Mrs. Madhu Garg And Anr. vs North Delhi Power Ltd.
2006 Latest Caselaw 540 Del

JUDGMENT

Markandeya Katju, C.J.

Page 1118

1. This writ appeal has been filed against the impugned common judgment of the learned Single Judge dated 09.11.2005 by which six writ petitions were disposed of.

2. Heard learned counsel for the parties and perused the record.

3. The facts in detail have been set out in the detailed judgment of the learned Single Judge and hence we are not repeating the same except where necessary.

4. The short question in these appeals is that if there are electricity dues against the owner of a premises who transfers the premises to a new owner, can the new owner be compelled to pay the electricity dues of the previous owner, and can the electricity department / company refuse to supply electricity to the premises for such non-payment.

5. The learned counsel for the appellant strongly relied on the Supreme Court decision in Isha Marbles case v. Bihar State electricity Board . Page 1119 We have carefully perused the said decision. In that decision the facts were that the previous owner of the premises in question had mortgaged/hypothecated the premises to secure a loan from the State Financial Corporation. Since the loan was not repaid the property was auction sold under Section 29 of the State Financial Corporation Act. The auction purchaser applied for reconnecting of the electric supply to the premises which had been disconnected for non-payment of dues by the previous owner. The question arose whether the auction purchaser had to pay the electricity dues of the previous owner to get restoration of the electric connection. The Supreme Court held that the Electricity Board had no charge over the property, and the Board could not seek enforcement of the contractual liability against a third party (the State Financial Corporation).

6. The view taken in Isha Marbles (supra) was repeated by the Supreme Court in Ahmedabad Electricity Company Ltd. v. Gujarat Inns Pvt. Ltd. .

7. However, the decision in Isha Marbles Case (supra) case was distinguished by the Kerala High Court in A. Ramachandran v. KSEB and Seena B. Kumar v. Assistant Executive Engineer , in which it was held that under Section 79(j) of the Electricity Supply Act, 1948, the Kerala Electricity Board had framed Regulation 15 (d) which provided that all dues to the Board from a consumer shall be charged on the assets of the consumer and hence can be realized as arrears of land revenue. The Division Bench of the Kerala High Court held that Regulation 15 (d) is statutory in nature and it will supersede any contract between the parties.

8. The petitioner in W.P. (C) No. 3532/2003 Ms. Madhu Garg v. North Delhi Power Ltd. had purchased the property bearing No. 10 Jamna Road, Civil Lines, Delhi 110 054. The earlier owner/occupant had not paid his electricity dues due to which the electric connection was disconnected. After taking possession, the petitioner received several electricity bills from the respondents that were issued in the name of Jathedar Richpal who was the tenant of the earlier owner. These bills included arrears of more than Rs. 7,00,000/- (Rupees Seven lac only) that pertained to the period much prior to the purchase of the property. The petitioner applied to the respondent for grant of fresh connection and offered to pay the electricity charges for the existing connection that was in the name of the tenant, but the respondent insisted that the petitioner should first clear the arrears of electricity dues as a pre-condition for grant of electricity connection. Hence the writ petition.

9. Counter affidavit was filed in the writ petition. The respondent, who is a licensee had been granted a license pursuant to the Delhi Electricity Reforms Page 1120 Act, 2000 (DERA) and the Delhi Electricity Reform (Transfer Scheme) Rules, 2000, to distribute electricity in North and North West Delhi. As such the respondent was obliged by the relevant Act and Regulations as also by the terms of the License itself, to abide by the orders and directions issued by the Delhi Regulatory Commission constituted under the DERA.

10. In exercise of the power vested in it by the DERA, the DERC issued Tariff Order dated May 23, 2001 which states:

General Conditions of Supply

2.1 Supply of electricity in all cases is subject to the condition that....

(iv) The applicant deposits developments charges, advance consumption deposit and all such charges as may be applicable including outstanding dues against the premises and / or disconnected connection(s).

11. Thus, the General Conditions of Supply clearly prohibits supply of electricity to an applicant unless he deposits the outstanding dues against the premises for which supply of electricity is sought. A copy of the Tariff Schedule for the year 2001-2002 as contained in the Tariff Order is Annexure R1.

12. It is stated in paragraph 5 of the counter affidavit that DERC being a statutory Commission is empowered under Section 28(2) of DERA to prescribe the terms and conditions for the determination of the supply of electricity. It is stated that the Tariff Order issued by the DERC is statutory in force and as such is binding on the respondent. Hence, supply of electricity to the premises cannot be made unless the outstanding dues are cleared, otherwise there will be violation of the statutory conditions laid down in the Tariff order.

13. The learned counsel for respondents has sought to distinguish the decision of the Supreme Court in Isha Marbles Case (supra) on the ground that in that case there was no statutory provision which empowered the authorities to refuse supply of electricity for outstanding dues against the previous owner. However, in the present case, there is a clear statutory provision embodied in the General Condition of Supply to that effect. We agree with this submission. In our opinion, the general conditions of supply is a piece of delegated legislation, and hence has statutory force.

14. In our opinion, there is no distinction between the purchaser of a premises who was aware that there were outstanding electricity dues against the previous owner/tenant, and one who was not aware of it. In either case, the dues have to be paid by the new owner/occupant before supply can be continued / restored. This is because of the statutory provision contained in Clause 2 (iv) of the General Conditions of Supply which has been quoted above.

15. In our opinion, whenever a person purchases a property, it is his duty to find out whether there are outstanding electricity dues in relation to the premises or not, and he cannot be allowed to say later that he was unaware of the fact that there were electricity dues of the previous owner / tenant. 16.In view of the General Condition of Supply, it is the duty of the new owner/occupant to himself make enquiries and find out whether there was such dues or not. The General conditions of Supply are statutory in nature (being delegated legislation), and hence the question of bonafide or malafide does not arise, and in either case the new owner/occupant of the premises has to pay the dues against the previous owner / tenant,Page 1121 if he wishes the electric supply to be continued/restored.

17. It is obvious that the purpose of framing Clause 2.1 (iv) of the General Conditions of Supply was that many persons against whom there were huge electricity dues tried to avoid payment of the same by selling / transferring the property, and in this way the electricity department/electricity company could not recover its dues. In our opinion, there is no illegality or unconstitutionality in sub-clause (iv) of Clause 2 of the General Condition of Supply.

18. It may be mentioned that in Hyderabad Vanaspati Ltd. v. A.P. State Electricity Board AIR 1998 4 SCC 1715, the Supreme Court took the view that even in the absence of a contract the terms and conditions of supply will be governed by the statutory Regulations and they will applicable to the consumers who will be bound by them.

19. Under Clause 2.1 (iv) of the General Conditions of Supply contained in the tariff order 1997-98 and 2001-02 which has been framed by the Delhi Electricity Regulatory Commission, it has been specifically stated that supply of electricity is subject to the condition that the applicant deposits development charge, advance consumption deposit and all such charges as may be applicable including outstanding dues against the premises and / or disconnected connection.

20. The above Clause 2.1 (iv) of the General Conditions of Supply has been framed under Section 21(2) of the Indian Electricity Act 1910 as well as Section 49 of the Electricity Supply Act, 1948, and hence is a piece of delegated legislation.

21. The learned Single Judge in the impugned judgment has struck down Clause 2.1 (iv) of the General Conditions of Supply. With respect to him, we are of the opinion that there is no illegality in the said Clause as it comes within the purview of the Tariff Order framed by the Delhi Electricity Regulation Commission as well as under Section 21(2) of the Indian Electricity Act, 1910 and Section 49 of the Electricity Supply Act, 1948. We do not agree that the General Conditions of Supply requires approval of the State Legislature under the proviso to Section 79 of the Electricity (Supply) Act, as in our opinion they are not Regulations made under Section 79.

22. We agree with the learned Single Judge who has disposed of Writ Petition (C) No. 3532/2003 Ms. Madhu Garg v. North Delhi Power Ltd. by directing her to pay the dues for the electricity consumed by one Jathedar Richpal Singh. The learned Single Judge in paragraph 20 to 23 of his judgment has dealt with this petition in detail and we fully agree with the reasoning contained therein. The petitioner was well aware of the outstanding dues against Jathedar Richpal Singh even before she purchased the property from him. Page 1122 However, as already observed above, even if she was unaware she has to pay the outstanding dues.

23. It may be mentioned that the condition of supply as contained in tariff order dated 23.5.2001 has been considered and discussed by a Division Bench of this Court in Suresh Jindal v. BSES Rajdhani Power Ltd. LPA 256/2006, decided on 20th February, 2006, in paragraph 51 of which it was observed that:

It may be mentioned that the binding and statutory nature of the Conditions of Supply has been upheld by the Supreme Court in Punjab State Electricity v. Bassi Cold Storage 1994 suppl. (2) SCC 125; Bihar State Electricity Board v. Parmeshwar 1994 (4) SCC 636 (vide para 16) and M/s Hyderabad Vanaspati Ltd. v. A.P. State Electricity Board (para 22).

24. In the same judgment it was also observed in paragraph 57:

No doubt, the license was granted by the Delhi Electricity Regulatory Commission on 11.3.2004 However, the respondent had applied for the license under Rule 10 (2) of the Delhi Electricity Reforms (Transfer Scheme) rules 2001 within 60 days of 1.7.2002, which was the notified date of transfer. Hence the respondents were duly licensed to supply electronic meters in the area of their distribution and were vested with the powers of the licensee under the Indian Electricity Act, 1910, Electricity (Supply) Act, 1948, and the rules framed there under. The powers under Section 26 of the Indian Electricity Act, 1910 and Section under Section 49 of the Electricity (Supply) Act, 1948 were available with the respondent No. 1 as also the power under the conditions of supply which were notified when Delhi Vidyut Board was in existence. 25. The learned Single Judge in the impugned judgment has observed that the outstanding dues of earlier owner / occupant cannot be realized from the new owner/ occupant unless there were malafides of the old consumer. With respect we do not agree. There is no question of malafides when there is a statutory provision.

26. The learned Single Judge also observed that the outstanding dues can be realized from the consumer only when he is the heir and successor of the defaulting party. In our opinion, this is not the correct position of the law. The new owner/occupant, whether he was a heir or successor or not, has to pay the outstanding dues if he wants continuation / restoration of the electricity connection. Further, notice of existence of arrears is not the requirement in the Clause 2.1 (iv) of the General Conditions of the Supply. Also, there is no requirement for the licensee to first initiate recovery proceedings by filing a civil suit against the old consumer before disconnecting the supply. As observed by the Supreme Court in Swastic Industries v. MSEB (vide para 5):-

Page 1123 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 licensee, the Electricity Board. Therefore, the mere fact that there is a right given to the Board to file the Suit and the limitation has been prescribed to file the suit, it does not take away the right conferred on the Board under Section 24 to make demand for payment of the charges and on neglecting to pay the same they have the power to discontinue the supply or cut off the supply, as the case may be, when the consumer neglects to pay the charges.

27. In our opinion, an interpretation of the law which furthers the preservation and protection of public property ought to be adopted. If arrears of electricity charges outstanding in respect of electricity supplied to a premises were to be permitted to be equated with a contractual claims of damages, it would encourage dishonest consumers to raise some dispute or other in respect of such arrears and evade the consequences of non-payment of electricity charges viz. disconnection / non-resumption of supply.

28. In our opinion, the decision in Isha Marbles v. BSEB and Anr. which has been heavily relied upon by the writ petitioner, is clearly distinguishable, as the Supreme Court observed therein that it was due to inadequacy of the law as applicable in the State of Bihar that arrears can not be realized from the subsequent purchaser. However, the law applicable in Delhi is different in as much as there is a statutory condition of supply which requires payment of such outstanding dues before resumption / continuation of electricity supply. 29.In our opinion, the condition of supply relates to Section 49 of the Electricity (Supply) Act, as well as Section 11 and 28 of the DERA. The Court has consistently held that the condition of supply forms an integral part of the tariff and does not require approval of State Legislature. In fact, Clause 2.1 (iv) of the Condition of Supply was formulated by DESU (DVB) as far back as in 1997-98 and thereafter adopted by DERC in 2001-02.

30. For the reasons given above, we find no merit in this appeal and hence it is dismissed.