellant, acting in reliance on it, altered its position and the State Government was, therefore, bound, on the principle of promissory estoppel, to honour the assurance and exempt the appellant from sales tax for a period of three years from 2nd July, 1970, being the date on which the factory of the appellant commenced production. The appellant assailed the view taken by the High Court that this claim of the appellant for exemption based on the doctrine of promissory estoppel was barred by waiver, because the appellant had by its letter dated 25th June, 1970 accepted that it would avail of the exemption granted under the letter of the 5th respondent dated 20th January, 1970 and charged sales tax at the concessional rate of 31/2% instead of 7% during the first year of its production. The appellant urged that waiver was a question of fact which was required to be pleaded and since no plea of waiver was raised in the affidavit filed on behalf of the State Government in opposition to the writ petition, it was not competent to the State Government to rely on the plea of waiver for the first time at the hearing of the writ petition. Even if the plea of waiver were allowed to be raised, notwithstanding that it did not find place in the pleadings, no waiver was made out, said the appellant, since there was nothing to show what were the circumstances in which the appellant had addressed the letter dated 25th June, 1970 stating that it would avail of the exemption granted under the letter dated 20th January, 1970 and it was not possible to say that the appellant, with full knowledge of its right to claim total exemption from payment of Sales Tax, waived that right and agreed to accept the concessional rates set out in the letter dated 20th January, 1970. The State Government on the other hand strongly pressed the plea of waiver and submitted that the appellant had clearly waived its right to complete exemption form payment of Sales Tax by addressing the letter dated 25th June, 1970. The State Government also contended that, in any event, even if there was no waiver, the appellant was not entitled to enforce the assurance given by the 4th respondent, since such assurance was not binding on the State Government and moreover, in the absence of notification under S. 4A, the State Government could not be prevented from enforcing the liability to sales tax imposed on the appellant under the provisions of the Act. It was urged on behalf of the State Government that there could be no promissory estoppel against the State Government so as to inhibit it from formulating and implementing its policies in public interest. These were broadly the rival contentions urged on behalf of the parties and we shall now proceed to consider them.
5. We shall first deal with the question of waiver since that can be disposed of in a few words. The High Court held that even if there was an assurance given by the 4th respondent on behalf of the State Page 22 of 25 C/SA/242/2014 JUDGMENT Government and such assurance was binding on the State Government on the principle of promissory estoppel, the appellant had waived its right under it by accepting the concessional rates of sales tax set out in the letter of the 5th respondent dated 20th Jan., 1970. We do not think this view taken by the High Court can be sustained. In the first place, it is elementary that waiver is a question of fact and it must be properly pleaded and proved. No plea of waiver can be allowed to be raised unless it is pleaded and the factual foundation for it is laid in the pleadings. Here it was common ground that the plea of waiver was not taken by the State Government in the affidavit filed on its behalf in reply to the writ petition, nor was it indicated even vaguely in such affidavit. It was raised for the first time at the hearing of the writ petition. That was clearly impermissible without an amendment of the affidavit in reply or a supplementary affidavit raising such plea. If waiver were properly pleaded in the affidavit in reply, the appellant would have had an opportunity of placing on record facts showing why and in what circumstances the appellant came to address the letter dated 25th June, 1970 and establishing that on these facts there was no waiver by the appellant of its right to exemption under the assurance given by the 4th respondent. But in the absence of such pleading in the affidavit in reply, this opportunity was denied to the appellant. It was, therefore, not right for the High Court to have allowed the plea of waiver to be raised against the appellant and that plea should have been rejected in limine.
6. Secondly, it is difficult to see how, on the facts, the plea of waiver could be said to have been made out by the State Government. Waiver means abandonment of a right and it may be either express or implied from conduct, but its basic requirement is that it must be "an intentional act with knowledge," per Lord Chelmsford, L. C. in Earl of Darnley v. London, Chatham and Dover Rly. Co., (1867) 2 HL 43 at p. 57. There can be no waiver unless the person who is said to have waived is fully informed as to his right and with full knowledge of such right, he intentionally abondons it. It is pointed out in Halsbury's Laws of England (4th ed) Vol. 16 in papa. 1472 at p. 994 that for a "waiver to be effectual it is essential that the person granting it should be fully informed as to his rights" and Isaacs, J. delivering the judgment of the High Court of Australia in Craine v. Colonial Mutual Fire Insurance Co. Ltd. (1920) 28 CLR 305 has also emphasised that waiver "must be with knowledge, an essential supported by many authorities." Now in the present case there is nothing to show that at the date when the appellant addressed the letter dated 25th June, 1970, it had full knowledge of its right to exemption under the assurance given by the 4th respondent and that it intentionally abandoned such right. It is difficult to speculate what was the reason why the appellant addressed the letter dated 25th June, 1970 stating that it would avail of the concessional rates of sales Page 23 of 25 C/SA/242/2014 JUDGMENT tax granted under the letter dated 20th Jan., 1970. It is possible that the appellant might have thought that since no notification exempting the appellant from sales tax had been issued by the State Government under Sec, 4A, the appellant was legally not entitled to exemption and that is why the appellant might have chosen to accept whatever concession was being granted by the State Government. The claim of the appellant to exemption could be sustained only on the doctrine of promissory estoppel and this doctrine could not be said to be so well defined in its scope and ambit and so free from uncertainty in its application that we should be compelled to hold that the appellant must have had knowledge of its right to exemption on the basis of promissory estoppel at the time when it addressed the letter dated 25th June, 1970. In fact in the petition as originally filed, the right to claim total exemption from sales tax was not based on the plea of promissory estoppel which was introduced only by way of amendment. Moreover, it must be remembered that there is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not a correct statement: there is no such maxim known to the law. Over a hundred and thirty years ago, Maule J., pointed out in Martindale v. Falkner, (1846) 2 CB 706:
"There is no presumption in this country that every person knows the law: it would be contrary to common sense and reason if it were so".
Scrutton, L. J., also once said:
"It is impossible to know all the statutory law, and not very possible to know all the common law."
But it was Lord Atkin who, as in so many other spheres, put the point in its proper context when he said in Evans v. Bartlam, 1937 AC 473:
"......... the fact is that there is not and never has been a presumption that every one knows the law. There is the rule that ignorance of the law does not excuse, a maxim of very different scope and application."
It is, therefore, not possible to presume, in the absence of any material placed before the Court, that the appellant had full knowledge of its right to exemption so as to warrant an inference that the appellant waived such right by addressing the letter dtd. 25th June, 1970. We accordingly reject the plea of waiver raised on behalf of the State Government.
27. In view of the above, I am of the view that the lower appellate Court was justified in partly allowing the Regular Civil Appeal filed by Page 24 of 25 C/SA/242/2014 JUDGMENT the plaintiff. The appellants - defendants have failed to point out any jurisdictional error or patent illegality apparent on the record of the case in the impugned judgment of the lower appellate Court. The appellants have failed to put into service any substantive argument so as to convince this Court to take a different view than the one taken by the lower appellate Court. This is not a case of concurrent findings of fact. However, the lower appellate Court being the final Court of facts, there is no scope for interference at the end of this Court while exercising its jurisdiction under Section100 CPC because there is no question of law, much less substantial question of law thereof found involved in the instant appeal.
28. In the result, this Second Appeal fails and is hereby dismissed.
(J.B.PARDIWALA, J) aruna Page 25 of 25