REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1815 OF 2020
(Arising out of Special Leave Petition (C) No.19292/2018)
TELANGANA STATE SOUTHERN POWER
DISTRIBUTION COMPANY LIMITED & ANR. … Appellants
Versus
M/S. SRIGDHAA BEVERAGES …Respondent
J U D G M E N T
SANJAY KISHAN KAUL, J.
1. The respondent is an auction-purchaser of a unit owned by M/s. SB
Beverages Private Limited, which failed to pay its dues, resulting in the
auction by Syndicate Bank (Secured Creditor) under the Securitisation
and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (hereinafter referred to as the ‘SARFAESI Act’). The
1
moot point of law, which arises for consideration, is whether the liability
towards previous electricity dues of the last owner could be mulled on to
the respondent.
2. The unit in question is a mineral water bottling plan situated in
land measuring 1 acre 13 guntas in Sy. No.283 at Rampally Village,
Keesara Mandal, Medchal District. As mentioned aforesaid, on account
of failure to repay a loan, the creditor, Syndicate Bank, brought the
property to auction for which an E-auction sale notice dated 25.5.2017
was issued in this behalf, in which the respondent was the successful
auction-purchaser. In order to appreciate the controversy before us, it is
necessary to reproduce some of the relevant clauses of the auction notice:
“The property described below is being sold on “AS IS WHERE IS,
WHATEVER THERE IS AND WITHOUT RECOURSE BASIS” under
the rule no.8 & 9 of the Security Interest (Enforcement) Rules
(hereinafter referred to as the rules) for the recovery of the dues detailed
as under:
…. …. …. …. …. ….
The total
amount due
as on 30-04-
2017
Rs.13,97,26,258.77 (Rs. Thirteen crores ninety seven
lakhs twenty six thousand two hundred fifty eight and
paisa seventy seven) with future interest & costs till
date of payment accounts no 1) 373OSLB140940002 &
2) 30151010006439
Details of
encumbrances
For property no.01 Nil
For property no.02: The subsequent to our MOD,
2
over the
property, as
known to the
bank
the following transactions observed in EC
1. As per the doc no 2611/2016 dated 15/06/2016, the
mortgager has sold the property to the extent of 540 sq
yds., to private party, for worth of Rs.972000/-
2. As per the doc no.657/2015 dated 05/02/2015, the
mortgager has sold the property to the extent of 620.83
sq.yds. to The Executive officer Ramapally
Gramapanchayat for worth of Rs.1242000/-.
3. As per the doc no 2721/2014 dated 05/08/2014, the
mortgager has sold the property to the extent of 204.75
sq yds to The Gramapanchayat Executive officer
Ramapally for worth of Rs.248000/-.
Details of
outstanding
dues of Local
Government
(Property tax,
Water
sewerage,
electricity
bills, etc.)
Rs.83,17,152/- (Eighty Three Lakhs Seventeen
Thousand One Hundred Fifty Two Only)
Reserve Price
of Property
For property no.01 Rs.77,63,000/-
For property no.02 Reserve Price: Rs.5,83,37,000/-
(Rupees five crores eighty three Lakhs thirty seven
Thousand Only)
Total 28 no of Machineries items reserve price:
Rs.3,25,28,000/- (three crores twenty five lakhs twenty
eight thousand only)
…. …. …. …. …. ….
TERMS AND CONDITIONS
…. …. …. …. …. ….
3
21. The successful bidder shall bear the stamp duties, charges including
those of sale certificate, registration charges, all statutory dues payable
to central/state government, taxes and rates and outgoing, both existing
and future relating to the properties.
…. …. …. …. …. ….
24. The property is sold in “AS IS WHERE IS, WHAT IS THERE IS
AND WITHOUT ANY RECOURSE BASIS” in all respects and subject
to statutory dues if any. The intending bidders should make discrete
enquiry as regards any claim, charges/encumbrances on the properties,
of any authority, besides the bank’s charges and should satisfy
themselves about the title, extent, quality and quantity of the property
before submitting their bid. For any discrepancy in the property the
participating bidder is solely responsible for all future recourses from
the date of submission of bid.
25. No claim of whatsoever nature regarding the property put for sale,
charges/encumbrances over the property or on any other matter etc., will
be entertained after submission of the bid/confirmation of sale.
26. The Authorised Officer will not be responsible for any charge, lien,
encumbrance, property tax dues, electricity dues, etc., or any other
dues to the Government, local authority or anybody, in respect of
the property under sale.”
3. The aforesaid auction notice shows that the unit was being
sold on “as is where is, what is there is and without any recourse basis”,
as per Rules 8 & 9 of the Security Interest (Enforcement) Rules, 2002
(hereinafter referred to as the ‘said Rules’). The aforesaid clauses of the
E-auction sale notice show that the total outstanding dues were much
4
larger, but the reserve price fixed was lower, and the actual sale
consideration of the successful auctioneer was Rs.9,18,65,000, which is
approximately Rs.10 lakh more than the minimum reserve price. Clause
24 reproduced aforesaid makes it clear that when the reference is to a sale
on “as is where is, what is there is and without any recourse basis”, the
same is “in all respects and subject to statutory dues”. This clause was
further subject to another Clause 26, where the Authorised Officer
carrying out the auction absolved himself of the liability for any charge,
lien, encumbrance, property tax dues, electricity dues, etc. The purpose
is to emphasise that a holistic reading of all these clauses left little in
doubt that the auction notice provided for a reserve price, with a bid
being made about Rs.10 lakh over and above that, and certain nature of
charges, lien, encumbrances, including electricity dues were clearly
beyond the sale consideration paid.
4. We may next turn to the sale deed dated 29.9.2017 executed in
pursuance of the auction, which provided for the sale “made free from all
encumbrances known to the Secured Creditor.” An indemnity was
provided by the vendor to the respondent against “any loss arising out of
any defect in the title, including recovery of statutory liabilities taxes, as
5
also litigation expenses arising out of such defects in title.” This
indemnity was, thus, confined to aspects mentioned in this clause, but
relatable to defects in title, and not to other liabilities like electricity dues.
5. The problem for the respondent arose when he applied to appellant
No.1 seeking sanction of a 500 KVA connection required for running the
bottling plant. This request was denied on the ground that there were
previous electricity dues to the tune of Rs.50,47,715, as on 26.10.2017.
Appellant No.1 asserted its right to recover this amount even from the
new purchaser (i.e. respondent), based on a reading of Clauses 5.9.6 and
8.4 of the General Terms and Conditions of Supply of Distribution &
Retail Supply Licensees in AP (for short ‘General Terms & Conditions of
Supply’), which clauses are reproduced hereinunder:
“5.9.6 Dismantlement of Service Line after Termination of
Agreement: On the termination of the LT or HT Agreement, the
company is entitled to dismantle the service line and remove the
materials, Meter, cut out etc. After termination of the Agreement,
the consumer shall be treated as a fresh applicant for the purpose of
giving supply to the same premises when applied for by him
provided there are no dues against the previous service
connection.”
…. …. …. …. …. ….
“8.4 Transfer of Service Connection
6
The seller of the property should clear all the dues to the Company
before selling such property. If the seller did not clear the dues as
mentioned above, the Company may refuse to supply electricity to
the premises through the already existing connection or refuse to
give a new connection to the premises till all dues to the Company
are cleared.”
6. We may also take note of the fact that the aforesaid dues partake
the character of statutory dues under the Electricity Act, 2003 read with
the General Terms & Conditions of Supply.
7. A writ petition was filed by the respondent before the High Court
of Telangana and Andhra Pradesh seeking quashing of these demands
predicated on a reasoning that as a subsequent purchaser, the respondent
was not responsible for the dues of the earlier owner, and in that behalf
relied upon the judgments of this Court in Isha Marbles v. Bihar State
Electricity Board & Anr.1
and Southern Power Distribution Company
of Telangana Limited (through its CMD) & Ors. v. Gopal Agarwal &
Ors.2
Reliance on these judgments persuaded the learned single Judge to
issue directions quashing the demand of appellant No.1. The appeal filed
1 (1995) 2 SCC 648
2 (2018) 12 SCC 644
7
before the Division Bench against this order was also dismissed on
30.4.2018.
8. We have examined the submissions in the contours of the aforesaid
controversy, and take note of the fact that in the case of Isha Marbles,3
the sale was in pursuance of Section 29(1) of the State Financial
Corporations Act, 1951, but the important aspect was that there was no
clause specifically dealing with the issue of electricity dues or such other
dues, as in the present auction notice. This Court elucidated the position
in the context of Section 24 of the Electricity Act, 1910, to emphasise
that under Section 2(c) of the Electricity Act, a consumer means any
person who is supplied with energy, and since liability to pay electricity
dues is fastened only on the consumer, at the relevant time, the purchaser
was not the consumer. It has also been stated that in the absence of
consumption of electricity, the subsequent purchaser was merely seeking
reconnection without there being any statutory dues towards consumption
charges. We had specifically posed a question to the learned counsel for
the respondent in the order dated 15.11.2019, that whether, in the context
of the judicial pronouncements sought to be relied upon, there was a
3 (supra)
8
specific clause in the nature of Clause 26 as in the present E-auction sale
notice, which absolved the Authorized Officer of various dues including
“electricity dues”. On the conspectus of the judgments referred to by the
respondent, there were no such clauses in the cases in question.
9. We may also notice that there have been subsequent judicial
pronouncements dealing with this aspect of electricity dues. A
three Judge Bench of this Court has held that the dues under the terms
and conditions of supply partake the character of statutory dues
(Hyderabad Vanaspathi Ltd. v. A.P. State Electricity Board & Ors.4
).
The mere fact that agreements were entered into with every consumer
only served the purpose of bringing to the notice of the consumer the
terms and conditions of supply, but did not make the dues purely
contractual in character.
10. We can draw strength from the observations of this Court in
Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P)
Ltd.,5
where there was a similarity as in the present case, of a specific
clause dealing with electricity dues. It was observed that in such a
scenario if a transferee desires to enjoy the service connection, he shall
4 (1998) 4 SCC 470
5 (2006) 13 SCC 101 (2 Judges Bench)
9
pay the outstanding dues, if any, to the supplier of electricity and a
reconnection or a new connection shall not be given to any premises
where there are arrears on account of dues to the supplier unless they are
so declared in advance.
11. We may also notice that as an auction purchaser bidding in an “as
is where is, whatever there is and without recourse basis”, the respondent
would have inspected the premises and made inquiries about the dues in
all respects. The facts of the present case, as in the judgment aforesaid,
are more explicit in character as there is a specific mention of the
quantification of dues of various accounts including electricity dues. The
respondent was, thus, clearly put to notice in this behalf.
12. The same view in case of a similar clause has been taken in
Paschimanchal Vidyut Vitran Nigam Limited & Ors. v. DVS Steels and
Alloys Private Limited & Ors.6
It has been further observed that if any
statutory rules govern the conditions relating to sanction of a connection
or supply of electricity, the distributor can insist upon fulfillment of the
requirements of such rules and regulations so long as such rules and
regulations or the terms and conditions are not arbitrary and
6 (2009) 1 SCC 210 (2 Judge Bench)
10
unreasonable. A condition for clearance of dues cannot per se be termed
as unreasonable or arbitrary.
13. We may notice a slightly contra view in Haryana State Electricity
Board v. Hanuman Rice Mills, Dhanauri & Ors.,7
in a given scenario
where the pendency of electricity dues was not mentioned in the terms &
conditions of sale, and it was held in those facts that the dues could not
be mulled on to the subsequent transferee.
14. We may notice that in Special Officer, Commerce, North Eastern
Electricity Supply Company of Orissa (NESCO) v. Raghunath Paper
Mills Private Limited & Anr.,8
a distinction was made between a
connection sought to be obtained for the first time and a reconnection. In
that case, no application had been made for transfer of a service
connection from the previous owner to the auction-purchaser, but in fact,
a fresh connection was requested. In light of the regulations therein,
previous dues had to be cleared only in the case of a reconnection.
Hence, the respondents were held to be free from electricity liability.
This Court in Southern Power Distribution Company of Telangana
Limited (through its CMD) & Ors.9
found that the facts were similar to
7 (2010) 9 SCC 145 (2 Judge Bench)
8 (2012) 13 SCC 479 (2 Judge Bench)
9 (supra)
11
the NESCO10 case, and thus followed the same line.
15. We have gone into the aforesaid judgments as it was urged before
us that there is some ambiguity on the aspect of liability of dues of the
past owners who had obtained the connection. There have been some
differences in facts but, in our view, there is a clear judicial thinking
which emerges, which needs to be emphasized:
A. That electricity dues, where they are statutory in character
under the Electricity Act and as per the terms & conditions of
supply, cannot be waived in view of the provisions of the Act
itself more specifically Section 56 of the Electricity Act, 2003
(in pari materia with Section 24 of the Electricity Act, 1910),
and cannot partake the character of dues of purely contractual
nature.
B. Where, as in cases of the E-auction notice in question, the
existence of electricity dues, whether quantified or not, has
been specifically mentioned as a liability of the purchaser and
the sale is on “AS IS WHERE IS, WHATEVER THERE IS
AND WITHOUT RECOURSE BASIS”, there can be no doubt
10 (supra)
12
that the liability to pay electricity dues exists on the respondent
(purchaser).
C. The debate over connection or reconnection would not exist in
cases like the present one where both aspects are covered as per
clause 8.4 of the General Terms & Conditions of Supply.
16. In view of the aforesaid legal position, which has emerged, we are
of the view that the impugned orders cannot be sustained and are
accordingly set aside while opining that appellant No.1 would be well
within its right to demand the arrears due of the last owner, from the
respondent-purchaser.
17. The appeal is accordingly allowed, leaving the parties to bear their
own costs.
...……………………………J.
[Sanjay Kishan Kaul]
...……………………………J.
[K.M. Joseph]
New Delhi.
June 01, 2020.
13
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1815 OF 2020
(Arising out of Special Leave Petition (C) No.19292/2018)
TELANGANA STATE SOUTHERN POWER
DISTRIBUTION COMPANY LIMITED & ANR. … Appellants
Versus
M/S. SRIGDHAA BEVERAGES …Respondent
J U D G M E N T
SANJAY KISHAN KAUL, J.
1. The respondent is an auction-purchaser of a unit owned by M/s. SB
Beverages Private Limited, which failed to pay its dues, resulting in the
auction by Syndicate Bank (Secured Creditor) under the Securitisation
and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (hereinafter referred to as the ‘SARFAESI Act’). The
1
moot point of law, which arises for consideration, is whether the liability
towards previous electricity dues of the last owner could be mulled on to
the respondent.
2. The unit in question is a mineral water bottling plan situated in
land measuring 1 acre 13 guntas in Sy. No.283 at Rampally Village,
Keesara Mandal, Medchal District. As mentioned aforesaid, on account
of failure to repay a loan, the creditor, Syndicate Bank, brought the
property to auction for which an E-auction sale notice dated 25.5.2017
was issued in this behalf, in which the respondent was the successful
auction-purchaser. In order to appreciate the controversy before us, it is
necessary to reproduce some of the relevant clauses of the auction notice:
“The property described below is being sold on “AS IS WHERE IS,
WHATEVER THERE IS AND WITHOUT RECOURSE BASIS” under
the rule no.8 & 9 of the Security Interest (Enforcement) Rules
(hereinafter referred to as the rules) for the recovery of the dues detailed
as under:
…. …. …. …. …. ….
The total
amount due
as on 30-04-
2017
Rs.13,97,26,258.77 (Rs. Thirteen crores ninety seven
lakhs twenty six thousand two hundred fifty eight and
paisa seventy seven) with future interest & costs till
date of payment accounts no 1) 373OSLB140940002 &
2) 30151010006439
Details of
encumbrances
For property no.01 Nil
For property no.02: The subsequent to our MOD,
2
over the
property, as
known to the
bank
the following transactions observed in EC
1. As per the doc no 2611/2016 dated 15/06/2016, the
mortgager has sold the property to the extent of 540 sq
yds., to private party, for worth of Rs.972000/-
2. As per the doc no.657/2015 dated 05/02/2015, the
mortgager has sold the property to the extent of 620.83
sq.yds. to The Executive officer Ramapally
Gramapanchayat for worth of Rs.1242000/-.
3. As per the doc no 2721/2014 dated 05/08/2014, the
mortgager has sold the property to the extent of 204.75
sq yds to The Gramapanchayat Executive officer
Ramapally for worth of Rs.248000/-.
Details of
outstanding
dues of Local
Government
(Property tax,
Water
sewerage,
electricity
bills, etc.)
Rs.83,17,152/- (Eighty Three Lakhs Seventeen
Thousand One Hundred Fifty Two Only)
Reserve Price
of Property
For property no.01 Rs.77,63,000/-
For property no.02 Reserve Price: Rs.5,83,37,000/-
(Rupees five crores eighty three Lakhs thirty seven
Thousand Only)
Total 28 no of Machineries items reserve price:
Rs.3,25,28,000/- (three crores twenty five lakhs twenty
eight thousand only)
…. …. …. …. …. ….
TERMS AND CONDITIONS
…. …. …. …. …. ….
3
21. The successful bidder shall bear the stamp duties, charges including
those of sale certificate, registration charges, all statutory dues payable
to central/state government, taxes and rates and outgoing, both existing
and future relating to the properties.
…. …. …. …. …. ….
24. The property is sold in “AS IS WHERE IS, WHAT IS THERE IS
AND WITHOUT ANY RECOURSE BASIS” in all respects and subject
to statutory dues if any. The intending bidders should make discrete
enquiry as regards any claim, charges/encumbrances on the properties,
of any authority, besides the bank’s charges and should satisfy
themselves about the title, extent, quality and quantity of the property
before submitting their bid. For any discrepancy in the property the
participating bidder is solely responsible for all future recourses from
the date of submission of bid.
25. No claim of whatsoever nature regarding the property put for sale,
charges/encumbrances over the property or on any other matter etc., will
be entertained after submission of the bid/confirmation of sale.
26. The Authorised Officer will not be responsible for any charge, lien,
encumbrance, property tax dues, electricity dues, etc., or any other
dues to the Government, local authority or anybody, in respect of
the property under sale.”
3. The aforesaid auction notice shows that the unit was being
sold on “as is where is, what is there is and without any recourse basis”,
as per Rules 8 & 9 of the Security Interest (Enforcement) Rules, 2002
(hereinafter referred to as the ‘said Rules’). The aforesaid clauses of the
E-auction sale notice show that the total outstanding dues were much
4
larger, but the reserve price fixed was lower, and the actual sale
consideration of the successful auctioneer was Rs.9,18,65,000, which is
approximately Rs.10 lakh more than the minimum reserve price. Clause
24 reproduced aforesaid makes it clear that when the reference is to a sale
on “as is where is, what is there is and without any recourse basis”, the
same is “in all respects and subject to statutory dues”. This clause was
further subject to another Clause 26, where the Authorised Officer
carrying out the auction absolved himself of the liability for any charge,
lien, encumbrance, property tax dues, electricity dues, etc. The purpose
is to emphasise that a holistic reading of all these clauses left little in
doubt that the auction notice provided for a reserve price, with a bid
being made about Rs.10 lakh over and above that, and certain nature of
charges, lien, encumbrances, including electricity dues were clearly
beyond the sale consideration paid.
4. We may next turn to the sale deed dated 29.9.2017 executed in
pursuance of the auction, which provided for the sale “made free from all
encumbrances known to the Secured Creditor.” An indemnity was
provided by the vendor to the respondent against “any loss arising out of
any defect in the title, including recovery of statutory liabilities taxes, as
5
also litigation expenses arising out of such defects in title.” This
indemnity was, thus, confined to aspects mentioned in this clause, but
relatable to defects in title, and not to other liabilities like electricity dues.
5. The problem for the respondent arose when he applied to appellant
No.1 seeking sanction of a 500 KVA connection required for running the
bottling plant. This request was denied on the ground that there were
previous electricity dues to the tune of Rs.50,47,715, as on 26.10.2017.
Appellant No.1 asserted its right to recover this amount even from the
new purchaser (i.e. respondent), based on a reading of Clauses 5.9.6 and
8.4 of the General Terms and Conditions of Supply of Distribution &
Retail Supply Licensees in AP (for short ‘General Terms & Conditions of
Supply’), which clauses are reproduced hereinunder:
“5.9.6 Dismantlement of Service Line after Termination of
Agreement: On the termination of the LT or HT Agreement, the
company is entitled to dismantle the service line and remove the
materials, Meter, cut out etc. After termination of the Agreement,
the consumer shall be treated as a fresh applicant for the purpose of
giving supply to the same premises when applied for by him
provided there are no dues against the previous service
connection.”
…. …. …. …. …. ….
“8.4 Transfer of Service Connection
6
The seller of the property should clear all the dues to the Company
before selling such property. If the seller did not clear the dues as
mentioned above, the Company may refuse to supply electricity to
the premises through the already existing connection or refuse to
give a new connection to the premises till all dues to the Company
are cleared.”
6. We may also take note of the fact that the aforesaid dues partake
the character of statutory dues under the Electricity Act, 2003 read with
the General Terms & Conditions of Supply.
7. A writ petition was filed by the respondent before the High Court
of Telangana and Andhra Pradesh seeking quashing of these demands
predicated on a reasoning that as a subsequent purchaser, the respondent
was not responsible for the dues of the earlier owner, and in that behalf
relied upon the judgments of this Court in Isha Marbles v. Bihar State
Electricity Board & Anr.1
and Southern Power Distribution Company
of Telangana Limited (through its CMD) & Ors. v. Gopal Agarwal &
Ors.2
Reliance on these judgments persuaded the learned single Judge to
issue directions quashing the demand of appellant No.1. The appeal filed
1 (1995) 2 SCC 648
2 (2018) 12 SCC 644
7
before the Division Bench against this order was also dismissed on
30.4.2018.
8. We have examined the submissions in the contours of the aforesaid
controversy, and take note of the fact that in the case of Isha Marbles,3
the sale was in pursuance of Section 29(1) of the State Financial
Corporations Act, 1951, but the important aspect was that there was no
clause specifically dealing with the issue of electricity dues or such other
dues, as in the present auction notice. This Court elucidated the position
in the context of Section 24 of the Electricity Act, 1910, to emphasise
that under Section 2(c) of the Electricity Act, a consumer means any
person who is supplied with energy, and since liability to pay electricity
dues is fastened only on the consumer, at the relevant time, the purchaser
was not the consumer. It has also been stated that in the absence of
consumption of electricity, the subsequent purchaser was merely seeking
reconnection without there being any statutory dues towards consumption
charges. We had specifically posed a question to the learned counsel for
the respondent in the order dated 15.11.2019, that whether, in the context
of the judicial pronouncements sought to be relied upon, there was a
3 (supra)
8
specific clause in the nature of Clause 26 as in the present E-auction sale
notice, which absolved the Authorized Officer of various dues including
“electricity dues”. On the conspectus of the judgments referred to by the
respondent, there were no such clauses in the cases in question.
9. We may also notice that there have been subsequent judicial
pronouncements dealing with this aspect of electricity dues. A
three Judge Bench of this Court has held that the dues under the terms
and conditions of supply partake the character of statutory dues
(Hyderabad Vanaspathi Ltd. v. A.P. State Electricity Board & Ors.4
).
The mere fact that agreements were entered into with every consumer
only served the purpose of bringing to the notice of the consumer the
terms and conditions of supply, but did not make the dues purely
contractual in character.
10. We can draw strength from the observations of this Court in
Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P)
Ltd.,5
where there was a similarity as in the present case, of a specific
clause dealing with electricity dues. It was observed that in such a
scenario if a transferee desires to enjoy the service connection, he shall
4 (1998) 4 SCC 470
5 (2006) 13 SCC 101 (2 Judges Bench)
9
pay the outstanding dues, if any, to the supplier of electricity and a
reconnection or a new connection shall not be given to any premises
where there are arrears on account of dues to the supplier unless they are
so declared in advance.
11. We may also notice that as an auction purchaser bidding in an “as
is where is, whatever there is and without recourse basis”, the respondent
would have inspected the premises and made inquiries about the dues in
all respects. The facts of the present case, as in the judgment aforesaid,
are more explicit in character as there is a specific mention of the
quantification of dues of various accounts including electricity dues. The
respondent was, thus, clearly put to notice in this behalf.
12. The same view in case of a similar clause has been taken in
Paschimanchal Vidyut Vitran Nigam Limited & Ors. v. DVS Steels and
Alloys Private Limited & Ors.6
It has been further observed that if any
statutory rules govern the conditions relating to sanction of a connection
or supply of electricity, the distributor can insist upon fulfillment of the
requirements of such rules and regulations so long as such rules and
regulations or the terms and conditions are not arbitrary and
6 (2009) 1 SCC 210 (2 Judge Bench)
10
unreasonable. A condition for clearance of dues cannot per se be termed
as unreasonable or arbitrary.
13. We may notice a slightly contra view in Haryana State Electricity
Board v. Hanuman Rice Mills, Dhanauri & Ors.,7
in a given scenario
where the pendency of electricity dues was not mentioned in the terms &
conditions of sale, and it was held in those facts that the dues could not
be mulled on to the subsequent transferee.
14. We may notice that in Special Officer, Commerce, North Eastern
Electricity Supply Company of Orissa (NESCO) v. Raghunath Paper
Mills Private Limited & Anr.,8
a distinction was made between a
connection sought to be obtained for the first time and a reconnection. In
that case, no application had been made for transfer of a service
connection from the previous owner to the auction-purchaser, but in fact,
a fresh connection was requested. In light of the regulations therein,
previous dues had to be cleared only in the case of a reconnection.
Hence, the respondents were held to be free from electricity liability.
This Court in Southern Power Distribution Company of Telangana
Limited (through its CMD) & Ors.9
found that the facts were similar to
7 (2010) 9 SCC 145 (2 Judge Bench)
8 (2012) 13 SCC 479 (2 Judge Bench)
9 (supra)
11
the NESCO10 case, and thus followed the same line.
15. We have gone into the aforesaid judgments as it was urged before
us that there is some ambiguity on the aspect of liability of dues of the
past owners who had obtained the connection. There have been some
differences in facts but, in our view, there is a clear judicial thinking
which emerges, which needs to be emphasized:
A. That electricity dues, where they are statutory in character
under the Electricity Act and as per the terms & conditions of
supply, cannot be waived in view of the provisions of the Act
itself more specifically Section 56 of the Electricity Act, 2003
(in pari materia with Section 24 of the Electricity Act, 1910),
and cannot partake the character of dues of purely contractual
nature.
B. Where, as in cases of the E-auction notice in question, the
existence of electricity dues, whether quantified or not, has
been specifically mentioned as a liability of the purchaser and
the sale is on “AS IS WHERE IS, WHATEVER THERE IS
AND WITHOUT RECOURSE BASIS”, there can be no doubt
10 (supra)
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that the liability to pay electricity dues exists on the respondent
(purchaser).
C. The debate over connection or reconnection would not exist in
cases like the present one where both aspects are covered as per
clause 8.4 of the General Terms & Conditions of Supply.
16. In view of the aforesaid legal position, which has emerged, we are
of the view that the impugned orders cannot be sustained and are
accordingly set aside while opining that appellant No.1 would be well
within its right to demand the arrears due of the last owner, from the
respondent-purchaser.
17. The appeal is accordingly allowed, leaving the parties to bear their
own costs.
...……………………………J.
[Sanjay Kishan Kaul]
...……………………………J.
[K.M. Joseph]
New Delhi.
June 01, 2020.
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