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TMI Blog2014 (11) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... n financial year exceeds its entire net worth. In short, while legislative net of consumer under the Electricity Act includes other than company or corporate sector also, while the wings of the SICA does not extend the area outside the sick company - the corporate world itself is much larger than the sick company. It may be noted that the Electricity Act is the only statute operating in the field and dealing with the subject and takes care of all and every kind of consumer, who receives electricity. It is not possible to agree with the submission that Electricity Act is a special Act with reference to SICA. Having said so, we may add that generally saying, neither the test that which of the two Acts are special Act nor the test that which of the two Acts is later in point of time, can be successfully applied in the present case. Both the tests can be more properly applied when both the Acts relate to or operate in, in the same field or the subject of both the Acts is analogous. Since the applicability of either of two tests is doubtful in the present case, we leave the question at that with the observation that if correct view is that, that the special Act versus General Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presented by learned advocates for the parties is considered. 2. Facts are, thus; One Navsari Cotton and Silk Mills Ltd. (for short NCSML ) was established in 1936. It appears that HT electric connection was granted to it by respondent in 1955 then was known as GEB. In its good days, it was producing 50,000 mtrs. (yarn) per day. About 2000 workers were working in the Mill. Presumably, its working was normal till it became 'sick'. It became sick in 1989. Reference was made to BIFR in 1990. Rehabilitation scheme was sanctioned in 1991. IDBI; was appointed as Operating Agency (OA). The scheme was to complete by March, 1992. It could not be completed even after 4 years. Company's 'financial condition deteriorated'. Meanwhile, the company also stopped its operation in July, 1994. In its meeting held in the month of October, 1994, BIFR observed that sanctioned Rehabilitation scheme has failed. It directed IDBI/OA to advertise for take over/merger/OTS since promoters were not able to bring in additional fund to revive the unit. An advertisement in this regard was issued in December, 1994 but no viable proposal came forward. BIFR, in its meeting held on 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 and learned AGP Mr. R.A. Rindani for respondent Nos. 2 and 3. 4. Learned Senior Advocate Mr. Shalin Mehta for the appellant has at the time of hearing placed emphasis on the plea that GEB/DGVCL was not a party to the scheme sanctioned by the BIFR. That being so, direction given pursuant to the provision made in the scheme is not binding to the GEB/DGVCL. The other principal submission of Mr. Shalin Mehta is based on Clause 2(j) of Conditions of Supply. It was submitted that assuming for the sake of argument that scheme is binding also to the GEB/DGVCL, even then appellant is obliged to provide electricity only in accordance with law. The law as prevailing and applicable, in substance, provides that unless the previous debts of the premises are paid up, the successor cannot ask for a new connection. Much of the argument at the time of hearing centered around Clause 2(j). Attention was also drawn to a decision of the Supreme Court in the case of Dakshin Hariyana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd., reported in (2006) 13 SCC 101. Learned advocate for the appellant also submitted written submissions. 5. On the other hand, learned Senior Advocate Mr. S.I. Nana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, reported in (2008) 8 SCC 148. 7. After recording elaborate submissions of learned advocates for the parties, the learned Single Judge found that controversy between the parties centers around two issues; (1) (i) applicability of provisions of SICA and (ii) effect of direction issued by the BIFR and (2) Applicability of Clause 2(j) of Supply Code. 8. The findings of the learned Single Judge on the above points are, thus; After briefly referring the facts that had led to formation of the scheme by BIFR, the Court has referred material provisions of the last scheme i.e. scheme framed on 5.12.1996. The scheme sanctioned on 5.12.1996. The Court referred Para. 7(b) and also Para. 8 and 11. Last referred paragraph gives overriding effect to the scheme. The Court has held that under the scheme GEB is directed to grant connection without insisting for payment of previous owners' dues. The Court has also held that, 'such dues' are unenforceable and direction issued by BIFR is binding to GEB. The Court has referred to the factum of challenging the scheme in question unsuccessfully by the State. It reiterates that scheme is final and binding to the parties. 9. The lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der to supply electricity and the scheme. That such objection goes to the root of the case and therefore, same can be raised even in collateral proceeding or in the proceeding where such order or a scheme sought to be enforced. It was also urged that assuming for the sake of argument that scheme is binding to GEB/DGVCL, even then appellant is required to grant electric connection only in accordance with law and that being so, new connection cannot be granted without payment of previous dues. 14. The submission though appears as 'attractive' in abstract, has hardly any substance. In the scheme, in respect of electricity dues, it has addressed the said subject to the Government of Gujarat (GOG). The grievance that the appellant was not a party to the scheme becomes, more or less, technical if one bears in mind that GOG has taken steps to agitate against the relief and concession granted under the scheme. Before referring to it, it may be noted that under the scheme, so far as granting of exemption under the Income-tax Act and other reliefs under the said Act are concerned, the scheme has addressed for the same to the Central Government. 15. Against the Scheme, it is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant did not opt to challenge the scheme. It appears that appellant had sought legal opinion that judgment of learned single Judge should be challenged or not. In detailed written opinion after considering the judgment of learned single Judge, expert has advised not to file LPA and accept the judgment of learned single Judge. 18. There is also another aspect to this plea. Learned advocate for the respondent No. 1 in written submissions has drawn attention to one letter written by the appellant's General Manager (Comm.). This letter is addressed to MDTLCIL. The subject of the letter is BIFR scheme dated 5.12.1996. This letter is in response to MDTLCIL's letter dated 4.9.1997. In the end, the General Manager has forwarded copy of this letter to; (1) Chief Engineer (Dist.), GEB H.O., Baroda (2) Additional C.E. (Zonal), GEB, Surat (3) S.E. (ONM) CEE, Valsad and (4) E.E. (ONM) GEB, Navsari. A note is placed at the end of the letter, that reads, thus; You are requested to accept the installment of outstanding dues as per BIFR order dated 5.12.1996 and security deposit under intimation to this office. You are also requested to take nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upier has to clear these dues of the previous consumer before the application of successor/occupier is processed for supply of electricity. If Board, at a later date, gets the full or part of these dues from the previous consumer, the amount shall be refunded to the successor/occupier after adjusting the cost including legal expenses to recover such arrears and the refund shall bear no interest. 21. Clause 2(j) framed under Electricity Supply Code. Clause 2(j) came into force on 10.9.2001. It was submitted that by virtue of notification issued under Section 49 of the Electricity Act, 1948, same was brought into force. The Electricity Act, 1910 and 1948 came to be repealed and new Act of 2003 came into force w.e.f. 10.6.2003 and new Act is made applicable in Gujarat on 10.12.2004. The controversy between the parties centers around these submissions; (I) effect of overriding provision in SICA and in Electricity Act and (II) Clause 2(j) not being inconsistent with the provisions of the new Act, it would be saved by the saving clause. 22. Taking second point first, submission of learned advocate for the appellant is, Section 185 of the Electricity Act saves Clause 2(j). Reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 43, 50, 56 and 181 of the Electricity Act, 2003.' This conclusion qua Regulation 4.1.11 is not irrelevant for consideration of point herein but it has some bearing on the point under discussion. Clause 2(j) was framed under the Electricity Supply Act, 1948 r/w 1910 Act. It is true that the Full Bench in the above case has considered the validity of Regulation 4.1.11 with reference to 2003 Act, however, this may not be of much significance and consequence in view of the fact that Section 19 in 1948 Act is replaced by Section 43 and Section 79 is replaced by Section 181 of the new Act. Sections 50 and 56 appear to be new provisions. In this regard, it has to be conceded that provisions of new Act are neither verbatim reproduction of the old provision, nor they are bodily lifted from the old Act. But it cannot be disputed that these provisions of the old Act and new Act are analogous. On the other hand, we are not considering the validity of clause 2(j). Reference and context herein is different. Sanjay Balvantray Desai's case (supra) opens up door for the argument that Clause 2(j) is inconsistent with couple of provisions of the Act. In above-referred decision, the Full B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the premises from a person who has purchased the premises where the electricity was supplied to the defaulted consumer. 21. We, therefore, find that by virtue of a delegated legislation, the Regulatory Commission has not only overstepped the limit of Sections 50 and 181[2][x] of the Act, but has also acted in violation of Section 56[2] of the Act by giving a scope of making a legally irrecoverable amount provided under the Act as a recoverable one. It is needless to mention that the power of the State Commission to make a regulation must be consistent with the Act and not inconsistent with any part thereof. We, therefore, find that the first part of the provision contained in the amended Regulation 4.1.11 authorizing a licensee to demand the arrears amount of consumer from the subsequent purchaser of the premises as condition of grant of new electricity connection is violative of the provisions contained in Sections 43, 50, 56, 126, and 181[2][x] of the Act. 24.1 It may also be noted that LPA No. 1484 of 2004 i.e. Krishna Industries' case (supra) - wherein this Court had upheld the validity of clause 2(j) - was referred to by the Full Bench in Sanjay Balvantray De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only a person can be the consumer viz. The user of the electricity power and premises, divorced of a person, cannot be user of the electricity power supply. 24.5. Referring different regulations including Regulation 4.1.11, in that case conclusion of this Court in paras 9, 10 and 11 is to the effect that. '... this Regulation also does not stipulate that supplier can withhold supply of power and reject an application for new connection in case of third party auction purchaser....' 25. In this regard, however, reference may be made to Dakshin Hariyana Bijli Vitran Nigam Ltd.'s case (supra), relied on by learned advocate for the appellant. Therein, predecessor of the respondent was 'consumer' of electricity company. There were dues of electricity. As the said earlier company has also borrowed finance from the Hariyana Finance Corporation and has failed to pay the dues, said finance corporation has auctioned the property of earlier company. Respondent has purchased the property in auction. In that case, provision analogous to clause 2(j) was introduced i.e. Section 21(A) w.e.f. 27.11.2001 framed under terms and conditions of Supply in relevant statutory prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. Section 32 of SICA reads, thus; 32. Effect of The Act on Other Laws. (1) The provisions of this Act and of any rules or schemes made there under shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) for the time being in force or in the Memorandum or Articles of Association of an industrial company or in any other instrument having effect by virtue of any law other than this Act. (2) Where there has been under any scheme under this Act an amalgamation of a sick industrial company with another company, the provisions under section 72A of the Income-tax Act, 1961 (43 of 1961), shall, subject to the modifications that the power of the Central Government under that section may be exercised by the Board without any recommendation by the specified authority referred to in that section, apply in relation to such amalgamation as they apply in relation to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case, attempt was made to urge that Electricity Act is a special Act. It is not possible to agree with this submission. With relation to Electricity Act also, SICA can be said to be special Act. The later Act relates to companies only - rather sick companies - while former Act would apply not only to all kind of companies, including the sick companies, but to every kind of consumer - be it commercial and non-commercial entities. In fact, definition of 'consumer' under the Act includes even the Government. Any person , it says, who 'receives electricity' comes within the sweep of the definition of 'consumer', while the simple definition of 'sick company', stated in short is, - a company whose accumulated losses of any given financial year exceeds its entire net worth. In short, while legislative net of consumer under the Electricity Act includes other than company or corporate sector also, while the wings of the SICA does not extend the area outside the sick company - the corporate world itself is much larger than the sick company. It may be noted that the Electricity Act is the only statute operating in the field and dealing with the subject an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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