2004 (3) TMI 411 - SC - Companies Law

Whether the respondents should be held liable to pay the arrears which were outstanding against the previous owners? Held that - Appeal dismissed. In case of a fresh connection though the premises are the same, the auction purchasers cannot be held liable to clear the arrears incurred by the previous owners in respect of power supply to the premises in the absence of there being a specific statutory provision in that regard.

Summary

Issues:
1. Liability of auction purchasers for arrears of power supply incurred by previous owners in cases of fresh connection.

Analysis:
The Supreme Court addressed the issue of whether auction purchasers of urban properties are liable to pay arrears of power supply incurred by previous owners in cases of fresh connection. The respondents in the two appeals had purchased properties in sales conducted under different acts, and the appellant, a power supply company, demanded payment of arrears from the respondents. The appellant argued that the respondents should be held liable to clear the arrears, citing a previous court decision. However, the respondents contended that they should not be responsible for the arrears. The Court considered the nature of the connections established by the respondents and concluded that they were fresh connections. The respondents had taken fresh connections and were willing to treat them as such. The Court held that in cases of fresh connection, auction purchasers cannot be held liable to clear arrears incurred by previous owners unless there is a specific statutory provision to that effect. While acknowledging the merit in reconsidering the legal propositions from a previous case, the Court determined that the present case did not warrant such a review. The Court dismissed the appeals, affirming that auction purchasers were not obligated to pay the arrears of power supply incurred by previous owners in cases of fresh connection.

This judgment clarifies the legal position regarding the liability of auction purchasers for arrears of power supply in cases of fresh connection. It emphasizes the importance of specific statutory provisions in determining such liability and distinguishes between fresh connections and reconnections. The Court's decision provides clarity on the obligations of auction purchasers in similar situations and upholds the principle that auction purchasers should not be held responsible for arrears incurred by previous owners in cases of fresh connection unless mandated by law.