Rkg Industries Llp vs Uttar Pradesh Power Corporation ...
2023 Latest Caselaw 14326 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Court No. - 29
 
Case :- CIVIL MISC REVIEW APPLICATION No. - 129 of 2023
 
Applicant :- Rkg Industries Llp
 
Opposite Party :- Uttar Pradesh Power Corporation Limited And 4 Others
 
Counsel for Applicant :- Veerendra Kumar Shukla
 
Counsel for Opposite Party :- C.S.C.,Baleshwar Chaturvedi,Krishna Agarawal
 
Hon'ble Mrs. Sunita Agarwal,J.

Hon'ble Vipin Chandra Dixit,J.

1. Heard Sri Anurag Khanna learned Senior Advocate assisted by Sri Sandeep Arora and Sri V.K. Shukla learned Counsels appearing for the review applicant, Sri Baleshwar Chaturvedi learned counsel for the respondent No.2, Sri K.M Asthana learned counsel for the respondent No.4.

2. The present review petition has been filed seeking for recall/review of the judgement and order dated 30.09.2022 passed by this Court after the review-applicant had approached the Apex Court in a Special Leave Petition (Civil) Diary No.462 of 2023, decided vide judgement and order dated 13.02.2023. On the submission of the learned counsel for the petitioner therein that certain error in the judgement of the High Court with reference to certain clauses had been made and a view different from the division bench decision of the very same High Court had been taken, permission was granted to the petitioner to withdraw the Special Leave Petition with liberty to file review.

3. The issue raised in the review application is about the correctness of the decision given by us dated 30.9.2022 wherein considering the provisions of Clause 4.3 of the U.P. Electricity Supply Code' 2005 (hereinafter referred as Code' 2005), the challenge to the recovery of electricity dues from the auction purchaser namely the review applicant herein, has been turned down. The main question which arises for consideration in the review application as also the writ petition is whether the liability towards the electricity dues in relation to the property in question can be realized from the petitioner/review applicant, who was an auction purchaser.

4. We have heard the learned Senior Counsel appearing for the review applicant at length as also the counsels appearing for the Electricity Department namely Paschimanchal Vidyut Vitran Nigam Limited and the bank concerned.

5. Few facts of the case in brief are relevant to be noted to examine the merit of the dispute. The petitioner herein is an auction purchaser of a property bearing No. G-599 to G-623 situated at Mussoorie Gulawati Road Industrial Area, Ghaziabad, Uttar Pradesh. The said property was put to auction sale and E-sale proclamation dated 14.05.2019 is appended with the supplementary affidavit in the review application filed by the review applicant. After purchase of the property, when the petitioner had applied for electricity connection in the premises in question, it was intimated of the arrears of electricity dues against the previous consumer namely the owner whose property was put to auction by the Debt Recovery Tribunal, Delhi. The recovery citation initiating recovery of electricity dues had been issued in the name of the petitioner herein.

6. In the writ petition, it was argued by learned counsel for the applicant that the arrears of electricity charges in relation to the property in question cannot be realized from the petitioner, who is an auction purchaser, as electricity dues do not constitute the charge over the property and a transferee of the premises cannot be held liable for the dues of the previous owner/occupier.

7. This argument was dealt by us in the original judgment by reading the provisions of clause 4.3 (f) (i) of the Code' 2005. It was held that in view of a specific statutory provision dealing with the dispute, general law principle that a transferee of the premises is not liable for the dues of the previous owner/occupier are not applicable. It was also noted that as per the conditions of the auction sale, the auction purchaser was under obligation to verify about the dues/encumbrances over the property and while purchasing the property in distress sale, he has also purchased the liability towards the electricity dues.

8. Terming this finding returned by us in the original judgement as erroneous, it was argued by learned Senior Counsel appearing for the review applicant that an error apparent on the face of the record has been committed by us, in as much as, the provisions of Clause 4.3(f)(i) have not been considered in the correct perspective. Much emphasis has been laid to Clause 4.3(f)(v) of the Code' 2005 to assert that the said clause is a special provision which applies for auction sale held by a financial institution, as in the present case. In view of the said provision, when a financial institution has auctioned the property without considering the charge of the licensee on assets, claim can only be lodged by the licensee with the concerned financial institution with diligent pursuance and not with the auction purchaser. It is further argued that Clause 4.3(f)(i) applies to private sale and does not contemplate any liability of an auction purchaser to find out the outstanding electricity dues upto the date of sale.

9. Moreover, the said provision is only in the form of the pre-condition for issuance of No-Objection certificate for obtaining new connection and does not in any way empower the licensee to recover the outstanding dues from the auction purchaser. It was argued that Clause 4.3(f)(i) is traceable to clause 4.1 of the Code' 2005, which deals with the licensee's obligation to supply electricity to an owner or occupier of any premises. Clause 4.1(3)(4) of the Code' 2005, the proviso to clause 4.1, has been placed before us to submit that the said provision only provides that in case of arrears of electricity dues in respect of any old consumers/premises, where ownership has changed, the new connection shall be released to the new owner only after submission of the No-dues certificate as provided in Clause 4.3(f) of the Code' 2005. It is, thus, argued that Clause 4.3, which is provided under the heading "new connection/general" cannot be invoked to assert the liability of the auction purchaser to find out the electricity dues at the time of sale. Further no liability can be fastened on the subsequent purchaser, who was auction purchaser, to pay the electricity dues of the previous owner whose property was put to auction.

10. It was further argued that in case, the licensee relies upon the provisions of clause 4.3(f)(i) to justify the recovery being made from the auction purchaser, the said provision would be repugnant to the provisions of the Electricity Act' 2003 (hereinafter referred as Act' 2003) which were duly considered by the Apex Court in the case of Isha Marbles Vs. Bihar State Electricity Board & another, 1995 (2) SCC 648 wherein it was categorically held that the auction purchaser who is a third party and in no way connected with the previous owner/occupier, the liability of the previous contracting party of the electricity dues cannot be fastened upon the purchaser. It was held therein that though the purchaser asked for electricity connection as a new connection but it cannot be regarded as a new connection rather, it is only a re-connection since the premises has already been supplied with the electrical energy. Such a supply having been disconnected owing to the default of the consumer, that consumer had bound himself to the Board to pay the dues as he had also agreed by the condition as stipulated in the Act and the Rules including the payments of the dues. It was held that since the auction purchaser cannot be said to be "consumer" within the meaning of Section 2 of the Act' 2003, and had never been benefited of electricity supply which was disconnected for the non-clearance of the dues, and the auction purchaser, having purchased the property after dis-connection, he cannot be "consumer or occupier" within the meaning of the provisions of the Act' 2003 till a new contract is entered into. It was held that the electricity dues are no charge over the property and when the premises came to be owned or occupied by the auction purchaser, when such purchaser seeks supply of electricity energy, he cannot be called upon to clear the past arrears as a condition precedent to supply. What matters is the contract entered into by the erstwhile consumer with the Board. The Board cannot seek the enforcement of contractual liability against the third party. It was held therein that bona-fides of the sale may not be relevant in such circumstances.

11. Reliance has further been placed on the decision of the Apex Court in Paschimanchal Vidyut Vitran Nigam Vs DVS Steels & Alloys Private Limited & others 2009 (1) SCC 210 to read para 11 thereof wherein it was noted that the supply of electricity by a distributor to a consumer is `sale of goods'. The distributor as the supplier, and the owner/ occupier of a premises with whom it enters into a contract for supply of electricity are the parties to the contract. A transferee of the premises or a subsequent occupant of a premises with whom the supplier has no privity of contract cannot obviously be asked to pay the dues of his predecessor in title or possession, as the amount payable towards supply of electricity does not constitute a `charge' on the premises. A purchaser of a premises, cannot be foisted with the electricity dues of any previous occupant, merely because he happens to be the current owner of the premises. No recovery proceedings can be initiated against the purchaser of a premises for the outstanding electricity dues of the vendor of the premises, in absence of any contract to the contrary.

12. Lastly, it was argued that the licensee having failed to file any claim with the financial institution in accordance with the provisions of clause 4.3(f)(v) cannot make recovery from the petitioner, as the Act' 2003 does not envisage the shifting of liability upon the auction purchaser for the electricity dues of the previous owner. It was also argued that in the sale proclamation dated 14.5.2019, the recovery officer has stated that there exists no encumbrance known to him. The petitioner being bonafide auction purchaser, the outstanding dues of the Power Corporation cannot be recovered from him in absence of any statutory provision in this regard.

13. A Division bench judgement of this Court in Misc. Bench No. 971 of 2018 dated 16.01.2018 has been relied to assert that in the similar facts and circumstances, taking note of the provisions of clause 4.3(f)(v) of the Code, 2005, it was held that the bank/financial institutions, who had auctioned the property in question, without making any enquiry from the electricity department regarding the outstanding electricity dues, was under liability to pay the said dues out of the surplus amount received from auction sale. The direction had, thus, been issued to the bank to decide the matter after receipt of the electricity bill and giving notice and hearing to the borrower as also the electricity department.

14. Sri Baleshwar Chaturvedi appearing for the respondent-department has further relied upon another Division bench judgement of this Court dated 10.11.2021 to assert that taking note of Clause 4.3 (i),(iii) & (v) of the Code' 2005, it was held therein that in view of the outstanding electricity dues with regard to the premise in question, no fault could be found in the decision of the electricity department to deny fresh connection as the above referred provisions of the Code' 2005 clearly provide that electricity connection would not be given in case there are outstanding dues with regard to the premises in question.

15. A decision of the Apex Court in Telangana State Sourthern Power Distribution Company Limited & another Vs. Srigdhaa Beverages 2020 (6) SCC 404, has been placed before us to demonstrate that the Apex Court has distinguished the law laid down by it in Isha Marbles (supra), taking note of the contents of the auction notice, in the similar facts and circumstances, as in the instant case. The question adjudicated by the Apex Court therein was whether liability towards the previous electricity dues of the last owner could be mulled on the auction purchaser of a unit which was put to auction under the SARFAESI Act' 2002. The decision relied upon by the counsel for the petitioners herein have been distinguished in Telangana State Sourthern Power Distribution Company Limited (supra) to hold that there may have been some differences in facts of different cases but there is a clear judicial thinking which emerges from the decisions of the Apex Court that the electricity dues, which are statutory in character under the Act' 2003 and as per the terms and conditions of supply, cannot be waived in view of section 56 of the Act, 2003 and cannot partake the character of dues of purely contractual nature. Moreover, in the said case, the E-auction notice was clear to the effect that the liability to pay electricity dues existed on the purchaser. It was held that the question of new connection or re-connection would not be relevant in such facts and circumstances of that case. The electricity department would be well within its right to demand the arrears dues of the last owner, from the respondent purchaser.

16. Dealing with the rival submissions of the learned counsels for the parties, we may first go through the auction notice, i.e. the sale proclamation. In the instant case, the specific contention in the auction notice/sale proclamation dated 14.05.2019 can be found in Clause 4 thereof, which reads that:-

"4. The property is being sold on "as is where is" basis."

17. The Schedule of property attached to the sale proclamation gives the description of the property to be sold in the following manner:-

Description of the property to be sold

Revenue assessed upon the property or any part thereof

Details of any encumbrance to which property is liable

Claims, if any, which have been put forward to the property, and any other known particulars bearing on its nature and value

Property being No. G-599 to G-623, Massoorie Gulawati Road, Industrial Area, U.P.

Not Known

Not Known

Not Known

18. The property in question, in the instant case, was put to auction in a proceeding conducted by the DRT, Delhi and the sale proclamation was issued by the Recovery Officer-I, DRT-II, Delhi. A perusal of the letter dated 23.10.2015 sent by the Executive Engineer, Paschimancal Vidyut Vitran Nigam Limited, Vidyut Vitran Khand, Pilkhuwa Ghaziabad indicates that an information with regard to the outstanding electricity dues of the previous owner to the tune of Rs.1,76,00,528.00 had been duly communicated to the Recovery Officer. It was stated therein that the recovery certificates were duly sent to the office of the District Magistrate, Hapur but payment had not been received and the premises-in-question had been sealed and the auction sale were going on.

19. It is an admitted fact that the sale consideration, received through auction sale, did not include the electricity dues to the tune of Rs.1,76,00,528.00 as was due to the previous consumer. The reliance placed on the decision of the Division bench dated 16.1.2018 in Misc. Bench No. 971 of 2018 to assert that the bank shall be directed to examine the bill and pay the electricity dues to the department/respondent No.2 is, therefore, misplaced.

20. As regards the submission of the learned Senior Counsel for the petitioner/review applicant about the applicability of the provisions of clause 4.3(f) of the Electricity Code, 2005, in light of the provisions of the Act' 2003 and the decision of the Apex Court in Isha Marbles (supra), we are first required to note the relevant provisions of clause 4.1 and 4.3 of the Code' 2005, which has been framed in exercise of power under the Electricity Act' 2003.

21. The Code' 2005 is applicable to all distribution licensees in the respected license area of the state. The Code enlists the obligations of the licensee and consumers vis-a-vis each other and specifies the set of practices to provide efficient, cost-effective and consumer friendly service to the consumers. It inter-alia deals with the following:-

"(a) Procedure for new connection and for enhancement or reduction of load.

(b) Recovery of electricity charges and intervals for billing of electricity charges.

(c) Disconnection, reconnection and restoration of supply of electricity.

(d) Tampering, distress or damage to electrical plant, electric lines or meter.

(e) Entry of distribution Licensee or any person acting on his behalf for disconnecting supply and removing the meter and / or for replacing, altering or maintaining electric lines or electrical plant or meter.

(f) Practices relating to payment of bills, consumer metering and assessment of energy.

(g) Standards of Performance for the Licensee; and

(h) Procedure for redressal of consumer grievances."

22. Clause 4.1 prescribes obligation of licensee to supply electricity on an application by the owner or a occupier of any premises, located in his area of supply. The obligation is of the licensee to supply electricity to such premises within one month after receipt of the complete application. Clause 4.1, however, provides that:-

"4.1 Licensee's Obligation to Supply -

The Licensee shall on an application by the owner or occupier of any premises, located in his area of supply, give supply of electricity to such premises within the one month after receipt of completed application and payments,

Provided where such supply requires extension of distribution mains, or commissioning of new sub-stations, the distribution Licensee shall supply the electricity to such premises immediately after such extension or commissioning or within such period as specified by the Commission in clause 4.8:

Provided also in case of application for supply from a village or hamlet or area wherein no provision for supply of electricity exists, the Commission shall extend the time period for provision of supply appropriately on a case-to-case basis:

Provided further that in case of arrears of electricity dues in respect of any of old consumers / premises where ownership has changed, the new connection shall be released to the new owners only after submission of No-Dues Certificate as provided in clause 4.3(f)

2 [And provided that if there are arrears of electricity dues on a premises, a new connection shall not be released to a new applicant / or the old consumer on the same premises. The connection shall also not be released if], -

(i) The applicant (being an individual) is an associate or relative (as defined in Section 2 and 6 respectively of the Companies Act, 1956) of the defaulting consumer,

(ii) Or where the applicant being a company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person, is controlled, or having controlling interest in the defaulting consumer, provided, the Licensee shall not refuse electric connection on this ground, unless an opportunity to present his case is provided to the applicant and a reasoned order is passed by an officer as designated by the licensee."

23. Clause 4.3, which is the General provision providing procedure for New connection for supply of electricity, in Clauses 4.3 (f)(i), (ii), (iii), (iv) & (v) reads as under:-

"(f)(i). It will be the duty of the seller and of the purchaser to find out the outstanding electricity dues up to the date of sale, and further that both seller and purchaser will be either/or, jointly and severally liable to pay the outstanding electricity dues/ obtain No dues certificate.

(ii) Before sale of a premise is made, the outstanding dues will be cleared and, in the alternative the deed to agreement / sale will specifically mention the outstanding dues and the method of its payment. "Outstanding dues" means all dues pending on a premises including late payment surcharge.

(iii) In case the no-dues certificate is not obtained by the old owner, new owner before purchase of property may approach the licensee for no-dues certificate, by giving the reference of the connection in said premises. The licensee shall either intimate the pending dues, if any, on the premises or issue no dues certificate within 30 working days from the date of application.

(iv) The outstanding dues will be first charge on the assets of the company, and the licensee shall ensure that this is entered in an agreement with new applicant.

(v) The recovery proceedings against the defaulting consumer, and where the defaulting consumer is a company, from the Directors of the company, shall be ensured. Where a financial institution has auctioned the property without consideration to licensees charge on assets, claims may be lodged with the concerned financial institution with diligent pursuance."

24. Clause 6.15 of the Code provides that:-

"6.15 Recovery of Arrears:-

(a) The payments due to the Licensee shall be recovered as per provision of Section 56 of the Act, and arrears of land revenue as per the provisions of the U.P. Government Electrical Undertaking (Dues Recovery) Act, 1958, as amended from time to time.

(b) Notwithstanding anything contained in any other law for the time being in force, no sum due from any consumer shall be recoverable after the period of two years from the date when such sum became first due unless such sum has been shown continuously as recoverable as arrear of charges of electricity supplied, and the supply of the electricity shall not be disconnected by licensee for this reason.

[(Explanation: The date from which such charges becomes 'first due', needs to be correctly interpreted. If as a result of regular meter reading / inspection of installation of consumer, such charges / penalties levied as per this code or tariff schedule, shall become first due counted from the due date of payment of such a bill, and such bill shall be provided to the consumer not later than two billing cycle for that category of consumer."

25. Section 56 of the Electricity Act' 2003 provides for recovery of electricity charges in case of default on the part of any person liable to pay the same. The UP Government Electrical Undertaking (Dues Recovery) Act' 1958 provides for recovery of electricity dues as arrears of land revenue, notwithstanding anything contained in any other law or instrument or agreement to the contrary. Section 5 of the Act' 1958 be noted hereinunder:-

"5. Recovery of dues.- If the dues for which notice of demand has been served are not deposited with the prescribed authority within thirty days from the date of service, or such extended period as' the prescribed authority may allow, the same together with cost of recovery as may be prescribed shall be recoverable as arrears of land revenue, anything contained in any other law or instrument or agreement to the contrary notwithstanding"

26. A conjoint reading of Section 56 of the Act' 2003 and Section 5 of the Act' 1958 providing for recovery of electricity dues and clause 6.15 of the Code 2005 indicates that the statutory electricity charges, in case of default on the part of any person liable to pay the same, can be recovered as arrears of land revenue. The question remains as to whether the petitioner/review applicant being auction purchaser, subsequent transferee of the auctioned property can be held liable for payment of electricity dues of the erstwhile owner.

27. To answer this question, we are required to note that the petitioner/review applicant herein is a purchaser of the property in an auction sale conducted by the Debt Recovery Tribunal after determining the dues of the respondent bank in the proceeding conducted before it against the borrower/erstwhile owner. The E-auction notice provides the condition of sale in clause 4 as under:-

"4. The property is being sold on "as is where is" basis."

28. The Schedule of property giving description of the property to be sold has already been extracted above. From a reading of para 4 of the E-auction notice and the description of the property in the Schedule appended to the said notice, it is evident that the property was put to sale on "as is where is basis". It was clarified in the auction notice by the Recovery Officer that claims, if any, which have been put forward to the property, and any other known particulars bearing on its nature and value was not known to him. The details of any encumbrances to which the property is liable was also not known. The revenue assessed upon the property or any part thereof was not known to the Recovery Officer. On reading of the auction notice, terms and condition on which the property was put to auction clearly shows that the Recovery Oficer carrying out the auction sale, absolved himself of the liabilities towards claims, if any, nature and value thereof, encumbrances to the property, revenue assessed upon the property. The auction sale was, thus, conducted of the property on "as is where is" basis. Meaning, thereby the auction purchaser was required to make necessary enquiries about the claims, charges or encumbrance, if any, related to the property.

29. Clause 4.3 (f) (i) which pertains to the provision relating to supply of electricity, New connections, further casts an obligation on the purchaser of the property to find out the outstanding electricity dues up to the date of sale and states that in case of transfer of property, there would be co-extensive liability of the purchaser to pay the outstanding electricity dues so as to obtain no-dues certificate. Clause 4.3 (f) (iii) further states that in case no-dues certificate is not obtained by the old owner, new owner before purchase of the property may approach the licensee for no-dues certificate, by giving the reference of the connection in the said premises. The licensee shall then intimate the pending dues, if any, on the premises or issue no-dues Certificate to the purchaser. Clause 4.3 (f) (iv) and (v) pertains to the outstanding dues of electricity against the company i.e. where defaulting consumer is a company. This provision states that outstanding dues will be first charge on the assets of the company and in case the defaulting consumer is a company, recovery proceedings from the Directors of the company shall be ensured. It further provides that where a financial institution has auctioned the property without consideration to licensees charge on assets, claims may be lodged with the concerned financial institution with diligent pursuance. Clause 4.3 (f)(v), thus, only provides that in case of auction of the property of a Company, the licensee may put his claim with the financial institution to pay electricity charges from the assets of the company, and for that purpose, the licensee may lodge its claim with the concerned financial institution with diligent. However, as submitted by the learned Senior Counsel for the petitioner/applicant, the said provisions cannot be read to mean that the claim for discharging the liability towards electricity dues can only be laid by the licensee before the financial institution which has auctioned the property and no recovery can be made from the auction purchaser.

30. It may further be noted that clause 4.3 (f) (i) cast a duty on the purchaser of a property to find out the outstanding electricity dues up to the date of sale. The contention of the learned Senior Counsel for the writ petitioner/review applicant is that this provision applies only in case of private sale and an auction purchaser cannot be held liable to pay electricity dues of erstwhile owner and obtain no-dues certificate by invoking this provision.

31. We may note that the provisions contained in clause 4.3 are general provision relating to supply of electricity to a New consumer. In case of transfer of property, a duty is cast on the purchaser as well as seller to clear the electricity dues. The liability of the purchaser has been held to be co-extensive to pay the outstanding electricity dues/to obtain no-dues Certificate, to obtain a new connection. Clause 4.3 (f) (iii) further cast an obligation on the purchaser of the property to obtain No Dues Certificate before purchase of the property, by giving reference of the connection in the premises, wherein there was an electricity connection. From a conjoint reading of Clause 4.3 (f) (i), (ii), (iii), it is clear that it is a duty of the purchaser to make an inquiry into the matter of the dues of electricity, with respect to a premises, wherein electricity supply has been made to the erstwhile owner.

32. In view of these statutory provisions, when we read the contents of the auction sale notice extracted above, it is evident that the auction purchaser was under obligation to make inquiries of the outstanding electricity dues with regard to the property put to auction in the proceeding under the SARFAESI Act' 2002.

33. As regards the contention of the learned Senior Counsel for the applicant based on the decision of this Court by reading clause 4.3 (f) (v) that the claim towards the electricity dues, in case of auction of the property by financial institution, can only be laid before it, and no recovery can be made from the auction purchaser, suffice it to note that Section 26-E of the SARFAESI Act 2002 gives priority to the debts due to a secured creditor, in the proceedings initiated under the said Act for recovery of debts by enforcement of security interest in accordance with Chapter-III in accordance with Section 13 to 15 of the Act 2002. It is not the case of the auction purchaser/petitioners, that the sale consideration paid by him in the auction of the secured assets was beyond the debt due to the secured creditor/bank, and some money has been left with the bank after settlement of its own dues, to pay the outstanding electricity dues of the licensee.

34. The Apex Court in Telangana State Sourthern Power Distribution Company Limited (supra), has examined the similar controversy in an auction sale conducted under the SARFAESI Act 2002, wherein the auction purchaser had pleaded that previous electricity dues of the erstwhile owner cannot be recovered from him. The writ petitions therein filed by the auction purchaser before the High Court seeking for quashing of the demands towards outstanding electricity dues were decided in his favour on the reasoning that as a subsequent purchaser, the auction purchaser was not responsible for the dues of the erstwhile owner, relying upon the decision of the Apex code in Isha Marbles (supra) and Sourthern Power Distribution Company of Telangana Limited & others Vs. Gopal Agarwal & others 2018 (12) SCC 644.

35. In the said case, the Apex Court having gone through the E-auction notice has taken note of clauses 5.9.6 and 8.4 of the General Terms and Conditions of Supply of Distribution & Retail Supply Licensees in AP. The aforesaid clauses extracted in the judgment of the Apex Court are pari materia to Clauses 4.3 (f), (i), (ii), (iii) of the U.P. Electricity Supply Code 2005 subject matter of consideration herein. Clause 8.4 of the General Terms and Conditions of Supply of Distribution & Retail Supply Licensees in AP as noted by the Apex Court therein provided that in case the seller of the property did not clear the dues, the company may refuse to supply electricity to the premises through the already existing connection or refuse to give a new connection to the premises till all dues of the electricity are cleared.

36. It was held by the Apex Court in Telangana State Sourthern Power Distribution Company Limited (supra) that from the reading of the provisions of Electricity Act' 2003, read with the General Terms and Condition of Supply therein, the electricity dues partake the character of statutory dues. From the reading of language of the auction sale notice therein, wherein property was sold on "as is where is, what is there is and without any recourse basis", it was held that the said clause leaves no doubt that the liability to pay electricity dues exists on the auction purchaser.

37. The decision in the case of Isha Marbles (supra) was distinguished with the observation that in the said case sale was in pursuance of Section 29(1) of the State Financial Corporation Act, 1951, but the important aspect was that there was no Clause specifically dealing with the issue of electricity dues or such other dues, as in the auction notice in this case Telangana State Sourthern Power Distribution Company Limited (supra) before the Apex Court. The reasoning given by the Court in the case of Isha Marbles (supra) that the subsequent purchaser being not the 'consumer' within the meaning of Section 2(c) of the Act' 2003, and in absence of consumption of electricity by the subsequent purchaser who was merely asking re-connection without there being any statutory dues towards consumption charges, he cannot be saddled with the liability of the past owner, has been considered to note in Telangana State Sourthern Power Distribution Company Limited (supra) that in the E-auction notice, there was a specific clause which absolved the Authorized Officer of various dues including electricity dues. In light of the said Clause in the E-auction notice, the subsequent purchaser/auction purchaser cannot be absolved of his liability to pay the electricity dues.

38. The Apex Court in the case of Telangana State Sourthern Power Distribution Company Limited (supra) has further noted the previous decision of the Apex Court in Hyderabad Vanaspathi Ltd. v. A.P. State Electricity Board & Ors. 1998 (4) SSC 470 to note that the Apex Court therein had held that the electricity dues under the terms and condition of supply partake the character of statutory dues. The agreements which were entered into with individual consumers only serve the purpose of bringing to the notice of the consumer the terms and condition of supply, but did not make the terms purely contractual. The Board in performance of statutory duty supplied energy on certain specific terms and conditions framed in exercise of statutory power. Undoubtedly, the terms and conditions are statutory in nature and they cannot be said to be purely contractual.

39. The Apex Court in Telangana State Sourthern Power Distribution Company Limited (supra) has also noted its earlier decision in Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd 2006 (13) SCC 101 to observe in paragraph 10, as under:-

"10.We can draw strength from the observations of this Court in Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd., where there was a similarity as in the present case, of a specific clause dealing with electricity dues. It was observed that in such a scenario if a transferee desires to enjoy the service connection, he shall 4 (1998) 4 SCC 470 5 (2006) 13 SCC 101 (2 Judges Bench) pay the outstanding dues, if any, to the supplier of electricity and a reconnection or a new connection shall not be given to any premises where there are arrears on account of dues to the supplier unless they are so declared in advance."

40. It was, thus, held that once an auction purchaser was bidding in a property on "as is where is, whatever there is and without recourse basis", it was his duty to have inspected the premises and made inquiries about the dues in all respects. The auction notice being explicit in character, giving specific mention of the dues of various accounts, including electricity dues, the auction purchaser was clearly put to notice in this behalf.

41. The decision in Paschimanchal Vidyut Vitran Nigam (supra) was further considered therein to note that a condition for clearance of electricity dues, for sanction of a connection for supply of electricity cannot per se be termed as unreasonable or arbitrary. We may further note the observation of the Apex Court in Paschimanchal Vidyut Vitran Nigam (supra) in paragraph 12 as under:-

"12.But the above legal position is not of any practical help to a purchaser of a premises. When the purchaser of a premises approaches the distributor seeking a fresh electricity connection to its premises for supply of electricity, the distributor can stipulate the terms subject to which it would supply electricity. It can stipulate as one of the conditions for supply, that the arrears due in regard to the supply of electricity made to the premises when it was in the occupation of the previous owner/occupant, should be cleared before the electricity supply is restored to the premises or a fresh connection is provided to the premises. If any statutory rules govern the conditions relating to sanction of a connection or supply of electricity, the distributor can insist upon fulfillment of the requirements of such rules and regulations. If the rules are silent, it can stipulate such terms and conditions as it deems fit and proper, to regulate its transactions and dealings. So long as such rules and regulations or the terms and conditions are not arbitrary and unreasonable, courts will not interfere with them."

42. For the above discussions, in view of the statutory provisions as contained in Clause 4.3 of the Code' 2005 of "General conditions for grant of New connection", the conditions of the auction notice of sale of property being on "as is where is basis" and the explicit statement in the Schedule of property put to auction that the Recovery Officer was not aware of any dues, claims, encumbrance or revenue assessed on the property, in light of the settled law noted above that the electricity dues are statutory in character and they cannot be waived in view of the provisions of Electricity Act, 2003 and cannot partake the character of dues of purely contractual nature, we find that the auction purchaser was under obligation to make enquiry about the dues before bidding in the property indicated in the auction sale notice dated 14.5.2019. The auction purchaser cannot allowed to contend that he was not intimated about the dues of electricity or there was no occasion for him to make an enquiry, as the Recovery Officer had absolved himself of any such liability.

43. Moreover, auction sale being a distress sale, the auction purchaser not only purchases the property but also purchases the liabilities attached to it. Clause 4.3 (f) casts an obligation on the purchaser of the property to make necessary enquiry from the licensee in case no-dues certificate is not obtained by the erstwhile owner and obtain no-dues Certificate by moving an application before the licensee, before purchase of the property.

44. No such application has been moved by the auction purchaser before the licensee to make any enquiry about the pending dues had been placed before us. The co-extensive liability of the purchaser to pay the outstanding electricity dues and obtain no-dues certificate in the scheme of the Code' 2005, in light of the clear language of Clause 4.3 (f) (I), cannot be confined to private sales as suggested by the learned Senior Counsel for the petitioner. The provision of Clause 4.3 (f), which deals with the grant of electricity connection on transfer of property casts an obligation on the purchaser of the property to make enquiries about the outstanding electricity dues before the sale and pay the same to obtain a no-dues certificate so as to get a new electricity connection. The statutory rules governing the conditions relating to sanction of a connection or supply of electricity empowers the licensee to insist upon the fulfillment of the requirement of such Rules and Regulations. One of the conditions for supply that the arrears due in regard to the supply of electricity made to the premises, occupied by the erstwhile owner, should be cleared before the electricity supply is restored to the premises or a fresh connection is provided. Insistence of this condition by the licensee in light of the statutory provisions, noted above, cannot be said to be arbitrary or unreasonable. This Court in exercise of power of judicial review cannot interfere in the same. We are, therefore, of the considered opinion that the respondents licensee would be well within its power to make recovery of outstanding electricity dues of the erstwhile owner from the auction purchaser, namely the petitioner-herein by initiating the proceedings for recovery of dues as arrears of land revenue.

45. For the elaborate reasoning given above, in view of the submissions of the learned Senior Counsel for the review applicant, we do not find any good ground to recall/review the judgement and order dated 13.9.2022, dismissing the writ petition holding that no fault can be found in the decision of the department not to provide electricity connection to the petitioner without clearing its outstanding dues.

46. The review application is, accordingly, dismissed being devoid of merits. The reasoning given in the present order of disposal of the review application on merit be added to the reasoning for dismissal of the writ petition in the original order.

Order date:- 08.05.2023

Himanshu