Venkateswara Ferro Alloys vs The Southern Power Distribution ...
2022 Latest Caselaw 1359 AP

          HON'BLE SRI JUSTICE U.DURGA PRASAD RAO

                             I.A.No.1 of 2021
                                    in
                      Writ Petition No.24461 of 2021

ORDER:

The petitioner prays to direct 2nd respondent to release the power

supply to the petitioner in pursuance of the sanctioned order issued in

Lr.No.SE/O/NLR/EE-T/DEE-C/F/D No.C1828/21 dated 16.08.2021

forthwith pending disposal of W.P.No.24461/2021.

2. W.P.No.24461/2021 is filed by the petitioner declaring the action of

2nd respondent in not releasing power supply to the petitioner even though

the conditions mentioned in the sanctioned order in Lr.No.SE/O/NLR/EE-

T/DEE-C/F/D No.C1828/21 dated 16.08.2021 were complied with by the

petitioner as illegal and arbitrary and for a consequential direction to 2nd

respondent.

3. The case of the petitioner succinctly is thus:

The petitioner is a partnership firm and purchased the property i.e.,

land, building, plant and machinery of M/s. Om Sri Sai Ferroy Alloys

Private Limited (OSSFAPL) located at Sy.No.298, Thimmanagaripalem

Village, Chillakur Mandal, SPSR Nellore District pursuant to the auction

conducted by the State Financial Corporation (SFC) as per the auction

notification dated 16.03.2020. After purchase of the property, the petitioner

made an application to the Distribution Company for release of power

supply and the respondents have informed that there are electricity dues of

OSSFAPL and unless the dues of the previous customer are paid, the power

supply would not be released to the petitioner‟s premises. As those dues

were on higher side and payment of such huge amount would not be

financially viable for the petitioner firm, the petitioner has decided to locate

the unit at a different place and has purchased the land in Sy.Nos.259 and

259-A of Thimmanagaripalem Village, Chillakur Mandal, SPSR Nellore

District. After obtaining necessary approvals, the petitioner made an

application to the Distribution Company for release of power supply to the

proposed unit in Sy.Nos.259 and 259-A of Thimmanagaripalem Village,

Chillakur Mandal, SPSR Nellore District with a contracted maximum

demand of 2,600 KVA and the said application was given registration

No.31111H327102021MAR03 dated 03.03.2021. Thereafter, the petitioner

made number of representations to the respondents for release of power

supply to the proposed new unit as the petitioner has already expended about

Rs.5.00 Crores for establishment of the unit. In spite of his representations,

the respondents did not release the power supply on the sole ground that the

petitioner purchased the machinery in public auction belonging to OSSFAPL

and the machinery is being used for the proposed new unit. Hence, the

petitioner filed W.P.No.10859/2021 before this Court. When the matter

came up for hearing, the petitioner was informed by the office of 1 st

respondent that the proposals were sent by the Superintending Engineer

dated 14.07.2021 for release of power supply to the petitioner and the

estimate was prepared and respondent No.2 was directed to collect the

documents and undertaking from the petitioner‟s firm for withdrawal of the

Court case before releasing the service. The 2nd respondent issued a letter in

SE/O/NLR/EE-T/DEE-C/F/D No.C1828/21 dated 16.08.2021 intimating the

amounts to be paid before execution of the work. In pursuance thereof, the

petitioner has withdrawn the writ petition and the same was dismissed on

17.08.2021. Pursuant to the proceedings of 2nd respondent, the petitioner

paid development charges of Rs.33,88,588/- on 18.08.2021, security deposit

of Rs.39,00,000/- on 17.09.2021 and submitted other compliances on

05.10.2021 and requested the respondents to release the power supply.

Though the entire amount as demanded by the Distribution Company was

paid and necessary certificates were produced for release of the power

supply, the 2nd respondent has not so far released the power supply to the

petitioner which is illegal and untenable. The petitioner made several

representations dated 21.09.2021, 25.09.2021 to the Executive Engineer and

dated 05.10.2021 to the Superintending Engineer and dated 11.10.2021 to 1st

respondent, but of no avail.

Hence, the writ petition.

4. The 2nd respondent filed counter on behalf of the respondents and

contending thus:

(a) Firstly, it contended that the writ petition is not maintainable in

view of the availability of efficacious and alternate remedy before the

Consumer Greivance Redressal Forum (CGRF) at Tirupati as per condition

No.14.4 & 14.8 of General Terms and conditions of Power Supply (GTCS).

It is further contended that on the complaint of P.Rajkumar Reddy to the

Andhra Pradesh Electricity Regulatory Commission (for short, „APERC‟), a

detailed report was called for from 1st respondent under the provisions of the

CGRF, Vidyut Ombudsman and Consumer Assistance Regulations, 2016

and report was submitted and the same is pending for consideration before

the APERC and therefore, writ petition is not maintainable.

(b) Initially, the respondents did not know that the petitioner has

purchased the unit of OSSFAPL in public auction. However, the said fact

came to the notice of the respondents after filing of W.P.No.10859/2021 by

the petitioner. When one P.Koti Reddy representing petitioner firm

approached the respondents seeking supply of electricity for the abutting

premises by utilizing the machinery which they have got purchased in

auction, the same was denied since there are outstanding arrears of more

than Rs.9.00 Crores in the name of OSSFAPL. The petitioner filed

W.P.No.10859/2021 challenging the action of the respondents in not

supplying the power and appropriate defence was placed on record by way

of counter affidavit. For the reasons best known to the petitioner, he has

withdrawn the writ petition.

(c) Nextly, while admitting that the respondents addressed letter dated

16.08.2021, it is however contended that the respondents came to know that

one P.Raj Kumar Reddy made a complaint stating that OSSFAPL

established the petitioner firm through P.Koti Reddy and others and

therefore, the petitioner firm is benami for OSSFAPL. Therefore, the

respondents have engaged a team of Engineers to enquire into those facts.

The Chief Vigilance Officer completed the internal enquiry over the issue of

benami transactions and concluded in his report that to evade the legal dues

to the respondents, OSSFAPL and the petitioner colluded together and

committed cheating. Apart from that B.Surendar Reddy on behalf of

OSSFAPL made a request to the respondents for settlement of outstanding

arrears of Rs.9,71,91,151/- through one time settlement for the HT SC

No.NLR422 which stands in the name of OSSFAPL. In view of these facts,

the petitioner has withdrawn the W.P.No.10859/2021. It is further

contended that as per the law laid down by the Hon‟ble Apex Court, it is the

liability of the auction purchaser to clear the outstanding dues of the

electricity and the APSPDCL is well within its right to demand the arrears

due by the auction purchaser accrued from the previous owner. It is further

contended that already the District collector, Nellore has initiated

proceedings under the Revenue Recovery Act vide OLNLR/DSED/237/2018

SA(DS) REV COL dated 07.12.2018 and served Form 1, 2 and 3 against

OSSFAPL by seizing its plant, building, machinery and structures and also

issued directions to Tahsildar, Chillakur Mandal to auction the property. In

that view, the petitioner‟s act of shifting the plant, building, machinery and

structures unauthorizedly amounts to illegal conspiracy. The contention of

the petitioner that the petitioner is a new plant is totally false. The petitioner

has shifted the plant and machinery equipment from the old premises i.e.,

OSSFAPL to the adjacent premises purchased to evade payment of dues and

registered under another application on 03.03.2021. Hence, the petitioner

being successful bidder is liable to pay dues of previous owner to

respondents and therefore, the writ petition is liable to be dismissed.

5. Heard the arguments of Sri O.Manoher Reddy, learned counsel for

petitioner, and Sri Y.Nagi Reddy, Standing Counsel for the respondents.

6. Both the counsel reiterated their respective pleadings in their

arguments.

7. While it is the submission of the petitioner that the petitioner firm is

only a purchaser of the plant and machinery and other assets of OSSFAPL in

public auction conducted by the SFC and except that it has nothing to do

with the said company and after purchase of the unit the machinery was

relocated at different place in Sy.Nos.259 and 259-A of Thimmanagaripalem

Village, Chillakur Mandal, SPSR Nellore District and after obtaining

necessary revenue permits, the petitioner filed an application to the

Distribution Company for release of the power supply at a contracted

maximum demand of 2600 KVA and in view of the non-response from the

respondents, the petitioner filed W.P.No.10859/2021 and on their promise

that the petitioner‟s request for supply of power was under consideration and

power would be supplied if he withdraws his writ petition, the petitioner has

withdrawn W.P.No.10859/2021 and later the 2nd respondent issued letter

dated 16.08.2021 informing the petitioner about the amounts to be paid

before the execution of the work and accordingly, the petitioner deposited

the development charges, security deposit and other amounts necessary for

release of the power supply and in spite of the petitioner‟s due compliance of

the instructions and directions of the respondents, it is argued, the

respondents have not supplied the power on an untenable argument that

petitioner is a benami of the OSSFAPL and the petitioner is liable to clear

the dues of the said former company.

8. In oppugnation, the contention of the respondents is that the petitioner

is not a new firm or company, but it is only a benami company of OSSFAPL

and since the petitioner purchased the unit of the OSSFAPL, the petitioner,

under law laid down by the Hon‟ble Apex Court, is obligated to discharge

the liabilities of OSSFAPL and when the respondents demanded the

petitioner to pay the said amount for release of power, OSSFAPL has

stealthily relocated the unit at different place under the guise of forming a

new unit and applied for energy. Thus it is the vehement contention of the

respondents that the petitioner is liable to pay dues of OSSFAPL of more

than Rs.9.00 Crores before seeking power supply from the respondents.

9. I gave my anxious consideration to the above respective arguments.

The material papers filed along with writ petition by the petitioner contain

the copy of the Memo No.CGM/O&M/GM/EE/C/F.e-257720/D.No.1182/21

dated 06.08.2021 issued by the Chief General Manager / O & M,

APSPDCL, Tirupati. This memo shows that the Superintending Engineer/

Operation / Nellore - 2nd respondent submitted a proposal for extension of

new HT service connection to the petitioner firm at an estimated cost of

Rs.17,90,587/-. The proposal is for release of HT service connection for

CMD of 2600 KVA potential. The Superintending Engineer also mentioned

the amounts under various heads to be collected from the consumer / writ

petitioner. The Memo reads that on careful consideration of the proposals, it

was instructed to the Superintending Engineer / 2nd respondent to collect the

memo mentioned documents from the petitioner and also an undertaking

from the petitioner for withdrawal of the Court case in W.P.No.10859/2021

for release of the supply. The Superintending Engineer was ultimately

requested to take up the work under turnkey basis by following certain

conditions enumerated in the memo. Pursuant to the said memo, the

Superintending Engineer / 2nd respondent addressed a letter in

SE/O/NLR/EE-T/DEE-C/F/D No.C1828/21 dated 16.08.2021. While

referring the memo addressed by the Chief General Manager, O & M,

APSPDCL, Tirupati, the 2nd respondent informed to the petitioner that the

proposal for issue of service connection for CMD of 2600 KVA with

connected load of 2600 KW at 33 KV potential under HT Cat-3C to the

petitioner firm was sanctioned under turnkey basis. The 2nd respondent in

his letter requested the petitioner to pay an amount of Rs.33,88,588/- under

two heads i.e., the development charges of Rs.31,20,000/- and administrative

overhead charges of Rs.2,68,588/- payable through Demand Draft from a

nationalized bank. In his letter he has further stated that the petitioner has to

follow the following conditions.

1. The consumer is requested to submit the following documents and an undertaking letter for withdrawal of court case filed before releasing of the service:

a) Land conversion approved documents from Revenue department is to be submitted for 2Nos. Sale deeds enclosed as proof of ownership documents.

b) NUDA approvals from NUDA authorities for 2 Nos. Sale deeds enclosed as proof of ownership documents.

c) Registered Partnership documents is to be submitted.

2. It is the responsibility of the concerned Executive Engineer / Operation and Deputy Executive Engineer / Operation to look over the quality of the work.

3. It is the responsibility of the Executive Engineer / Construction / Nellore to check measure the materials at the site before commencement of the said work duly collecting the bills for all the materials.

4. The original purchase bills shall be submitted to the concerned Executive Engineer / Operation.

5. The work is to be executed by the approved contractors of APSPDCL, duly following all other departmental procedures in vogue.

6. Further you are requested to pay the above amounts within one month from the date of this letter otherwise your application will be deleted without any further notice and the work under Turnkey basis will be valid upto 3 months only. Hence the consumer is requested to complete the Turnkey work within the time frame otherwise the approval will be invalid and

a fresh application has to be registered for further course of action.

(a) Thus, the above memo and letter of 2nd respondent would depict

that on two main conditions the respondents agreed to release the power

with connected load of 2600 KW at 33 KV potential to the petitioner unit.

Firstly, on the condition of the petitioner depositing the amounts enumerated

in the memo and letter and secondly the petitioner shall withdraw the

pending Court case i.e., W.P.No.10859/2021. The other conditions are

incidental to the supply of power and they are not germane for our

discussion. According to the petitioner, he duly followed the instructions

contained in the letter dated 16.08.2021 and deposited the amounts. It

should be noted that in para 6 of the counter, the respondents admitted the

factum of addressing letter dated 16.08.2021 to the petitioner for release of

power and the respondents also admitted that the petitioner paid the amounts

on receiving the aforesaid letter. It is important to note that neither in the

Memo dated 06.08.2021 nor in the letter dated 16.08.2021, it was mentioned

that the petitioner is only a benamdar of OSSFAPL and that unless he

deposits the amount payable by the former company, his request for supply

of power cannot be considered. In the counter, for the first time, the

respondents raised that plea and also contended that in view of the judgment

of the Hon‟ble Supreme Court in Civil Appeal No.1815/2020 dated

01.06.2020 [Telangana State Southern Power Distribution Company

Limited v. M/s. Srigdhaa Beverages], the petitioner being purchaser of the

unit of OSSFAPL, it is liable to pay electricity consumption dues of

OSSFAPL.

10. It should be noted that at this juncture, this Court is only considering

the interlocutory application which is filed for a direction to 2nd respondent

to release the power supply to the petitioner pending writ petition. The

Court is aware of the fact that the averments and counter averments made by

both parties require a detailed hearing for resolution in accordance with law.

Therefore, at this juncture, a detailed discussion cannot be made with regard

to the relevant issues i.e., (1) whether the petitioner firm is a benamdar of

OSSFAPL? (2) whether the petitioner being the auction purchaser of the unit

of OSSFAPL, liable to pay the electricity consumption dues of the said

company? However, only a peripheral observation to the extent required

can be made.

11. So far as the first issue is concerned, the respondents along with its

counter filed certain material papers which contain copy of the Vigilance

Report dated 03.07.2021 forwarded by the Inspector of Police, Vigilance &

A.P.T.S. P.S, Nellore to the Joint Managing Director, Vigilance & Security,

AP Transco, Vijayawada, wherein, with regard to certain allegations made

against M/s. Om Sri Sai Ferro Alloys and the writ petitioner, he conducted

enquiry and forwarded the said report. The allegation No.2 is to the effect

that the company of OSSFAPL was auctioned by the A.P. State Financial

Corporation and unit was taken over by M/s. Sri Venkateswara Ferro Alloys

(writ petitioner), benami company of the respondent floated by Sri

P.Kotireddy and others. In respect of this allegation, the finding of the

Inspector of Police, Vigilance & A.P.T.S. P.S. is as follows:

"In view of the above, it is clear that the company of M/s. Om Sri Sai Ferro Alloys was auctioned by APSFC and the unit was taken over by M/s. Sri Venkateswara Ferro Alloys. The petitioner has mentioned the above allegation was true. But there is no specific evidence available to

prove that M/s. Venkateswara Ferro Alloys is a binami company of the respondent."

It is true that the effect of the above report requires to be heard during the

course of arguments in the main writ petition. However, the above finding

prima facie shows that there is no specific evidence to prove that the writ

petitioner is a benami company of M/s. Om Sri Sai Ferro Alloys.

12. So far as the second issue relating to the liability of the petitioner to

pay the electricity consumption charges of OSSFAPL is concerned, in the

decision of the Hon‟ble Supreme Court in Telangana State Southern

Power Distribution Company Limited's case (supra), the question before

the Apex Court was whether the auction purchaser (a unit owned by M/s. SB

Beverage Private Limited) was liable to discharge the previous electricity

dues of the last owner. In that context, taking into consideration the e-

auction notice in question wherein the existence of the electricity dues,

whether quantified or not, has been specifically mentioned as a liability of

the purchaser and also, as the sale was on "AS IS WHERE IS, WHATEVER

THERE IS AND WITHOUT RECOURSE BASIS", the Hon‟ble the Apex Court

observed that the auction purchaser is liable to pay the electricity dues of the

previous owner.

13. In the instant case, at this stage, this Court has no advantage of seeing

the auction notification issued by the A.P. State Financial Corporation,

basing on which the writ petitioner purchased the unit of OSSFAPL.

Neither party produced the auction notification and conditions of the

auction. Therefore, at present it is not possible to decide whether the

petitioner is liable to pay electricity dues of the previous owner.

14. Therefore, at the outset, the two important issues raised by the

respondents in its counter are concerned, they have to be resolved only after

hearing the arguments in the main writ petition, but not at this stage. As the

matter stands, the prima facie there is no material to show that the petitioner

is a benamdar of OSSFAPL. If the impasse were to be continued, the

respondents will lose its revenue and petitioner for want of electricity,

cannot start production, which in my considered view, is not good for either.

Therefore, in the interests of justice it is apposite to direct the respondents to

release the electricity power to the petitioner as requested by him and as

mentioned in the letter dated 16.08.2021 addressed by 2nd respondent to the

petitioner on the condition of the petitioner depositing (1) usual charges as

claimed by the respondent authorities, which if he has not already deposited

and (2) 10% of the electricity consumption charges due from M/s. Om Sri

Sai Ferroy Alloys Private Limited to the respondents within a specified time

to show its bonafides.

15. Accordingly, this application is allowed and the respondents are

directed to release power supply to the petitioner as per the sanction order

issued in Lr.No.SE/0/NLR/EE-T/DEE-C/F/D No.C1828/21 dated

16.08.2021 on the conditions of the petitioner depositing:

(1) the charges as mentioned in the aforesaid sanction order dated 16.08.2021 and other incidental charges (which, if he already paid can be ignored)

(2) 1/10th of the electricity consumption charges due from M/s. Om Sri Sai Ferroy Alloys Private Limited to the respondents as on the date of auction sale.

The above amounts shall be deposited by the petitioner within eight (8)

weeks from the date of this order, in which case, the respondent authorities

shall release power supply to the petitioner unit. Needless to emphasize that

in case the petitioner succeeds in the writ petition, the electricity

consumption charges of M/s. Om Sri Sai Ferroy Alloys Private Limited paid

by him, can be requested to be adjusted towards petitioner‟s own

consumption charges.

As a sequel, interlocutory applications pending, if any, shall stand

closed.

_________________________ U.DURGA PRASAD RAO, J 21.03.2022 mva