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TMI Blog2023 (5) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... h Ahuja, Praveen Chaturvedi, Chirag M. Shroff, Ashok Mathur, Manik Karanjawala, Raj Singh Rana, Purvish Jitendra Malkan, Rameshwar Prasad Goyal, AORs, M.Y. Deshmukh, Adviteeya Sharma, Manjeet Kirpal, Nandkumar Deshmukh, Advs., Ramesh Lal Bhatia, AOR, D.N. Ray, Dillip Kumar Nayak, Disha Ray, Advs., Sumita Ray, Shivaji M. Jadhav, AORs, Brij Kishor Sah, Adarsh Kumar Pandey, Apurva, R.B. Phookan, Neha Tandon, Advs., Shailesh Madiyal, AOR, P.S. Patwalia, Sr. Adv., Bansuri Swaraj, Siddhesh Kotwal, Ana Upadhyay, Manya Hasija, Nihar Dharmadhikari, Md. Sontu Mia, Advs., Nirnimesh Dube, Ram Lal Roy, Sharmila Upadhyay, AORs, Ap & J Chambers, Abhijeet Sinha, Jatin Zaveri, Romy Chacko, AORs, Prashant Kumar, Robin V.S., Advs., P.N. Gupta, P.V. Dinesh, AORs, Raghenth Basant, Nida K., Akhil K.M., Advs., P.V. Yogeswaran, AOR, Amar Dave, Adv., P.S. Sudheer, AOR, Rishi Maheshwari, Anne Mathew, Bharat Sood, Advs., Sneha Kalita, AOR, Ravindra Kumar, Sr. Adv. and Divya Roy, AOR JUDGMENT Dr. D.Y. Chandrachud, C.J.I. Table of Contents A. Overview B. Regulatory Regime C. The position in law D. Issues E. Submissions F. Analysis G. Application: Facts of Individual Cases I. Kerala II. Maharashtr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the supply of electricity. It also laid down a legal framework for supply of electrical energy and imposed certain responsibilities and obligations on persons licensed to supply electricity with a view to incentivise the growth of the electricity industry through private licensees. 5. Section 2(c) of the 1910 Act defined "consumer" as any person supplied with energy by a licensee or any other person engaged in the business of supplying energy to the public under the Act, and included any person whose premises were for the time being connected for the purposes of receiving energy. Section 21(2) empowered a licensee to make conditions to regulate their relations with persons who were or intend to become consumers. Section 22 obligated a licensee to supply electrical energy, on application, to every person within the area of supply on the same terms as those on which any other person in the same area was entitled. Section 24 empowered the licensee to disconnect the supply of electricity if any person neglected to pay any charge or sum for energy due to the licensee. 6. The 1910 Act was found inadequate for a coordinated development of electricity and a "grid-system" in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d encouraging open access transmission. Section 2(15) of the 2003 Act defines 'consumer' in terms similar to Section 2(c) of the 1910 Act. Part VI of the 2003 Act deals with distribution of electricity. Section 43 casts a Universal Service Obligation "USO"on the distribution licensee to provide supply of electricity to the premises of an owner or occupier. The State Commission has been empowered Under Section 50 to specify an Electricity Supply Code to provide among other things for the recovery of electricity charges, intervals for billing of electricity charges and disconnection of supply of electricity for non-payment. Under Section 56, the generating company or distribution licensee, as the case may be, may disconnect electricity supply of any person who neglects to pay any charge or sum for electricity. Section 181(2)(x) provides that the State Commission may make Regulations inter alia providing for, the Electricity Supply Code Under Section 50. 10. In light of the provisions contained in the 1910 Act, 1948 Act, and 2003 Act, various Electric Utilities such as State Electricity Regulatory Commissions, State Electricity Boards, and distribution licensees notified Cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se premises are cleared. 14. In Assam, the Assam Electricity Regulatory Commission "AERC" framed the Assam Electricity Regulatory Commission (Electricity Supply Code and Related Matters) Regulations, 2004. "AERC Supply Code" Clause 3.6 dealing with the requisition of electricity supply requires a person occupying a new premises to ensure that all the outstanding electricity dues are duly paid up and discharged. 15. In West Bengal, the West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2012 "WB Electricity Supply Code" have been notified under the 2003 Act. Clause 3.4.2 of the said Regulations empowers the licensee to recover the dues of a previous consumer in respect of the premises from a new consumer only if there is a nexus between the previous consumer and the new consumer. 16. The subsequent owners or occupiers of the premises challenged the Conditions of Supply and Electricity Supply Codes enacted by the Electric Utilities before the respective High Courts when they were called upon to clear the arrears of the previous owners or dues relating to the premises. C. The position in law 17. Prior to the enactment of the 2003 Act, in Isha Marb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les (supra), where the Court had no occasion to consider similar provisions. In Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/s. Paramount Polymers Pvt. Ltd. AIR 2007 SC 2, this Court was dealing with Clause 21A of the relevant Conditions of Supply, which entitled a licensee to demand payment of outstanding dues from a transferee if they desired a service connection. It was held that Isha Marbles (supra) cannot be applied to strike down Clause 21A as the Court in that case had no occasion to consider the effect of a similar clause. The matter was remitted back to the High Court for a fresh decision since it had not adjudicated on the implication of Clause 21A of the Conditions of Supply. 21. In Paschimanchal Vidyut Vitran Nigam Limited v. DVS Steels and Alloys Private Limited (2009) 1 SCC 210, this Court observed that a licensee or an electricity distributor can insist upon fulfilment of statutory rules, Regulations or the conditions of supply so long as they are not arbitrary and unreasonable. It was further held that the conditions of supply mandating the clearance of electricity dues of a previous owner by a new purchaser before electricity supply is restored or a new connection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e express provisions enabling the creation of a charge or encumbrance over the premises; f. Whether the statutory bar on recovery of electricity dues after the limitation of two years provided Under Section 56(2) of the 2003 Act, will have an implication on civil remedies of the Electric Utilities to recover such arrears; and g. What is the implication of an auction-sale of premises on "as is where is" basis, with or without reference to electricity arrears of the premises? E. Submissions 24. To put the above-mentioned issues in their proper context, we refer to the broad legal submission adduced before us by the parties. I. Electric Utilities 25. Sarvashri M.G. Ramachandran, Mr. Ranjit Kumar, Mr. Vijay Hansaria, Mr. Ajit Bhasme, learned Senior Counsel appearing for Electric Utilities have made the following submissions: a. USO is not absolute i. (i) The duty of the licensee to supply electricity Under Section 43 of the 2003 Act is not absolute. Section 43 provides that an applicant has to fulfil the corresponding obligations to become entitled to the supply of electricity; ii. (ii) Section 43(1) opens with the words "save as otherwise provided in the Act", which brin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions of supply framed by the Electricity Board Under Section 49 of the 1948 Act are statutory in character; ii. The terms and conditions of supply under the 2003 Act are framed by independent regulators in terms of Section 50 read with Section 181(2)(x) of the 2003 Act after following a detailed procedure. Therefore, the Electricity Supply Code framed by the State Commission is a subordinate legislation and has a statutory character. This statutory authority enables the Supply Code to provide for recovery of dues of the previous owner from the subsequent owner; and iii. The condition of payment of outstanding dues is not a compulsory extraction of money and does not require a primary legislation by Parliament or state legislature. Such a condition can be prescribed by a subordinate legislation. d. Electricity arrears as charge over the premises i. i. It is not the case of the Electric Utilities that there is any mortgage or charge over the property in the form that the licensee is a secured creditor. The licensee has the right to insist on clearance of outstanding dues of the premises before giving a new connection. e. Civil and Statutory remedies to recover electricit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Section 43(2) of the 2003 Act could only be the price at which electricity is supplied to the distribution licensee. Thus, 'price' Under Section 43 cannot include the arrears of the previous consumer; (iv) The payment of necessary "charges" and "other compliances" contemplated Under Section 43 relates to the application fees, and cannot be stretched to include a power to require the payment of third-party arrears; (v) The statutory duty of a licensee to supply power on an application by the owner or occupier of any premises within one month is contained in Section 43(1) of the 2003 Act. The only exception to this statutory obligation is provided by Section 44 where the licensee is prevented from giving supply due to cyclone, floods, storms or other circumstances beyond his control; and (vi) The legislature has consciously inserted all the substantive requirements which the person making an application for supply of electricity is required to meet, which has been primarily captured Under Sections 43(2), 45, 46, 47, and 48 of the 2003 Act. Therefore, no power has been endowed upon the State Commission to impose any other substantive condition in the form of providin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f it is assumed that such liability can be enforced by a delegated legislation, the parent law must clearly prescribe the power of framing such a piece of legislation. Neither the 1910 Act nor the 1948 Act provides any specific provision empowering the Electricity Board to recover the electricity dues of the previous owner or occupier of the premises from the new owner or occupier of premises in question; c. The scheme of the 2003 Act, from Sections 43 to 49, makes it evident that no specific power has been conferred upon the State Commission Under Section 50 read with Section 181 of the 2003 Act or with the State Under Section 180 of the 2003 Act to add further substantive conditions like clearance of past dues of another consumer; and d. It is a settled principle of law that for framing any Rule or Regulation, a specific source of power must be provided in the parent legislation. e. Electricity arrears do not constitute a charge over the premises a. Electricity dues do not constitute a charge over property as they do not run with the land. Only a fiscal levy by way of statutory exaction could be fastened on land or any other immovable property. The State Commission Under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is not absolute 27. The Electric Utilities have argued that the duty to supply electricity Under Section 43 of the 2003 Act is not absolute. It has been submitted that Under Section 43, an applicant has to fulfil the obligation to pay the 'price' as determined by the State Commission to become entitled to receive supply of electricity. The 'price', it is urged, includes application fees as well as arrears of unpaid electricity dues of the previous owner or occupier. The Electric Utilities argue that in case there are outstanding dues of the previous owner they are entitled to refuse a new connection or decline to commence the supply of electricity until the dues owed by the previous owner are cleared. On the contrary, the auction purchasers have urged that Section 43 obligates the distribution licensees to supply electricity when demanded by the auction purchaser. It is further urged that the 'price' in Section 43 can only mean the price at which electricity is supplied to the distribution licensee, and cannot include the arrears of the previous owner or occupier of the premises. 28. To contextualise the submissions of counsel, it is appropriate to refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall be entitled to demand, or to continue to receive, from a licensee a supply of electricity for any premises having a separate supply unless he has agreed with the licensee to pay to him such price as determined by the Appropriate Commission. (emphasis supplied) 31. According to Section 43, the distribution licensee is obligated to supply electricity to the premises of an owner or occupier within a month of the receipt of an application requiring such supply. The provision casts a duty on the distribution licensee to supply electricity to the owner or occupier's premises. Correspondingly, the owner or occupier of the premises has a right to apply for and obtain electric supply from the distribution licensee. Chandu Khamaru v. Nayan Malik, (2011) 12 SCC 314 Both the right and the corresponding duty are imposed by the statute. The owner or occupier of the premises has to submit an application to avail of the supply of electricity. 32. In Brihanmumbai Electric Supply & Transport Undertaking v. Maharashtra Electricity Regulatory Commission (2015) 2 SCC 438, a two-judge Bench of this Court observed that the obligation of the distribution licensee to supply electricity to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of electricity or to provide the line or plant or meter for the period during which the failure continues. (emphasis supplied) 34. Section 47 indicates that a distribution licensee can refuse to supply electricity Under Section 43 if the applicant fails to furnish the requisite security. Under Section 48, a distribution licensee may require the applicant, who requires a supply of electricity in pursuance of Section 43, to accept (i) any restrictions which may be imposed for the purpose of enabling the distribution licensee to comply with the Regulations made Under Section 53; and (ii) any terms restricting any liability of the distribution licensee for economic loss resulting from negligence of the person to whom electricity is supplied. Thus, it is implicit that the distribution licensee may refuse electricity supply to the applicant until they accept such terms and restrictions reasonably imposed by the distribution licensee incidental to the statute. 35. Further, Section 50 empowers the State Commission to specify an Electricity Supply Code providing for recovery of electricity charges, among other things. The Electric Utilities have urged that the duty to supply electrici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) 1 SCC 195, a two-judge Bench of this Court interpreted 'tariff' in the context of the Electricity Regulatory Commissions Act, 1998. It observed: 16. The word "tariff" has not been defined in the Act. "Tariff" is a cartel of commerce and normally it is a book of rates. It will mean a Schedule of standard prices or charges provided to the category or categories of customers specified in the tariff. 40. The proviso to Section 43(2) further refers to the "price" payable by an applicant to demand or to continue to receive the supply of electricity from a distribution licensee. The "price" is to be determined by the appropriate commission. This "price" is the consideration, as determined by the State Commission, that an applicant pays for receiving a supply of electricity. 41. The term "price" has to be given a broad meaning to include all the 'tariffs' and 'charges' that may be determined by the appropriate commission. This includes the 'charges' fixed Under Section 45 by the appropriate commission from time to time and the 'charges' that a distribution licensee may impose Under Section 46 to recover any reasonable expenditure. The ambit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f supplying electricity to the public under this Act or any other law for the time being in force and includes any person whose premises are for the time being connected for the purpose of receiving electricity with the works of a licensee, the Government or such other person, as the case may be; (emphasis supplied) 46. The definition of "consumer" Under Section 2(15) of the 2003 Act is similar to the definition of "consumer" in the 1910 Act. The definition consists of two limbs: (i) any person who is supplied with electricity for their own use; and (ii) any person whose premises are for the time being connected for the purposes of receiving electricity, irrespective of whether or not such person is supplied with electricity for his own use. Uttar Pradesh Power Corporation Limited v. Anis Ahmad, (2013) 8 SCC 491 The first limb of the definition is prefaced with "means" while the second limb is prefaced with "includes". The definition is thus exhaustive of the ambit of the expression defined. The inclusive part is intended to expand the ambit of the initial limb of the definition. 47. In Jivendra Nath Kaul v. Collector/District Magistrate (1992) 3 SCC 576, a two judge Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to consumer: 2. Definitions.-In this Act, unless the context otherwise requires,- *** (17) "distribution licensee" means a licensee authorised to operate and maintain a distribution system for supplying electricity to the consumers in his area of supply; *** (19) "distribution system" means the system of wires and associated facilities between the delivery points on the transmission lines or generating station connection and the point of connection to the installation of the consumers; *** (61) "service line" means any electric supply line through which electricity is, or is intended to be, supplied - (a) to a single consumer either from a distributing main or immediately from the Distribution Licensee's premises; or (b) from a distributing main to a group of consumers on the same premises or on contiguous premises supplied from the same point of the distribution main; *** (70) "supply", in relation to electricity, means the sale of electricity to a licensee or consumer; (emphasis supplied) 50. The definition of 'supply' specifically states that supply means the sale of electricity to a consumer. The said definition does not indicate that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the liability of the consumer to pay the charge for electricity in respect of the supply of electricity. Under Section 56 the duty of effecting the payment of charges for electricity is on a person, that is, the consumer. Further, Section 56(2) specifically contains the expression "no sum due from any consumer". Section 126 also uses the words "the electricity charges payable by such person or any other person benefited by such use." Thus, the overall scheme of the 2003 Act makes it evident that only a consumer can be held liable for default in payment of electricity dues or charges. 55. Under the 2003 Act, the Central government has enacted various Rules and Regulations for carrying out the provisions of the Act. The government notified the Electricity (Rights of Consumers) Rules, 2020 "Rules" laying down the rights of the consumers of electricity. The Rules detail the rights of consumers and obligations of distribution licensees; release of new connections; metering arrangements; billing and payment; disconnection and reconnection; grievance redressal mechanism, among others. The Rules define an 'applicant' as an owner or occupier of any premises who files an applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricity Board in not recovering the arrears as and when they fall due or not providing itself by adequate deposits." However, this Court also conceded that liability of previous owners could be fastened on auction-purchasers if the law so prescribed. 59. In Gujarat Inns (supra), another three-judge Bench of this Court held that the connection sought by auction-purchasers of properties would constitute a fresh connection. The Court held that in case of a fresh connection, the auction purchasers cannot be held liable to clear the arrears incurred by the previous owners in the absence of any specific statutory provision. It was observed: 3. In our opinion, the present two cases are cases of fresh connection. The learned Counsel for the Respondents (auction-purchasers) have stated that they have taken fresh connections and they have no objection if their connections are treated as fresh connections given on the dates on which the supply of electricity was restored to the premises. We are clearly of the opinion that 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 respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n', the applicant has to seek supply of electricity with respect to the same premises for which electricity was already provided. Even if the consumer is the same, but the premises are different, it will be considered as a fresh connection and not a reconnection. 62. In Gujarat Inns. (supra), this Court held that an application for electricity by an auction-purchaser will constitute fresh connection even though the premises are the same. The reasoning is based on the correct assumption that supply of electricity is with respect to the consumer, and not the premises. Therefore, even if the premises may be the same to which electricity had already been supplied, it will be considered as a fresh connection in the situation where a different applicant, in that case an auction-purchaser, applies for supply of electricity. IV. Regulatory power of the Electricity Boards/ State Commissions 63. The Electric Utilities have submitted that: (i) Section 49 of the 1948 Act empowered the Board to supply electricity upon such terms and conditions as it thinks fit; (ii) the phrase "regulate" in Section 79 of the 1948 Act has a wider implication allowing the State Commission to do everything ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly Licensee prescribed conditions with the previous sanction of the state government. Similarly, the Boards could also prescribe conditions Under Section 21 of the 1910 Act by virtue of Section 26 of the 1948 Act. 68. Section 49 of the 1948 Act read as follows: 49. Provisions for the sale of electricity by the Board to persons other than licensees.- (1) Subject to the provisions of this Act and of Regulations, if any made in this behalf, the Board may supply electricity to any person not being a licensee upon such terms and conditions as the Board thinks fit and may for the purposes of such supply frame uniform tariffs. *** (emphasis supplied) Under the 1948 Act, the Electricity Boards were empowered to prescribe terms and conditions of supply Under Section 49 read with Section 79(j). The Board was empowered to fix such terms and conditions as it thinks fit for supply of electricity to any person not being a licensee. Section 79 permitted the Board to make Regulations providing for the principles governing the supply of electricity by the Board to persons other than licensees Under Section 49: 79. Power to make Regulations.- The Board may by notification in the Official Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o requires to be noticed under Clause VI of the Schedule to the Electricity Act that the requisition for supply of energy by the Board is to be made under proviso (a) after a written contract is duly executed with sufficient security. This, together with the Regulations stated above, could be enough to clothe it with legal sanction. 71. In Hyderabad Vanaspathi (supra), a three-judge Bench of this Court had to decide upon the validity of Condition 39 of the "Terms and Conditions of Supply" prescribing an adjudicatory machinery for assessing and levying penal damages. This Court considered the legal provisions under the 1910 Act and 1948 Act to hold that terms and conditions notified Under Section 49 of the latter enactment were valid and had statutory force. The relevant paragraph is extracted below: 20. We have already seen that Section 49 of the Supply Act empowers the Board to prescribe such terms and conditions as it thinks fit for supplying electricity to any person other than a licensee. The Section empowers the Board also to frame uniform tariffs for such supply. Under Section 79(j) the Board could have made Regulation therefor but admittedly no Regulation has so far been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that these contractual terms cannot be enforced by the Board against the new owner or occupier of the premises. In India Thermal Power Ltd. (supra), the issue before the two-judge Bench was whether the State Government can alter the terms of the Power Purchase Agreement entered into Under Sections 43 and 43-A of the 1948 Act. Section 43 empowered the Board to enter into an arrangement with any person for purchase or sale of electricity. Section 43-A provided that the tariff for the sale of electricity by a generating company shall be determined in accordance with the norms regarding the operation and plant-load factor as determined by the Central Government from time to time. It was in light of these provisions, that this Court observed that every provision of an agreement entered into between a generating company and Electricity Board in exercise of the enabling power conferred Under Sections 43 and 43-A does not render the entirety of the contract statutory. The relevant observations are extracted below: 11. [...] Merely because a contract is entered into in exercise of an enabling power conferred by a statute that by itself cannot render the contract a statutory contract. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulate implies the power to prescribe and enforce all such proper and reasonable Rules necessary for conduct of business. It was held: 3. It is settled law that the Rules validly made under the Act, for all intents and purposes, be deemed to be part of the statute. The conditions of the licence issued under the Rules form an integral part of the statute. The question emerges whether the word Regulation would encompass the power to fix rates of admission and classification of the seats. The power to regulate may include the power to license or to refuse the licence or to require taking out a licence and may also include the power to tax or exempt from taxation, but not the power to impose a tax for the revenue in Rule making power unless there is a valid legislation in that behalf. Therefore, the power to regulate a particular business or calling implies the power to prescribe and enforce all such proper and reasonable Rules and Regulations as may be deemed necessary to conduct the business in a proper and orderly manner. It also includes the authority to prescribe the reasonable rules, Regulations or conditions subject to which the business may be permitted or conducted. A conj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plier can recover the arrears from a purchaser. (emphasis supplied) 78. In Paramount Polymers (supra), a two-judge Bench of this Court was called upon to decide the validity of Clause 21-A of Terms and Conditions of Supply which provided that no fresh connection in respect of the premises would be given to a purchaser unless the purchaser cleared the amount that was left in arrears by the previous consumer. The Court held that it was within the power of the Electricity Board to insert Clause 21-A in the Terms and Conditions of Supply Under Section 49 of the Supply Act: 15. [...] Under Section 49 of the Supply Act, the licensee or rather, the Electricity Board, is entitled to set down the Terms and Conditions of Supply of electrical energy. In the light of the power available to it, also in the context of Section 79(j) of the Supply Act, it could not be said that the insertion of Clause 21-A in the Terms and Conditions of Supply of electrical energy is beyond the power of the Appellant. (emphasis supplied) 79. As regards the 2003 Act, the Electric Utilities submit that Section 50 read with Section 181(2)(x) authorises the State Commission to frame the conditions governing Elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the confines of the plenary legislation. JK Industries Ltd. v. Union of India, (2007) 13 SCC 673 The Rules or Regulations enacted by the Central Commission or State Commission cannot override the 2003 Act by stipulating inconsistent provisions or by supplanting the parent statute. 83. The 2003 Act empowers the State Commission to make Regulations on matters specified Under Section 181(2). In PTC India Ltd. v. Central Electricity Regulatory Commission (2010) 4 SCC 603 a Constitution Bench of this Court held that Regulations can be framed by State Commissions so long as they satisfy two conditions: first, they must be consistent with the provisions of Act; and second, they must be made for carrying out the provisions of the Act. The Court held: 28. The 2003 Act contemplates three kinds of delegated legislation. Firstly, Under Section 176, the Central Government is empowered to make Rules to carry out the provisions of the Act. Correspondingly, the State Governments are also given powers Under Section 180 to make rules. Secondly, Under Section 177, the Central Authority is also empowered to make Regulations consistent with the Act and the Rules to carry out the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble under the scheme of the 2003 Act. 86. The next question that arises for consideration is whether a Regulation providing for recouping the arrears of a previous consumer from the subsequent owner has a reasonable nexus with the provisions of the 2003 Act. Section 42 of the 2003 Act requires the distribution licensee to develop and maintain an efficient, coordinated, and economical distribution system in their area of supply to supply electricity in accordance with the provisions of the said Act. A distribution licensee is an intermediary, performing the function of conveying supply of electricity from generating companies to the consumer, at their premises. In order to provide a supply of electricity to consumers, a distribution licensee is required to lay down infrastructure such as electricity lines, transformers, and other equipment. The nature of the supply of electricity also depends upon the type of consumer as well their needs. The licensee has to make a significant capital outlay for creating the necessary infrastructure as well as operation and maintenance costs to keep the infrastructure in readiness according to Section 42. The licensees are required to maintain the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided for enquiries by designated officials. This Court observed that it was the statutory duty of the Board to supply, transmit, and distribute electricity throughout the state in the most efficient and economical manner. It was further observed that terms and conditions such as Clause 39 were necessary to prevent unauthorised use, pilferage or malpractices by the consumers. Such terms were necessary to recoup the loss suffered by pilferages, and to stop the continuation of similar malpractices. 90. Apart from protecting a public good, such conditions also have a reasonable nexus with objects of the 2003 Act, such as a robust development of the electricity industry, protecting the interests of consumers as well as the financial interests of the distribution licensees. The need to protect the financial interests of distribution licensees has been explicitly recognized in Section 61 of the 2003 Act which empowers the Appropriate Commission to specify the terms and conditions for the determination of tariff in accordance with commercial principles. The relevant part of the Section 61 reads as follows: 61. Tariff Regulations.- The Appropriate Commission shall, subject to the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he charge does not arise, and electricity dues are simply an unsecured debt. On the other hand, the Electric Utilities submit that it is not even their case - in the absence of an express provision of law - that there is any mortgage or charge over the property in the form that the licensee would be a secured creditor. 94. Section 100 of the Transfer of Property Act 1882 contemplates two types of charges: charges created by act of parties and charges arising by operation of law. It inter alia provides as follows: 100. Charges: Where immoveable property of one person is by act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained 1[which apply to a simple mortgage shall, so far as may be, apply to such charge]. Nothing in this Section applies to the charge of a trustee on the trust property for expenses properly incurred in the execution of his trust, [and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of property tax. An auction purchaser, who became the owner of the property, resisted the attempt of the Municipal Corporation to recover the arrears of pending taxes in exercise of its charge on the ground that they were not aware of the past municipal tax arrears. The Corporation argued that the transferee was imputed with constructive knowledge of the charge created against the property due to Section 141 of the Bombay Provincial Municipal Corporations Act 1949. The Court held against the Municipal Corporation on the ground that in the facts of the case, the Plaintiff did not have constructive notice of the arrears of municipality. 99. While explaining the purport of Section 100, this Court held that the second half of Section 100 enacts a general prohibition and no charge can be enforced against property in the hands of a transferee for consideration without notice of the charge. In terms of Section 100, an exception to this Rule must be expressly provided by law. The Court held that whether a transferee has actual or constructive notice which satisfies the requirement of notice in the proviso to Section 100, must be determined in the facts and circumstances of each case. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gam (supra), this Court held that in the absence of any contract to the contrary, the amount payable towards supply of electricity does not constitute a charge on the premises. 103. Consequently, in general law, a transferee of the premises cannot be made liable for the outstanding dues of the previous owner since electricity arrears do not automatically become a charge over the premises. Such an action is permissible only where the statutory conditions of supply authorise the recovery of outstanding electricity dues from a subsequent purchaser claiming fresh connection of electricity, or if there is an express provision of law providing for creation of a statutory charge upon the transferee. 104. The next issue which falls for consideration is whether an electricity charge can be introduced by way of statutory Regulations or Rules enacted by a regulatory commission under its Rule making power in the 2003 Act. 105. Counsel for the auction purchasers have relied on Deputy Commercial Tax Officer, Park Town Division v. Sha Sukhraj Peerajee AIR 1968 SC 67, and Indian Council of Legal Aid and Advice v. Bar Council of India 1995 (1) SCC 732, to argue that a charge cannot be introduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther cognate matters. In terms of Section 181 of the 2003 Act, the State Commission is empowered to make Regulations and Rules consistent with the Act which carry out the provisions of the Act. As held in the preceding paragraphs, the Rule making power contained Under Section 181 read with Section 50 is wide enough to enable the regulatory commission to provide for a statutory charge in the absence of a provision in the plenary statute providing for creation of such a charge. The State Commission is conferred with wide powers under the statutory framework to provide for different mechanisms in the Electricity Supply Code for recovery of electricity arrears of the previous owner. The recovery of electricity arrears may take effect either by requiring a subsequent owner of premises to clear payment of outstanding dues as a condition precedent for an electricity connection, or by deeming that any amount due to the licensee shall be a first charge on the assets, or by any other reasonable condition. 109. In exercise of such power, Regulation 10.5 of the Maharashtra Electricity Supply Code 2005 provides that any charge for electricity or any other sum which remains unpaid by an erstwhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Transfer of Property Act, 1882. Once it is established that a statutory charge is created and required notice was given, the charge attaches to the property and the licensee is entitled to recover the unpaid electricity dues by proceeding against the premises. Consequent to the charge created, Article 62 of the Indian Limitation Act, 1963 would come into play. Article 62 of the Limitation Act relates to enforcing the payment of money procured by mortgaged or otherwise charged upon the immoveable property. The electricity utilities would get a period of twelve years to recover the dues charged on the immoveable property from the date when the money payable became due. 113. In light of the above discussion, we are of the opinion that the electricity utilities can create a charge by framing subordinate legislation or statutory conditions of supply enabling recovery of electricity arrears from a subsequent transferee. Such a condition is rooted in the importance of protecting electricity which is a public good. Public utilities invest huge amounts of capital and infrastructure in providing electricity supply. The failure or inability to recover outstanding electricity dues of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion by the licensee; (ii) no limitation is provided Under Section 56 after the electricity is discontinued for non-payment of dues; (iii) a valid and subsisting money decree in favour of the Electricity Board against the erstwhile owner of the premises would not be affected by the limitation period of two years; (iv) no time limit has been provided for cessation of the right of the licensee to demand past dues for giving a new connection to the premises; and (v) the right of the licensee not to give a connection till the outstanding dues are cleared is a continuing right and cannot be said to be extinguished. 116. On the other hand counsel representing the auction purchasers have urged that (i) the period of limitation Under Section 56(2), which begins with a non obstante clause, bars the recovery of outstanding electricity dues from successful auction purchasers who apply for a new connection for the supply of electricity from the licensee; (ii) two conditions need to be fulfilled to get over the embargo on the recovery of a sum due from any consumer, after a period of two years from the date when such sum became first due, namely (a) such sum has been shown continuously as recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty supplied and the licensee shall not cut off the supply of the electricity. (emphasis supplied) 118. Section 56 falls under Part VI which is titled "Distribution of Electricity". Section 56 provides for disconnection of electrical supply in case there is a default in payment of electricity charges. 119. The power to disconnect is a drastic step which can be resorted to only when there is a neglect on the part of the consumer to pay the electricity charges or dues owed to the licensee or a generating company, as the case may be. Section 56(1) provides that where any person neglects to pay any charge for electricity or any sum other than a charge for electricity due from him to a licensee or a generating company, the licensee or generating company may after giving a written notice of fifteen days, disconnect the supply of electricity, until such charges, including the expenses incurred are paid. The power to disconnect electricity is conditioned on the fulfilment of the conditions stipulated. The cutting off or disconnection is without prejudice to the rights of the distribution licensee to recover such charge or other sums by other permissible modes of recovery. The proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03 Act is pari materia to Section 24 of the 1910 Act. Section 24 of the 1910 Act empowered the Electricity Board to issue a demand and to discontinue supply to consumers who neglected to pay charges, without prejudice to the right to recover such charges or other sums by way of a suit. The import of Section 24 was considered by this Court in Isha Marbles (supra), where it was observed that the action of cutting off electricity supply after service of the notice as prescribed Under Section 24 was in addition to the general remedy of filing a suit for recovery. 123. In M/s. Swastic Industries v. Maharashtra State Electricity Board (1997) 9 SCC 465, this Court held that the right to discontinue supply of energy Under Section 24 was not taken away by Section 60A of the 1948 Act, which provided an option to the Electricity Board to file a suit within the period of limitation stipulated there. This Court observed that: 5. It would, thus, be clear that the right to recover the charges is one part of it and right to discontinue supply of electrical energy to the consumer who neglects to pay charges is another part of it. The right to file a suit is a matter of option given to the licens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability incurred under the previous enactment would continue and the claim of the licensee to recover electricity would be governed by the regulatory framework which was in existence prior to the enforcement of the 2003 Act. 126. In its report dated 19 December 2002, the Standing Committee of Energy opined that the restriction for recovery of arrears Under Section 56 was considered necessary to protect the consumer from arbitrary billings. Standing Committee of Energy-Thirteenth Lok Sabha, The Electricity Bill 2001-Thirsty First Report, Ministry of Power (2002) In other words, the enactment of Section 56(2) was to address the mischief of arbitrary billings. Hence, Section 56(2) was incorporated to ensure that a licensee does not abuse its special power of disconnection of electrical supply. Section 56(2) ensures that a licensee does not have the liberty to arbitrarily impose a bill after a long period and then recover such a huge amount through the drastic step of disconnection of electrical supply. 127. In Rahamatullah Khan (supra), a two judge Bench of this Court dealt with the applicability of the period of limitation provided by Section 56(2) on an additional or supplement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licensee company discovered the mistake of billing under the wrong Tariff Code on 18-3-2014. The limitation period of two years Under Section 56(2) had by then already expired. 9.1. Section 56(2) did not preclude the licensee company from raising an additional or supplementary demand after the expiry of the limitation period Under Section 56(2) in the case of a mistake or bona fide error. It did not, however, empower the licensee company to take recourse to the coercive measure of disconnection of electricity supply, for recovery of the additional demand. (emphasis supplied) 128. The exposition of law by this Court in Rahamatullah Khan (supra) was considered by a coordinate bench in Prem Cortex (supra). A consumer was served with a short assessment notice and the Court had to consider whether short billing and the subsequent raising of an additional demand would tantamount to a deficiency of service. This Court observed that the bar contemplated in Section 56 operates on two distinct rights of the licensee, namely, the right to recover and the right to disconnect. This Court observed that under the law of limitation, the remedy and not the right is extinguished. The bar with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efly deal with the objection of the auction purchasers that the conditions of supply cannot be used to resurrect time barred debts. Counsel placed reliance on VT Kallianikutty (supra), where it was held that a time barred debt cannot be recovered by taking recourse to the provisions of the Kerala Revenue Recovery Act. This decision is not helpful to the auction purchasers in the present batch of cases. In that case, a three-judge Bench of this Court while dealing with agricultural loans extended by the Kerala Finance Corporation, held that since the Kerala Revenue Recovery Act does not create a new right, a person could not claim the recovery of amounts which are not legally recoverable. In reaching its decision, this Court, however, reasoned that the statute of limitation bars the remedy by way of a suit beyond a certain time period, without touching the right to recover the loan. The right remains untouched and it can be exercised in any other suitable manner provided. 131. We therefore, reject the submission of the auction purchasers that the recovery of outstanding electricity arrears either by instituting a civil suit against the erstwhile consumer or from a subsequent transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a consumer complaint. This Court held that where existing sites are put up for sale or lease by public auction and the sale is confirmed in favour of the highest bidder, the resultant contract relates to sale or lease of immovable property, and not a provision of service or sale of goods. This Court delved into the nature of public auctions and opined on the implications of an auction conducted on an "as is where is basis", where an auction purchaser is expected to exercise due diligence with regard to the condition of a site. The Court observed: 19. .... In a public auction of sites, the position is completely different. A person interested can inspect the sites offered and choose the site which he wants to acquire and participate in the auction only in regard to such site. Before bidding in the auction, he knows or is in a position to ascertain, the condition and situation of the site. He knows about the existence or lack of amenities. The auction is on `as is where is basis'. With such knowledge, he participates in the auction and offers a particular bid. There is no compulsion that he should offer a particular price. When the sites auctioned are existing sites, withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of auction and after having accepted the commercial plots on "as is where is" basis, they cannot be heard to contend that PUDA had not provided the basic amenities like parking, lights, roads, water, sewerage etc. If the allottees were not interested in taking the commercial plots on "as is where is" basis, they should not have accepted the allotment and after having accepted the allotment on "as is where is" basis, they are estopped from contending that the basic amenities like parking, lights, roads, water, sewerage etc. were not provided by PUDA when the plots were allotted.... (emphasis supplied) 136. In Kenneth Builders and Developers (supra), in the circumstances arising in that particular case, this Court refused to accept the seller's reliance on the "as is where is" condition and held that refusal of the Delhi Pollution Control Committee, "DPCC" to grant permission to the auction purchaser, frustrated the Development Agreement which was entered into between the seller, Delhi Development Authority, "DDA" and the builder. DDA had held an auction on an "as is where is" basis for involving the private sector for the development of a project land. The bid was acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in this context is misplaced. As mentioned above, this primarily pertains to physical issues at site.... (emphasis supplied) 137. Reliance placed by the auction purchasers on Raghu Nath Gupta (supra) and Kenneth Builders and Developers (supra) to contend that "as is where is" is a feature of physical property, limited to encumbrances or charges running with land, is misconceived. In both the cases relied upon by the auction purchasers, the judgments were rendered on the peculiar facts at hand. In Raghu Nath Gupta (supra) this Court was dealing with the availability of basic facilities like parking, lights, roads, water and sewerage, but the application of the doctrine of "as is where is" was not limited to only physical features of the property. Further, in Kenneth Builders and Developers (supra) based on the facts, this Court opined that a sale on "as is where is" could not be interpreted to mean that the auction purchaser would be responsible to take permission for the initial commencement of construction itself, which was the obligation of the DDA. The observation of this Court that "this primarily pertains to physical issues at site" was limited to specific clauses in the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clauses 24 and 26 of the auction notice, which stipulated an "as is where is" sale with respect to all statutory dues and absolved the authorised officer of all liabilities for any charge, encumbrances and dues, including electricity dues. It concluded that the auction purchaser was "clearly put to notice" since there was a specific mention of the quantification of dues of various accounts including electricity dues. On the liability of the past owners to bear electricity dues when the sale is on "as is where is" and existence of electricity dues is specifically mentioned, this Court categorically held that the auction purchasers were bound to inspect the premises and provide for the dues in all respects. This Court observed: 16.2. 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). 141. To conclude, all prospective auction purchasers are put on notice of the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of this Court in Paramount Polymers (supra). This Court observed: 11. ..... We are also not in a position to agree with the High Court that the relevant date is the date of sale of the undertaking by the Financial Corporation to the first Respondent. The insertion of Clause 21-A was circulated by the communication dated 27-11-2001 and it was subsequently followed by the formal notification in terms of Section 49 of the Supply Act read with Section 79(j) of that Act. The first Respondent having applied for a fresh connection only on 1-1-2002, the application would be governed by the Terms and Conditions including the term inserted on 27-11-2001, as subsequently formally notified. In the writ petition filed on 27-2-2002 in that behalf, the Court could not have come to the conclusion that the application made by the first Respondent was not governed by the amended Terms and Conditions of Supply including Clause 21-A thereof.....On our interpretation of Clause 21-A of the Terms and Conditions of Supply as inserted with particular reference to Sub-clauses (b) and (c) thereof, we are of the view that the said Sub-clauses clearly applied to the first Respondent when it made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he registered consumer shall intimate the transfer of the right of occupancy of the premises within seven days to the officer concerned. On such intimation being received, the service shall be disconnected. If the transferee desires a service connection, they shall pay off the dues and apply for transfer of the ownership of the service connection. In terms of Clause 15(d), all dues to the KSEB from a consumer shall be the first charge on the assets of the consumer. In terms of Clause 15(e), a new connection or reconnection shall not be given to any premises where there are arrears on any account unless they are cleared in advance. 147. The validity of Clause 15(e) was upheld by a Full Bench decision of the Kerala High Court in Suraj v. KSEB 2005 (3) KLT 856. The High Court upheld the validity of the said Regulation on the ground that it is unjust to compel the Board to supply electricity to the very same premises without the arrears of the previous owner or occupier being cleared. The High Court observed: 8. Regulations make no distinction between an auction purchaser and Ors. in the matter of supply of electricity. Regulations 15(d) and (e) have been incorporated with a purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or not and the principle of 'Caveat Emptor' will apply. 150. The Appellant sought permission of the KSEB for wiring for an electricity connection in the property by a letter dated 4 June 1999. Wiring permission was rejected by KSEB due to the outstanding dues of the erstwhile owner, and it was stated that a new connection would be provided if the Appellant was ready to remit the amount due from the previous consumer. 151. In the interregnum, KSEB filed a claim petition before the Company Court in a company petition Company Petition 15 of 1994 claiming a sum of Rs. 86,54,711 from Pearlite Wire Products Ltd., which was in liquidation. The claim petition was admitted for Rs. 63 lakhs. The Appellant filed a company application Company Application 349 of 1999 in Company Petition 15 of 1994 seeking a direction to the KSEB to not insist on payment of arrears of electricity charges by the auction purchaser, which were due from the company in liquidation. On 18 September 2000, the Single Judge rejected the application filed by the Appellant, holding that KSEB can insist on the arrears being cleared before the connection is given. Aggrieved by the order, the Appellant challenged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same time, we cannot lose sight of the fact that the Appellants have made huge investments as claimed by them, and only the interest component on such investment may create a huge liability as against the Appellant. On the other hand, if the industry starts functioning, perhaps the Electricity Board will also stand to gain. We have no doubt that instead of litigating, if the parties could have settled the dispute, both would have benefited to a great extent. However, no settlement could be reached. 155. We are of the view that the Kerala High Court was correct in upholding the validity of Clause 15(e). Clause 15 of the Conditions of Supply of the Electrical Energy, which is statutory in character, unequivocally provides that the Board is not obligated to give reconnection or a new connection in the premises where there are any arrears of electricity charges from a previous consumer, unless the arrears including penalty are cleared by the new owner/ occupier/ allottee. Furthermore, in the present case the terms of auction sale provided that the assets were sold on "as is where is and whatever there is'' basis. In the light of the clear facts, the Respondent would be well w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e action taken by the Respondent-Board. 159. This Court issued notice on 7 January 2004, and granted leave on 2 April 2004. Recovery proceedings were stayed on 5 May 2006. 160. The Appellant has submitted in the course of the written submissions that the impugned Regulation would apply prospectively as subordinate legislation made by a delegate cannot have retrospective effect unless Rule making power in the concerned statute expressly or by necessary implication confers power in this behalf. Reliance placed on State of Madhya Pradesh v. Tikamdas, (1975) 2 SCC 100 It was further stated that the Appellant had applied for electricity connection on 1 December 1989, before the Conditions of Supply came into force. It has been urged that in the absence of any existing statutory Regulations, the Appellant cannot be called upon to clear the past arrears incurred by the erstwhile consumer as a condition precedent to electricity supply. 161. The relevant date to determine the applicability of the Conditions of Supply is the date on which the auction purchaser applies for a fresh connection of electricity for the premises, and not the date of purchase of the undertaking. The issue before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply for a fresh connection after completing necessary formalities, without being liable for outstanding arrears of the previous owner. The circular further provided that Condition 23(b) of the MSEB Conditions of Supply would not apply to prospective consumers with effect from 1 April 1993. 166. The circular was withdrawn by the Circular 607 dated 19 December 1998, whereby it was mandated that reconnection or fresh connection would be released only after the arrears of the Electricity Board are cleared. The circular purported to emanate from Condition 23(b) of the Conditions of Supply, as framed by the MSEB. The circular was made operative with immediate and prospective effect. 167. In light of the impugned judgments of the Bombay High Court, which are in appeal before us, MSEB by its Circular 684 dated 25 September 2003 allowed auction purchasers of closed/ sick industrial units to exercise either of the options as prescribed by Circular 518 dated 18 June 1993. However, an undertaking was required by the incoming consumers to unconditionally agree to pay the arrears of previous owners in case the Supreme Court decided in favour of MSEB. 168. After the enactment of the 2003 Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause 14 of the standard agreement between the Electricity Board and the consumer incorporates the Conditions of Supply as a part of the agreement; c. The reliance placed by the Bombay High Court on the judgment in Isha Marbles (supra) cannot be sustained since the case of Isha Marbles (supra) is distinguishable on facts; d. The General Auction Conditions of Sale of SICOM in Clause 2 stipulate that the sale is on "as is where is and what is" basis. Auction purchasers were put on notice of their liability for the past electricity arrears due to the inclusion of the standard auction proclamation (Clause 6) while inviting bids; e. Regulation 10.5 of Maharashtra Electricity Supply Code 2005 explicitly states that any unpaid electricity dues shall be a charge on the premises transferred; and f. All six cases pertain to the period prior to 2005 i.e., before the enactment of the Maharashtra Electricity Supply Code 2005. The 1976 MSEB Conditions of Supply would continue to operate till the enactment of the Maharashtra Electricity Supply Code in 2005. 172. In Maharashtra, the right of the Electric Utilities to demand outstanding dues is traceable to provisions across different tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be provided. The High Court in all the cases directed the Appellant-Board to provide reconnection or fresh connection to the Respondents, without insisting on payment of arrears. 174. These impugned judgments raise a common question on the applicability and the scope of Condition 23. This Court would first deal with the overall argument on the applicability of Condition 23 of the MSEB Conditions of Supply, and its interpretation, before delving into the specific factual matrix of the cases. 175. In Maharashtra State Electricity Board v. Super & Stainless Hi Alloys Ltd., Civil Appeal 5312-5313 of 2005 the Bombay High Court relied on the decision of this Court in Isha Marbles (supra) to quash the impugned circular dated 19 December 1998 for lack of jurisdiction as it was held to be beyond the powers of the Electricity Board Under Section 24 of the 1910 Act. The High Court concluded that the contract of supply was only between the Electricity Board and the previous consumer, and since the subsequent purchaser was a third party, it cannot be made liable for the past liabilities of the erstwhile consumer. 176. In Supdt. Engg. Maharashtra State Electricity Board v. M/s. Umang Ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to premises from the purchaser of a property seeking reconnection or fresh connection of electricity when either of two conditions are met: a. An express provision exists in law providing that electricity arrears constitute a charge over the property. For the statutory charge to be enforced against the property in the hands of a person to whom such property has been transferred for consideration, the transferee must have notice, either actual or constructive, of the charge; and b. The statutory Regulations or terms and conditions of supply which are statutory in character, authorise the supplier of electricity to make such a demand. 180. In general law, electricity arrears do not constitute a charge over the property. Under the provisions of the 1910 Act read with the1948 Act, electricity arrears do not create a charge over the property. In the cases before us governed by the 1910 Act read with 1948 Act, no charge was created on the property in favour of the Electricity Board for the payment of electricity dues. The arrears of electricity dues were not levied against the premises, but were levied against the erstwhile consumer. 181. We are of the opinion that the Bombay High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of service connection from the name of the erstwhile consumer. 186. The submission of the Appellant on the applicability of Condition 23 rests on the meaning and scope of Condition 23 in relation to the liability of a person who becomes the new owner or occupier of the premises of the erstwhile consumer, to which electricity was being supplied. Condition 23 is extracted below: Clause 23: Assignment or Transfer of Agreement a) The consumer shall not without previous consent in writing of the Board, assign, transfer or part with the benefit of his Agreement with the Board nor shall the consumer in any manner part with or create any partial or separate interest thereunder. b) A consumer who commits breach of condition 23(a) above and neglects to pay to the Board any charges for energy or to deposit with the Board amount of security deposit or compensation and the supply of such consumer is disconnected Under Section 24 of the Indian Electricity Act, 1910 or under condition No. 31(a) of these conditions dies, or transfers, assigns or otherwise dispenses of the undertaking or the premises to which energy was being supplied to the consumer, any person claiming to be heir, legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes Ltd. v. Tehri Hydro Development Corporation (India) Ltd., (2019) 17 SCC 786 In Adoni Cotton Mills Ltd. v. Andhra Pradesh State Electricity Board (1976) 4 SCC 68, this Court had to interpret Section 49(3) of the 1948 Act, which empowered the Electricity Board to fix different tariffs for the supply of electricity to any person having regard to the geographical position of any area, the nature of supply and purpose for which the supply is required and any other relevant factors. This Court refused to limit the generality of "other relevant factors" since there was no genus of the enumerated factors. Geographical position of the area and the nature and purpose of the supply were held not to be related to any common genus. 190. In the impugned judgment Ecto Spinners, the Bombay High Court observed that the word "successor", occurs in the collocation of other words "heir", "legal representative", "transferee" and "assignee", and its meaning must take colour from the preceding words in association with which it is used. It held that the word "successor" has to be understood to refer to an owner acquiring the right by way of voluntary transfer or on account of the right of inheritanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not bring into play the Rule of ejusdem generis for the preceding words "dies", "transfers", "assigns" do not belong to a single limited genus. 195. The word "transfer" itself is generally regarded to have a wide connotation, comprehending within it both voluntary and involuntary transfers. In Mangalore Electric Supply Co. Ltd. v. The Commissioner of Income Tax, West Bengal (1978) 3 SCC 248, a three-judge Bench of this Court held that a compulsory acquisition of property can constitute a "transfer" within the meaning of Section 12B(1) of the Indian Income Tax Act 1962 (sic 1922). It rejected the argument that the word "transfer" must be construed ejusdem generis with the preceding words "sale", "exchange", "relinquishment". On the wide amplitude of the word 'transfer', this Court observed: 8. We find it impossible to accept this submission. In the first place if it was intended that voluntary transfers alone should fall within the meaning of the section, it was unnecessary for the legislature to use the expression "transfer", an expression acknowledged in law as having a wide connotation and amplitude. Earl Jowitt, in "The Dictionary of English Law" says: In the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular 518 dated 18 June 1993 and Circular 607 dated 19 December 1998 issued by the MSEB emanated from Condition 23 of the MSEB Conditions of Supply. They contained directions vis-à-vis power supplied to those property owners who purchased sick and closed industrial units. The context and the purpose of the statutory terms and conditions of supply demand that a broader construction should be adopted, and there is no room for the application of the Rule of ejusdem generis. 198. On our interpretation of Condition 23 of the MSEB Conditions of Supply with particular reference to Sub-clause (b) thereof, we are of the view that the said Sub-clause is applicable to involuntary transfers, such as court auctions. 199. Applying the above considerations to the appeals our conclusions are as follows: Item 101.1: Maharashtra State Electricity Board v. Super & Stainless Hi Alloys Ltd.; Civil Appeal 5312-5313 of 2005 200. The first Respondent purchased a sick industrial unit in auction from the SICOM Under Section 29 of the State Financial Corporations Act. It filed a writ petition challenging the actions of the Appellant-Board in denying it a new electricity connection. A subsequent wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in transfer of property shall vest in the successor all rights in the property transferred as if the transfer has been made by the owner of the property. Accordingly, a sale made by the corporation is deemed to be a sale made by the owner of the property, attracting Condition 23 of the MSEB Conditions of Supply. 204. It is necessary to reproduce some of the relevant clauses of the "General Auction Conditions of Sale" of properties put on sale by SICOM. The clauses are extracted below: Clause 4: The purchaser may take inspection of the property to be sold. Even if the purchaser does not take inspection, he shall be deemed to have inspected all the assets put up for sale on "As is where is and what is basis" in regard to the condition thereof, before making the offer for purchase of the same. It is hereby expressly agreed and declared that notwithstanding the provisions of Section 55 of the Transfer of Property Act or any other enactment for the time being in force in that behalf, SICOM shall not be bound to disclose to the purchaser any defect, whether material or otherwise in the property, whether or not SICOM may be or may not be aware of such defect and whether or not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eking a clarification that it was not liable for past dues and liabilities of any kind in respect of the property purchased through the auction sale. The Bombay High Court by its order dated 29 January 2003 declared that the Respondent-purchaser was not liable to pay any arrears payable by the erstwhile owner. The Appellant alleges that this order was passed ex-parte. The order of the Bombay High Court in Judges Order dated 29 January 2003 has not been placed on record before this Court. 208. The Respondent-purchaser requested the Appellant for a new electricity connection, which was denied on 6 June 2003 on the ground that the Respondent was not eligible for a new connection unless the dues of the erstwhile consumer were discharged in terms of Condition 23 of the MSEB Conditions of Supply. The Respondent filed a writ petition, with an interim prayer seeking a direction to grant a new electric connection. The main prayer in the writ petition sought a declaration that the demand made by the Electricity Board to pay arrears was unfounded in law. The Bombay High Court by its impugned judgment dated 24 September 2004 disposed of the writ petition with a direction to the Appellant to g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd since then, the first Respondent had the possession of the property. The final deed of assignment was yet to be executed. The first Respondent incurred an expenditure of Rs. 4 crores to overhaul the plant and machinery at the premises, and thereafter applied for a fresh electricity connection as a High Tension Consumer for the premises. Meanwhile, the plots were transferred by the Maharashtra Industrial Development Corporation to the first Respondent on 4 February 2005. The Appellant, however, relied on the MSEB Conditions of Supply and the agreement entered with the erstwhile consumer to decline granting electricity connection until the arrears of the erstwhile consumer were cleared. The Respondent filed a writ petition before the Aurangabad Bench of the Bombay High Court, seeking a direction to the Appellant to supply electricity to the Respondent at its premises. 213. By the impugned judgment dated 20 July 2005, the Bombay High Court allowed the writ petition. The High Court held that the Respondent could not be made liable for the dues of the erstwhile owner as a prerequisite for obtaining a new electricity connection as there was neither any statutory provision nor an agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusively borne and paid by the Purchaser. 218. The first Respondent applied for a fresh electricity connection for the premises. The Appellant-MSEDC refused the request of the first Respondent by a letter dated 9 September 2005 on the ground that the arrears of electricity charges of the earlier owner were pending, and the first Respondent was liable to clear them in light of Condition 23 of MSEB Conditions of Supply. The Bombay High Court by its impugned judgment dated 12 December 2005 held that Condition 23 was inapplicable and directed the Appellant to grant a fresh connection to the first Respondent, if otherwise eligible. The High Court observed that Condition 23 intended to apply to voluntary acts of the original consumer by which he transfers the benefit of his agreement with the Board. 219. The Appellant filed a Special Leave Petition challenging the impugned judgement. The Appellant has argued that the concept of voluntariness is not a sine qua non for Condition 23 of the MSEB Conditions of Supply. In the reply filed by the Respondent, it has been urged that it is not a necessary party to the present petition since it had sold the premises in dispute to Rajaram Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion licensee is entitled to recover the unpaid dues from the first Respondent subject to the permitted period specified in the proviso to Regulation 10.5. 224. In view of the aforesaid legal position, which has emerged, we are of the view that the impugned order of the High Court cannot be sustained. The appeal is allowed. Item 101.13: Maharashtra State Electricity Board v. M/s. Jai Tirath Financiers Pvt. Ltd.; SLP(Civil) No. 10732 of 2006 225. In 1999, liquidation proceedings were initiated against M/s. Hariganga Alloys & Steel Ltd. By a sale notice dated 2 May 2001, offers were invited from interested bidders for purchase of properties of M/s. Hariganga Alloys & Steel Ltd. on "as is where is" and "as is what is" basis. The first Respondent successfully purchased the assets in the auction sale and took possession of the purchased property in 2002. 226. On 17 June 2005, the Respondent applied to the Appellant for a new electricity connection to the premises purchased in the auction. By a letter dated 22 June 2005, the Appellant rejected the application on the ground that arrears of electricity charges of Rs. 83 lakhs of the erstwhile owner were pending and a permanent electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to force from 20 January 2005, is applicable in the instant case. Accordingly, a charge was created on the electricity arrears in terms of Regulation 10.5. At the same time, the Court cannot be oblivious to the commercial exigencies in view of which the settlement proposal was complied with. The Appellant has recovered an amount of Rs. 83 lakhs. In the facts and circumstances of the case it would be iniquitous to direct the payment of interest at this stage. We therefore direct a closure of the dispute in the above terms in the exercise of the jurisdiction Under Article 142 of the Constitution. 232. In the circumstances, it is not possible to entertain the appeal at this stage. The appeal is accordingly dismissed. Pending applications, if any, stand disposed of. Item 101.14: Maharashtra State Electricity Distribution Co. Ltd. v. M/s. Garib Nawaj Scrap Merchant; Civil Appeal No. 10732 of 2006 233. In 2002, the electricity supply of M/s. R & J Alloys Pvt. Ltd. was permanently disconnected by the Appellant. On 3 October 2005, the first Respondent successfully purchased the properties of M/s. R & J Alloys Pvt. Ltd. in an auction held pursuant to a sale conducted for enforcement of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant against the erstwhile owner. During the pendency of the present appeal, the trial court by an order dated 30 September 2009 passed a decree in favour of the Appellant for the debt due from the erstwhile consumer and its proprietor in respect of the arrears of electricity bills. The first Respondent has urged that in view of the decree, the Appellant ought to have withdrawn the present appeal instead of protracting the litigation. 238. At the outset, we would deal with the submissions on the applicability of the 2003 Act. The electricity connection was permanently disconnected in 2002, and the first Respondent acquired ownership rights in the premises in 2005. The first Respondent made the application for a new electricity connection on 30 December 2005. Hence, the first Respondent requested the Appellant to supply electricity after the Maharashtra Electricity Supply Code 2005 came into effect on 20 January 2005. Accordingly, the Maharashtra Electricity Supply Code 2005 would govern the facts in the present case. In terms of Regulation 10.5 of the Maharashtra Electricity Supply Code 2005, any unpaid electricity dues constitute a charge on the premises, and would be recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter pursuing its remedy by filing a suit for recovery of moneys/ dues. It becomes the bounden duty of the distribution licensee to diligently pursue the decree awarded and recover amounts from the real defaulter. Any amount that may have been realised in the execution of the decree would have to be given due credit for in determining the amount payable by the Respondent. 243. In view of the reasons which have been adduced earlier, we allow the appeal and set aside the order of the High Court. III. Gujarat 244. In Gujarat, the right of the Electric Utilities to demand outstanding dues is traceable to the following provisions: a. Up to the enactment of the 2003 Act on 10 June 2003: The governing legislation consists of the 1910 Act and the 1948 Act. Clause 2(j) of Conditions of Supply of the Gujarat Electricity Board was inserted by a notification dated 10 August 2001. It reads: 2(j) Recovery of old dues: Reconnection or new connection for any premises, where there are arrears of the Board pending from the consumer/occupier, shall not be entertained. The new successor/ occupier has to clear these dues of the previous consumer before the application of successor/occupier is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company was passed and an Official Liquidator was appointed. By an advertisement dated 21 December 2001, the Official Liquidator invited tenders for the auction sale of the property of the previous owner. The Appellant submitted an offer of Rs. 35.5 lakhs for purchase of the property on an "as is where is" basis. The offer letter specified that the Petitioner "shall not be responsible for any of the past dues of the Gujarat Electricity Board, Excise and Customs Department, Sales Tax and Income Tax Department and of any outsiders whether it is Government, Semi-Government Corporations and/ or Board, Bank or of any private parties". After inter se bidding, the Appellant's offer of Rs. 45.5 lakhs was found to be highest. On 23 July 2022, the Official Liquidator submitted a report before the Gujarat High Court for confirmation of the sale in favour of the Appellant for Rs. 45.5 lakhs. The High Court accepted the sale in favour of the Appellant subject to certain terms and conditions. One such condition was: 10. The purchaser shall be liable to pay all statutory dues, if any, due and payable on the properties of the company for the period after the date of winding up. The paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of the case make it evident that the Appellant requested supply of electricity by a letter dated 12 August 2002. In the present case, the payment of electricity dues, being statutory in nature, cannot be waived. The auction conditions are subservient to the statutory demand made under Condition 2(j) of the Conditions of Supply. Therefore, we uphold the impugned judgment of the High Court. 249. Before parting, we would like to highlight that by an order dated 18 November 2011, this Court directed the Appellant to deposit Rs. 25 lakhs with the Respondent and secure the balance principal amount by giving a bank guarantee of a nationalised bank in the name of the Respondent within a period of eight weeks from the date of the order to obtain a fresh electricity connection. The relevant part of the said order is reproduced below: The principal amount claimed by Paschim Gujarat Vij Company Limited is to the tune of Rs. 1.26 crores. The applicant-Petitioner has applied for grant of fresh electricity connection which is being denied on the ground that arrears, referred to above, have not been paid by the previous owner [consumer]. The Petitioner is an auction purchaser. Pending f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Limited and Ors.; SLP (C) No. 2880 of 2007 251. The Appellant is an electric utility engaged in distribution and retail supply of electricity in Ahmedabad. Raipur Manufacturing Company Ltd., the previous owner, became liable to pay an amount of Rs. 12 crores towards electricity dues together with running interest thereon. On account of the outstanding debt, the Appellant disconnected electricity supply to the premises of the company at Ahmedabad on 15 July 1999. In 2001, winding up proceedings were filed against the previous owner before the Company Court of the High Court of Gujarat. The sale of property of the previous owner was sanctioned by the High Court of Gujarat by an order dated 2 December 2002 in favour of the Respondent. The relevant terms and conditions imposed by the High Court were: 1. The sale of properties of the Company shall be on "as is where is and whatever there is" basis and the Official Liquidator will not transfer the title except the title which the company was having prior to its liquidation. *** 5. All the statutory dues including the municipal dues, taxes, cess, etc. shall be paid and borne by the purchaser, Ajar Enterprises Private Limited. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent applied for electricity connection on 13 August 2004. Hence, the Respondent had applied for a connection before the coming into force of the Gujarat Electricity Supply Code. Thus, the said Regulations will not be applicable to the facts of the present case. 256. Since the Respondent applied for electricity connection on 13 August 2004, the 2003 Act and the Rules and Regulations made thereunder are inapplicable in the instant case. It has been admitted by the Appellant that there was no statutory condition requiring the Respondents to pay the outstanding electricity dues of the previous owner at the point of time when they applied for electricity connection. 257. The Appellant has submitted that Ahmedabad Electricity Company, "AEC" the predecessor of the Appellant, notified the Conditions of Supply on 14 October 1994, and that would be applicable. For the period from 10 June 2003 till 31 March 2005, when the Electricity Supply Code came into force, the 1994 Conditions of Supply continued to operate in terms of Section 185(2)(a) of the 2003 Act. Condition 2 of the 1994 Conditions of Supply provided that a requisition for supply of electrical energy shall be made in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired the assets of Arunesh Processors Pvt. Ltd. at Vapi, Gujarat. The sale was confirmed in favour of the Respondent for Rs. 70 lakhs on 11 August 2005 by the Bombay High Court. Thereafter, on 12 December 2008 a deed of conveyance was executed between the Official Liquidator, High Court of Bombay and the Respondent. In 2010, the Appellant filed Darkhast No. 7 of 2010 for execution of the decree passed in the suit in 2002. 260. On 16 December 2010, the Respondent approached the Appellant requesting it to release power supply to the plot at Vapi, Gujarat. On 03 January 2011, the Appellant informed the Respondent that power supply cannot be released on the plot because Darkhast No. 7 of 2010 was pending and dues were not recovered from the previous owner. Since the Respondent was in need of power supply on the said plot, it paid the outstanding dues of the previous owner to the tune of Rs. 17 lakhs on 25 February 2011. However, on 17 August 2011, the Respondent approached the Appellant to refund the paid amount. The Appellant refused to refund the amount, contending that the previous owner had not yet acknowledged the receipt of their claim. The Respondent instituted a writ petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been further argued that Clause 4.1.11 affixing the dues to the premises is contrary to Section 43 of the 2003 Act, which affixes the liability to pay electricity dues and charges on the consumer. The dues relating to the premises would be a financial encumbrance on the property, and as such would be transferred with the sale of the land. 264. In the instant case, the first part of Clause 4.1.11 provides that an application for electricity supply for any premises need not be entertained unless any dues relating to the premises have been cleared. The said Clause indicates that a distribution licensee can withhold connection to the premises unless its dues with respect to the said premises have been cleared. In our opinion, the High Court has erred in observing that the phrase "any dues relating to that premises" is inconsistent with the provisions of the 2003 Act. The use of the said phrase does not entail that the premises are deemed to be a defaulter and made liable to pay electricity dues, as the High Court suggests. According to Clause 4.1.1 of Electricity Supply Code, it is the applicant who has to make an application in terms of Annexure A and pay all the required elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequently, we set aside the impugned judgment of the High Court dated 2 December 2012. Any pending IAs are disposed of accordingly. Item 101.5: Madhya Gujarat Vij Co. Ltd. v. Agriculture Produce Market Committee, SLP (C) No. 8197-8198 of 2014 269. Rajprakash Spinning Mills Ltd. "RSML" was a consumer of the Gujarat Electricity Board since 1967. On 31 December 1994, its power was disconnected due to the non-payment of electricity dues. On 18 July 1995, the Gujarat Electricity Board instituted a suit in the Civil Court, Nadiad against RSML for recovery of electricity charges amounting to Rs. 78 lakhs. In the meantime, RSML went into liquidation and the High Court appointed the Official Liquidator. On 20 August 2002, the suit was decreed in favour of the Electricity Board. In 2003, the Board lodged a claim before the Official Liquidator with decree in the suit for Rs. 78 lakhs and legal expenses and interest up to December 2002, which cumulatively amounted to Rs. 1.39 crores. 270. On 17 December 2003, the Official Liquidator executed a sale deed in favour of the Respondent. The sale deed specifically mentions the liability of the purchaser about the dues. On 25 February 2004, a rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant seeking a new connection for electricity in respect of the premises. The Appellant declined to grant a new connection pending the payment of the outstanding electricity dues of the previous owner. The Respondent instituted a writ petition before the Gujarat High Court. By the impugned judgment dated 31 January 2014, the High Court held that the subsequent owner is not liable to pay the electricity dues of the previous owner. 275. The Respondent approached the Appellant for seeking a new electricity connection on 24 January 2007. At the relevant time, the 2005 Electricity Supply Code was in force. Regulation 4.1.11 of the 2005 Electricity Supply Code required only the dues of the applicant, if any, to be paid at the time of the application for a new connection. In the affidavit filed before the High Court, the Appellant conceded that unamended Regulation 4.1.11 was applicable to the Respondent, who is the auction-purchaser. The facts of the present clearly demonstrate that on 24 January 2007, when the auction-purchaser applied for electricity, unamended Clause 4.1.11 was operational and applicable. Therefore, the Respondent cannot be made liable to clear the dues of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale deed dated 29 May 2003 mentioned that the additional open land was free from all encumbrances including lien and charge. Clause 9 further specified that "all taxes, land revenue, education cess, and other outstanding dues up to date has been paid and if any dues remain unpaid that is to be paid by the Company." 280. On 01 December 2004, the Respondent applied for a new connection. However, the Appellant refused to grant a new connection until the outstanding dues were cleared in terms of Clause 2(j) of the Conditions of Supply. In 2006, the Respondent moved an application before the BIFR for a direction to release power supply. On 12 June 2006, the BIFR sanctioned a Revised Rehabilitation Scheme directing the Appellant to release an electricity connection to the Respondent. Since the electricity supply was not released, the Respondent instituted a writ petition before the High Court of Gujarat. In 2010, a Single Judge of the High Court allowed the writ petition by directing the Appellant to release the electricity connection to the residential establishments on the surplus land without insisting on the payment of the dues of the previous owner. The Single Judge held that C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remains to be paid that is to be paid by the company. Now onwards, the responsibility for payment of all taxes, etc. related to the said property will be on the first party. By support of this deed the purchaser can enter its name on said property in Government, Semi-Government and local records, City Survey Records and Municipal Records and for that we have to give our signature, consent, and such signed consent admitted being considered. (emphasis supplied) 282. To decide this issue, the question that arises before us is whether SICA is special legislation in relation to the 1910 Act and 2003 Act. SICA was enacted with a view to secure the timely detection of sick companies and speedy determination of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies. Section 18 mandated an operating agency such as a BIFR to prepare a scheme providing for transfer of business, properties, assets, and liabilities of the sick industrial company on terms and conditions as specified in the scheme. According to Section 18(8) of SICA, once the scheme is sanctioned, it is binding on the sick industrial company as well as the shareholders, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erspective. On the basis of the observation that a legislation may be general for some purposes and special for other purposes it was held that the Industrial Disputes Act, 1947 being a special law, prevails over the LIC Act. It was held: 52. In determining whether a statute is a special or a general one, the focus must be on the principal subject-matter plus the particular perspective. For certain purposes, an Act may be general and for certain other purposes it may be special and we cannot blur distinctions when dealing with finer points of law. In law, we have a cosmos of relativity, not absolutes - so too in life. 286. In UP State Electricity Board v. Hari Shankar Jain (1978) 4 SCC 16, a three-judge Bench of this Court was called upon to determine whether the Industrial Employment (Standing Orders) Act, 1946 is a special legislation and overrides the 1948 Act in regard to the age of superannuation. Justice O Chinnappa Reddy, speaking on behalf of the Bench held that the Industrial Employment (Standing Orders) Act, 1946 is a special legislation dealing with the conditions of service of workmen in industrial establishments. On the other hand, the 1948 Act is an act to coordina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Financial Institutions Act, 1993 "RDDB Act" would prevail over the other. The Court observed that although both the legislations are special laws in relation to their respective subject matters, SICA would prevail over the RDDB Act by virtue of the incorporation of a non-derogation Clause in the latter. In the RDDB Act, Parliament had specifically provided that the RDDB Act shall be in addition to and not in derogation of other laws mentioned therein including SICA: 49. The term "not in derogation" clearly expresses the intention of Parliament not to detract from or abrogate the provisions of SICA in any way. This, in effect must mean that Parliament intended the proceedings under SICA for reconstruction of a sick company to go on and for that purpose further intended that all the other proceedings against the company and its properties should be stayed pending the process of reconstruction. While the term "proceedings" Under Section 22 of SICA did not originally include the RDDB Act, which was not there in existence Section 22 covers proceedings under the RDDB Act. (emphasis supplied) 289. Similarly, Section 175 of the 2003 Act provides that the provisions of the Act are in ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has rightly observed that the Appellant cannot selectively withhold electricity to the Respondent under the guise of demand for past electricity arrears. The stance of the Appellant is opposed to the rehabilitation scheme framed by the BIFR. The Revised Rehabilitation Scheme formulated by the BIFR will be binding on the Appellant by virtue of Section 18(8) of SICA. According to the said provision, once a scheme is sanctioned, it shall not only bind the sick industrial company and the transferee company, but also creditors such as the Appellant. The statutory provision is extracted below: 18. Preparation and sanction of Schemes - (8) On and from the date of the coming into operation of the sanctioned scheme or any provision thereof, the scheme or such provision shall be binding on the sick industrial company and the transferee company or, as the case may be, the other company and also on the shareholders, creditors and guarantors and employees of the said companies. 293. On 20 March 2015, a two-judge Bench of this Court passed an interim order staying the operation of the impugned judgment in the following terms: The impugned judgment and order dated 21.11.2014 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion. On 16 December 2016, the High Court dismissed the review petition preferred by the Appellant on the ground of delay. 297. The Respondents purchased a small residential house from JMIPL in 2012. On 4 October 2014, the Respondents applied for the grant of an electricity connection. Since the request was not acceded to, the Respondent instituted a complaint before the Consumer Grievances Redressal Forum seeking a connection without insistence on the dues of the earlier owner as they had purchased the plot from JMIPL. The forum disposed of the case in light of Clause 4.1.11 of the Electricity Supply Code, which was amended in 2010. The Respondent approached the Electricity Ombudsman, who relied upon the previous order of the High Court to direct the Appellant to supply electricity to the Respondents by an order dated 30 March 2015. The Appellants filed a Special Civil Application before the High Court against the order of the Ombudsman. On 16 February 2016, the Single Judge of the High Court dismissed the application. The Division Bench of the High Court by judgment dated 8 September 2017 declined to interfere on the ground that a Special Leave Petition Diary No. 23261 of 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... city Supply Code to argue that the auction-purchaser cannot deny knowledge of the requirement to clear the outstanding dues of the premises. In response, the auction-purchaser has submitted that there was no statutory provision at the relevant time requiring the payment of the dues of the previous owner from the subsequent owner as a condition precedent for providing for a fresh connection. 302. The relevant Clauses 4.1.16, 4.8.1, and 4.8.4 of the 2005 Electricity Supply Code are extracted hereunder: 4.1.16 The Distribution Licensee shall give no dues certificate to consumer on his request to avoid any possibilities of pending dues of previous owner while purchasing new house/ premises. [...] 4.8.1 The Consumer shall not without prior consent in writing of the Distribution Licensee assign, transfer or part with the benefit of the Agreement executed with the Distribution Licensee nor shall part with or create any partial or separate interest there under in any manner. Transfer of service connection will be effected on application in case the registered Consumer is dead or if the ownership or occupation of the property has changed or transferred. In all cases of such transfers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without transferring to their name. The said Clause is only applicable where a transferee applies for a transfer of connection, and not where a transferee applies for a new power connection in their own name. 306. In the present matter, from the perusal of facts, it is evident that the Respondent applied for a fresh electricity connection for the premises on 28 December 2006. Therefore, on the date of the submission of the application for electricity by the Respondent, the unamended Clause 4.1.11 of the Gujarat Electricity Supply Code was in force, according to which only the dues of the applicant to the distribution licensee had to be cleared for a new connection or reconnection of electric supply. There was no statutory provision requiring the auction purchasers to clear the arrears of the previous owner as a condition precedent for getting a fresh connection. 307. It was only in 2010 that Clause 4.1.11 of the said Electricity Supply Code was amended which required the subsequent owner of the premises to clear the dues of the previous owner as a condition precedent for receiving a new electricity connection. Thus, at the time when the Respondent applied for a fresh connection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dder and was declared as an auction-purchaser on 20 February 2008. On 24 March 2008, a sale certificate was issued in favour of the Appellant and possession was handed over to the Appellant by UCO Bank on 27 March 2008. The Recovery Officer confirmed the auction sale in favor of the Appellant, who took over the possession of the property on 27 March 2008. On 21 January 2009, the Appellant applied for a high-tension industries electricity connection, but ASEB denied it due to pending arrears of the previous owner. 311. Therefore, the Appellant filed a writ petition before the Gauhati High Court seeking: (i) an electricity connection without having to pay the arrears of the previous owner; and (ii) challenging the vires of Regulation No. 3.6.4 of the AERC Electricity Supply Code. On 2 June 2010, a Division Bench of the High Court delivered a judgment dismissing the petition. 312. The Appellant has drawn the attention of this Court to the fact that the Respondent had filed a suit against the previous consumer, in which a decree was passed. The Appellant submits that recovery of arrears of the previous owner could be effected in execution of the decree. From the perusal of the facts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses to the Appellant does not arise for consideration, as it is a matter to be decided in separate proceedings. We are only concerned with whether the Appellant, being a new owner of the premises, is liable to clear the dues of the previous consumer before getting a supply of electricity. 315. By the impugned judgment dated 2 June 2010, the High Court has upheld the validity of Regulation 3.6.4 of the AERC Electricity Supply Code. It held that the stipulation contained in the said Regulation is reasonable and within the ambit of the powers conferred by Section 50 of the 2003 Act. We are of the opinion that the impugned Clause is reasonable and consistent with the provisions of the 2003 Act. Accordingly, the Appellant was obligated to check the bills for previous months and ensure that all the outstanding amounts are duly paid up and discharged. Therefore, we find no merit in the challenge to the decision of the High Court. However, to balance the interests of parties, we make it clear that if any arrears of electricity are received from the previous owner, the amount shall be adjusted with the power bills of the Appellant. V. West Bengal 316. In West Bengal, the WB Electricity S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollers Private; SLP (C) No. 15723 of 2020 318. On 30 June 2012, the Appellant electricity utility, Damodar Valley Corporation, and Capricorn Ispat Udyog Private Limited, the previous owner, entered into an agreement for supply of electrical energy. The bank guarantees furnished by the Respondent expired on 4 June 2014. The electricity connection to the previous owner was disconnected on 21 September 2016 for default in payment of electricity dues to the suit premises. On 14 August 2018, the State Bank of India advertised the property for e-auction under SARFAESI Act for default of dues on "as is where is basis". The relevant terms and condition of e-auction sale are as follows: 1. "E-auction is being held on AS IS WHERE IS and will be conducted online. *** 2. [To] the best of knowledge and information of the authorised officer there is no encumbrance of the properties. However, the intending bidders should make their own independent enquiries regarding the encumbrance title of properties put on auction and claim rights dies affecting the properties [prior] to submitting their bid. The E-auction advertisement does not constitute and will not be deemed to constitute any commitme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the definition of "consumer" contained in Section 2(15) does not include an auction-purchaser. However, the Court held that it is possible to bring an auction-purchaser within the ambit of Regulation 4.6.4 if: (i) the distribution licensee establishes the fact that the premises concerned were connected to the works of the distribution licensee; (ii) for the purpose of receiving electricity; and (iii) in such a manner that the supply of electricity can be resumed by 'simply putting on a switch'. 321. The Appellant has drawn attention to the fact that the supply of electricity to the premises was disconnected on 21 September 2016. Therefore, the Appellant submits that on the date of the sale of the premises to the Respondent, that is 31 August 2018, the supply of electricity was disconnected for more than 180 days. Hence, it is the Appellant's contention that Regulation 4.6.1 is applicable and there is a deemed termination of agreement. It has been further contended that Regulation 4.6.4 has an overriding effect as it begins with a non-obstante clause. The Respondent, on the contrary, has argued that Regulation 3.4.2 would be applicable in the present case. It has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nineteen cases, this Court while granting leave passed interim orders. The legal issue of whether electricity dues constitute a charge on the property so far as the transferor and the transferee are concerned was referred to a larger bench by an order of this Court way back in 2006. The litigation in this batch of cases remained pending. 326. In the specific cases before us, where this Court has upheld the validity of the subordinate Regulations (Conditions of Supply or Electricity Supply Code, as the case may be) and has held the relevant Regulation to be applicable to the factual matrix, the auction purchasers would be liable to pay the outstanding dues of the previous consumer. On behalf of the Electric Utilities, claims have been made for interest on such arrears. 327. This Court must bear in mind the element of public interest in balancing the equities, particularly, at this stage where more than two decades have passed in litigation since the issue first arose. The 2003 Act was enacted to promote the development of the electricity industry, while protecting the interest of consumers. It must be kept in mind that many of the auction-purchasers are commercial entities who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king power contained Under Section 181 read with Section 50 of the 2003 Act is wide enough to enable the regulatory commission to provide for a statutory charge in the absence of a provision in the plenary statute providing for creation of such a charge;
h. The power to initiate recovery proceedings by filing a suit against the defaulting consumer is independent of the power to disconnect electrical supply as a means of recovery Under Section 56 of the 2003 Act;
i. The implication of the expression "as is where is" basis is that every intending bidder is put on notice that the seller does not undertake responsibility in respect of the property offered for sale with regard to any liability for the payment of dues, like service charges, electricity dues for power connection, and taxes of the local authorities; and
j. In the exercise of the jurisdiction Under Article 142 of the Constitution, the Electric Utilities have been directed in the facts of cases before us to waive the outstanding interest accrued on the principal dues from the date of application for supply of electricity by the auction purchasers.
330. Pending applications, if any, shall stand disposed. X X X X Extracts X X X X X X X X Extracts X X X X
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