2018 (4) TMI 1807 - HC - Indian Laws

Refusal to sanction of the 500 KVA electricity power connection to the firm - Liability of petitioner to make payment of dues, payable by the previous owner - HELD THAT - It is not in dispute that the subject property was purchased by the respondent-writ petitioner in a public auction conducted by Syndicate Bank under the provisions of the SARFAESI Act. It is not even the case of the appellant that, by the auction notice, the respondent-writ petitioner was made aware that they would be liable to pay electricity dues of the previous owner. While the appellants are entitled to recover the dues from the previous owner, they cannot refuse to grant a fresh power connection to the respondent-writ petitioner, as he has, admittedly, no connection with the previous owner and had purchased the subject property in a public auction conducted by Syndicate Bank. Appeal dismissed.

Summary

Issues:
- Refusal of sanction for a 500 KVA electricity power connection to a firm.
- Liability of the respondent-writ petitioner to pay electricity dues of the previous owner.
- Interpretation of the SARFAESI Act in relation to electricity charges.
- Applicability of principles of natural justice in the case.

Refusal of Electricity Connection:
The respondent-writ petitioner purchased a mineral water bottling plant in a public auction and applied for a 500 KVA electricity connection. The Distribution Company refused connection citing dues of over &8377;50 Lakhs from the previous owner. The respondent approached the court seeking relief, arguing they were not liable to pay the previous owner's dues. The Learned Single Judge ruled in favor of the respondent, citing relevant Supreme Court judgments.

Liability for Previous Owner's Dues:
The appellants contended that the respondent, as the new owner, should be liable for the previous owner's electricity dues to prevent avoidance of payments by property alienation. However, the court noted that the respondent was not informed of this liability during the auction conducted under the SARFAESI Act. The court emphasized that while the appellants could recover dues from the previous owner, they could not withhold a power connection from the respondent who had no connection to the previous owner.

Interpretation of SARFAESI Act:
The court highlighted that the respondent acquired the property through a public auction conducted under the SARFAESI Act. The judgment emphasized that the auction notice did not mention any liability for the previous owner's electricity dues, indicating that the respondent should not be held responsible for those dues. The court rejected the argument that allowing a new connection would lead to avoidance of dues through property alienation.

Principles of Natural Justice:
In an intra-Court appeal, the court clarified that interference is justified only if the lower court's order contains a patent illegality. Since the Learned Single Judge based the decision on relevant Supreme Court judgments, the court found no such illegality in the order. The court dismissed the Writ Appeal, allowing the appellants to pursue legal avenues to recover electricity arrears from the previous owner without penalizing the respondent.