1997 (1) TMI 535 - SC - Indian Laws

Summary

Issues:
1. Challenge to the correctness of the order of the Allahabad High Court regarding payment of outstanding amount by U.P. State Electricity Board.
2. Interpretation of the judgment in C.E.S.C. Ltd. case in relation to default in payment and fulfilment of obligations.
3. Application of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 in the context of pending proceedings before BIFR and compliance with contractual obligations for the supply of electrical energy.

Analysis:
1. The petitioner, U.P. State Electricity Board, challenged the order of the Allahabad High Court regarding the payment of outstanding dues amounting to &8377; 49395 lacs. The petitioner had agreed to pay the amount in 12 monthly installments to avoid disconnection, but defaulted after the first installment. The High Court refused to grant relief, leading to the special leave petition before the Supreme Court.

2. The petitioner contended that the judgment in C.E.S.C. Ltd. case was applicable, arguing that the High Court erred in relying on a different judgment. However, the Supreme Court found the contention incorrect, noting that the C.E.S.C. Ltd. case did not address the specific issues of default and fulfilment of obligations raised in the present case. The Court highlighted that the matter was pending before the BIFR, and the petitioner was required to comply with the agreed payment terms for the supply of electricity.

3. The Supreme Court analyzed Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, which stays legal proceedings when an inquiry is pending before the BIFR. The Court clarified that the obligation to pay for electrical energy supplied by the Board was a contractual condition, and default in payment could lead to disconnection. The Court emphasized that such enforcement of contractual obligations did not amount to execution of a decree and was not prohibited by the Act. Therefore, the petitioner was obligated to comply with the payment terms despite the pending proceedings before the BIFR.

In conclusion, the Supreme Court dismissed the special leave petition, affirming that the petitioner was liable to fulfill the payment obligations for the supply of electrical energy, even with pending proceedings before the BIFR. The Court clarified that compliance with contractual terms was necessary, and the petitioner could not seek relief based solely on the ongoing BIFR proceedings.