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2020 (6) TMI 37 - SC - Indian LawsLiability of last owner - statutory dues under the Electricity Act, 2003 read with the General Terms Conditions of Supply - whether the liability towards previous electricity dues of the last owner could be mulled on to the respondent? - HELD THAT - The 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. 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 that the liability to pay electricity dues exists on the respondent (purchaser) - 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. 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 - Appeal allowed.
Issues Involved:
1. Liability of auction-purchaser for previous electricity dues. 2. Interpretation of auction notice clauses. 3. Applicability of statutory dues under the Electricity Act. 4. Judicial precedents on liability for electricity dues. 5. Distinction between fresh connection and reconnection. Detailed Analysis: 1. Liability of Auction-Purchaser for Previous Electricity Dues: The primary issue was whether the auction-purchaser (respondent) was liable for the previous electricity dues of the last owner. The auction was conducted under the SARFAESI Act by Syndicate Bank. The auction notice explicitly mentioned that the property was sold on an "AS IS WHERE IS, WHATEVER THERE IS AND WITHOUT RECOURSE BASIS," indicating that the purchaser should be aware of and assume any existing liabilities, including electricity dues. 2. Interpretation of Auction Notice Clauses: The auction notice contained specific clauses that outlined the terms of the sale. Clause 24 stated that the property was sold "in all respects and subject to statutory dues if any," and Clause 26 absolved the Authorized Officer of any liability for charges, liens, encumbrances, property tax dues, electricity dues, etc. The sale deed also mentioned that the sale was "free from all encumbrances known to the Secured Creditor," but indemnity was provided only for defects in title, not for other liabilities like electricity dues. 3. Applicability of Statutory Dues under the Electricity Act: The electricity dues were considered statutory dues under the Electricity Act, 2003, and the General Terms & Conditions of Supply. Clauses 5.9.6 and 8.4 of these conditions stipulated that a new connection could be denied if there were outstanding dues from the previous owner. The Supreme Court emphasized that statutory dues could not be waived and were not purely contractual in nature. 4. Judicial Precedents on Liability for Electricity Dues: The respondent relied on previous judgments such as Isha Marbles v. Bihar State Electricity Board and Southern Power Distribution Company of Telangana Limited v. Gopal Agarwal, where subsequent purchasers were not held liable for previous owners' electricity dues. However, the Supreme Court distinguished these cases, noting that the auction notice in the present case explicitly mentioned the liability for electricity dues. 5. Distinction Between Fresh Connection and Reconnection: The Court referred to cases like Special Officer, Commerce, NESCO v. Raghunath Paper Mills Private Limited, which distinguished between fresh connections and reconnections. In the present case, Clause 8.4 of the General Terms & Conditions of Supply covered both scenarios, indicating that the purchaser was liable for previous dues regardless of whether a fresh connection or reconnection was sought. Conclusion: The Supreme Court concluded that the auction-purchaser was liable for the previous electricity dues. The clauses in the auction notice and the statutory nature of the dues under the Electricity Act supported this conclusion. The Court set aside the impugned orders and allowed the appeal, affirming that the appellant was within its rights to demand the arrears from the respondent. The appeal was allowed, and each party was directed to bear its own costs.
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