Gujarat High Court
Bipin Laxmanbhai Kathiriya vs Gujarat State Financial ... on 18 August, 2023
Bench: Bhargav D. Karia
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 18942 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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BIPIN LAXMANBHAI KATHIRIYA
Versus
GUJARAT STATE FINANCIAL CORPORATION
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Appearance:
MR BM MANGUKIYA(437) for the Petitioner(s) No. 1,2,3,4,5,6
MS BELA A PRAJAPATI(1946) for the Petitioner(s) No. 1,2,3,4,5,6
MR AS ASTHAVADI(3698) for the Respondent(s) No. 1
MS LILU K BHAYA(1705) for the Respondent(s) No. 3,4
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 18/08/2023
CAV JUDGMENT
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1.Heard learned advocate Mr. B.M. Mangukiya for
the petitioners, learned advocate Mr. A.S.
Asthavadi for the respondent no.1 and and
learned advocate Ms. Lilu K. Bhaya for
respondent nos. 3 and 4
2.Since the issue involved in this petition is
in a narrow compass, with the consent of
learned advocates for the respective parties,
the petition is taken up for hearing.
3.By this petition under Article 226 of the
Constitution of India, the petitioners have
prayed for a direction to hold and declare
the action of respondent Dakshin Gujarat Vij
Company Limited demanding the amount due and
payable for the electricity connection of the
erstwhile owner M/s. Vaishnav Fabrics Pvt.
Ltd. with delayed payment charges and
interest as ex-facie illegal, arbitrary and
contrary to the guidelines issued by the
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Government of Gujarat vide its resolutions
dated 07.02.2004, 21.05.2005, 05.09.2005 and
24.09.2008.
4.Brief facts of the case are that the
petitioners was the successful bidder for
purchase of the property situated at Plot
no.G/3-A, Revenue Survey No.55, Block No. 46,
Pipodra, pursuant to the auction
advertisement to sell the properties of M/s.
Vaishnav Fabrics Pvt. Ltd. by the respondent
no.1 Gujarat State Financial Corporation (for
short "GSFC")under section 29 of the State
Financial Corporations Act, 1951 (For short
"the SFC Act").
4.1) It is the case of the petitioners
that offer of the petitioners having been
found highest, Letter of Acceptance of offer
dated 06.08.2010 for consideration of
Rs.12,02,000/- was issued. The petitioner
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paid the consideration within the stipulated
time, however the sale deed was executed by
the respondent no.1 GSFC on 28.03.2022.
4.2) It is the case of the petitioners
that when the sale deed was executed, the
petitioners were informed that on the basis
of resolutions of the State Government dated
07.02.2004, 21.05.2005, and 24.09.2008 the
petitioners are only liable to make payment
of taxes as referred to local taxes and the
petitioners would not be responsible for
payment towards any liability of the Sales
Tax Department and/or Electricity Board as
per clause (7) of the sale deed. Clause (7)
of the sale deed reads as under:
"7. Any taxes, local bodies charges,
Stamp Duty, double Stamp Duty,
Registration Charges, Transfer Fee,
Pending Stamp Duty under 32-C with
penalty and other if any are to be
paid by the Purchaser. The purchaser
hereby further confirms and agrees
that Save & Except the claims
liabilities of Sales Tax and Gujarat
Electricity Board, if any other
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liabilities/claims of Government
which is found payable in accordance
with law in respect of the 'Said
Land', shall be paid by the
Purchaser: in accordance with law.
Likewise, dues or claims of Local
Authorities, if any, found payable,
in accordance with law shall also be
paid by the Purchaser in accordance
with law. In no case, the Vendor
herein shall be liable or
responsible for payment of any such
dues/claims excepts Sales Tax dues
and Gujarat Electricity Board dues
of the Industrial concern which
shall be subject to Government of
Gujarat, Industries & Mines
Department, Gandhinagar G.R. Nos.
GFC (GIC) 102003-1711-P dated
07.02.2004, GFC (GIC) 102003-1711-P
dated 21.05.2005, GFC (GIC) 102003-
1711-P dated 0.09.2005 &
GIC/1007/1633/P dated 24.09.2008,
and subsequent GR, if any, as the
assets are sold on "AS IS WHERE IS
BASIS".
4.3) The petitioners thereafter received
a communication dated 25.05.2022 whereby the
petitioners were informed that pro-rata
payment has been made to
Gujarat Urja Vikas Nigam Ltd. (GUVNL)
amounting to Rs.1,16,000/- on 28.03.2012 as
per Government Resolution dated 07.02.2004.
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4.4) The petitioner no.6 thereafter made
an application dated 04.07.2022 before
respondent no.3 Dakshin Gujarat Vij Company
Ltd. to release the electric connection.
4.5) It is the case of the petitioners
that erstwhile company M/s. Vaishnav Fabrics
Pvt. Ltd. is alleged to have been involved in
theft of electricity in the year 1994-1995
for which supplementary bill was given to it
and the respondent electricity company is now
threatening to recover the amount due and
payable from the said company from the
petitioners.
4.6) The petitioner no.6 received a
communication dated 16.07.2022 from
respondent no.3 informing that the amount of
Rs.17,28,441.32/- is due and payable by the
company and until such amount is paid with
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delayed payment charges, no connection can be
released.
4.7) The petitioners, therefore, being
aggrieved by the said communication dated
16.07.2022 has preferred this petition for
quashing and setting aside the same.
5.Learned advocate Mr. B.M. Mangukiya for the
petitioners submitted that as per Government
Resolution dated 07.02.2004, respondent no.1
Gujarat State financial Corporation has
executed the sale deed stipulating the terms
in Clause (7) of the sale deed. It was
submitted that the Letter of Acceptance of
Offer in the year 2010 was issued subject to
payment of Sales Tax dues and dues of Gujarat
Electricity Board of the company whose
properties are purchased by the petitioners
subject to Government Resolutions dated
07.02.2004, 21.05.2005 and 24.09.2008 of
Government of Gujarat, Industries and Mines
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department.
5.1) It was submitted that as per the
Government Resolution dated 07.02.2004, it is
resolved that when the sale is made under
section 29 of the SFC Act, sale proceeds
realized by auction would be apportioned
between the outstanding dues of the Gujarat
Electricity Board, Gujarat Industrial
Development Corporation and Electricity
charges of the State Government on pro-rata
basis which would be coordinated by the
Commissioner of Industries. It was therefore,
submitted that action of respondent no.3 to
refuse the electric connection is illegal and
contrary to Articles 14 and 19 of the
Constitution of India.
5.2) Learned advocate Mr. Mangukiya
submitted that the petitioners are successful
bidders in auction held under section 29 of
the SFC Act and once the sale has been
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confirmed and conveyance has been executed by
respondent no.1 GSFC, the petitioners cannot
be saddled with the electricity dues of the
erstwhile owner in view of the Government
Resolution dated 07.02.2004 and subsequent
resolutions passed by the State Government.
5.3) It was therefore submitted that such
resolutions were passed by the State
Government so as to enable respondent no.1
Gujarat State Financial Corporation to hold
auction without any liability of the dues of
other Government departments. It was pointed
out by learned advocate Mr. Mangukiya that
respondent no.3 has accepted pro-rata amount
made available to its share in the year 2012
and for ten years, no action has been taken
for recovery of any amount, if at all, due
and payable by the petitioners.
5.4) It was further submitted that the
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properties purchased by the petitioners was
for Rs. 12 lakhs in the year 2010 whereas
outstanding dues sought to be paid by the
petitioners is Rs. 17 Lakh with dealayed
payment charges which would be more than
Rs.40 Lakh. It was therefore submitted that
the action of the respondents is ex-facie
arbitrary waiting for more than ten years for
claiming the dues which is absolutely time
barred.
5.5) It was also submitted that the
action of the respondents in demanding Rs. 17
lakhs together with overdue charge and
interest without reference to any date is
arbitrary and illegal. Respondent no.3 has
failed to point out the details of dues, if
any, except mentioning the amount relying
upon Clause No.4.30 of the Supply Code, 2015
(For short "the Supply Code") framed by
Gujarat Electricity Regulatory Commission
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(GERC) which cannot be made applicable in
facts of the case.
5.6) It was submitted that delayed
payment charges and interest is also not
quantified by the respondent no.3 in the
impugned communication dated 16.07.2022 and
therefore, such demand is contrary to the
provisions of section 29 of the SFC Act and
Government Resolution dated 07.02.2004 and
other subsequent resolutions.
6.On the other hand, learned advocate Ms. Lilu
K. Bhaya for respondent nos.3 and 4 -
electricity company submitted that Government
Resolution(G.R.) dated 07.02.2004 was issued
when the Gujarat Electricity Board was in
existence and thereafter, Electricity Act,
2003 (For short "the Act, 2003") has come
into force on 9.12.2004 and therefore, such
G.R. cannot be said to be in force when the
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transaction of sale took place in the year
2010. It was submitted that all the G.R. and
guidelines which are issued after coming into
force of the Act, 2003 cannot be implemented.
6.1) Learned advocate Ms. Bhaya referred
to and relied upon section 43 of the Act,
2003 which empowers the respondent nos. 3 and
4 to release the connection on such terms and
conditions as may be decided by the licensee.
Reliance was also placed on sections 45 and
46 of the Act, 2003 to submit that it is for
the licensee to supply electricity on such
terms and conditions which is prayed in view
of Clause no. 4.30 of Supply Code framed by
GERC.
6.2) It was submitted that respondent
no.3 is entitled to recover the outstanding
dues of M/s. Vaishnav Fabrics Pvt. Ltd. which
owned the property which was sold under
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section 29 of the SFC Act on 06.08.2010 and
payment was made by petitioners on
21.03.2011. It was submitted that after a
lapse of more than 11 years sale deed was
executed between the petitioners and
respondent no.1- GSFC on 08.04.2022.
6.3) It was submitted that in view of
Clause No. 4.30 of the Supply Code, unless
the petitioners pay the remaining outstanding
dues of M/s. Vaishnav Fabrics, respondent
nos.3 and 4 cannot release the new electric
connection.
6.4) It was also submitted that petition
is not maintainable in view of alternative
remedy available to the petitioners as
provided under section 42(5) of the Act, 2003
to approach the Consumer Grievances Redressal
Forum and against the decision of Consumer
Grievances Redressal Forum, the petitioners
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can approach Electricity Ombudsman as
provided under section 42(6) of the Act,
2003. However, the petitioners have
straightway approached this Court by
preferring this petition without availing the
alternative efficacious remedy provided under
the Act, 2003 and, therefore, the petition
deserves to be dismissed relegating
petitioners to avail alternative remedy.
6.5) Learned advocate Ms. Bhaya referred
to and relied upon the decision of this Court
in case of Jitendrabhai Babubhai Patel v. the
Dakshin Gujarat Vij Co. Ltd. (Judgment dated
27.06.2022 passed in Special Civil
Application No.9655 of 2022) wherein the
petition is dismissed by relegating the
petitioners to avail the alternative remedy.
6.6) Reliance was also placed on the
decision of Apex Court in case of Maharashtra
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Electricity Regulatory Commission v. Reliance
Energy Ltd. and others reported in (2007) 8
SCC 381, wherein the Apex Court has referred
to the judgment in case of Suresh Jindal v.
BSES Rajdhani Power Ltd. reported in (2006)
132 DLT 339 (DB).
6.7) It was submitted that the reliance
placed by the petitioners on G.R. dated
7.2.2004 was issued prior to coming into
force of the Act, 2003 and, as such, such
resolution would not be applicable in view of
provisions of section 185(2)(a) of the Act,
2003.
6.8) It was submitted that in view of
repeal provision of section 185(2)(a) of the
Act, 2003, all circulars, guidelines and
resolutions issued by the Government of
Gujarat which are inconsistent with the
provisions of the Act, 2003 and Electricity
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Supply Code which is framed in exercise of
powers conferred upon GERC under section 50
of the said Act would not be applicable
because such Supply Code would be binding
upon all the consumers.
6.9) Learned advocate Ms. Bhaya referred
to and relied upon Clause No. 4.1.11 of
Supply Code wherein it is provided that
irrespective of purchase of the property by
consumer from auction or private transaction,
the consumer is required to make payment of
dues of the earlier consumer.
6.10) It was therefore, submitted that
circulars, guidelines, resolutions or
directives which are inconsistent with the
provisions of Act, 2003 and the Supply Code
will not have any force of law as the Supply
Code is statutory condition having legal
force and therefore, it is applicable, and it
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is not unreasonable for the respondent nos. 3
and 4 to demand the outstanding dues of
previous owner as a condition for release of
new electric connection.
6.11) It was further submitted by learned
advocate Ms. Bhaya that the amount which is
received from respondent no.1-GSFC of Rs.
1,16,000/- in the year 2012 has been given
credit and thereafter the outstanding amount
is calculated by respondent nos. 3 and 4.
6.12) Learned advocate Ms. Bhaya referred
to and relied upon the decision of the Apex
Court in case of Telangana State Southern
Power Distribution Company Limited and
another v. Srigdhaa Beveragees reported in
(2020) 6 Supreme Court Cases 404, wherein the
Apex Court has held that electricity company
can recover the outstanding amount from the
subsequent purchaser as under:
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"(7.) A writ petition was filed by
the respondent before the High Court
of Telangana and Andhra Pradesh
seeking quashing of these demands
predicated on a reasoning that as a
subsequent purchaser, the respondent
was not responsible for the dues of
the earlier owner, and in that
behalf relied upon the judgments of
this Court in Isha Marbles v. Bihar
State Electricity Board & Anr.,
(1995) 2 SCC 648 and Southern Power
Distribution Company of Telangana
Limited (through its CMD) & Ors. v.
Gopal Agarwal & Ors., (2018) 12 SCC
644 Reliance on these judgments
persuaded the learned single Judge
to issue directions quashing the
demand of appellant No.1. The appeal
filed before the Division Bench
against this order was also
dismissed on 30.4.2018.
(8.) We have examined the
submissions in the contours of the
aforesaid controversy, and take note
of the fact that in the case of Isha
Marbles, (supra) the sale was in
pursuance of Section 29(1) of the
State Financial Corporations 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 present auction
notice. This Court elucidated the
position in the context of Section
24 of the Electricity Act, 1910, to
emphasise that under Section 2(c) of
the Electricity Act, a consumer
means any person who is supplied
with energy, and since liability to
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pay electricity dues is fastened
only on the consumer, at the
relevant time, the purchaser was not
the consumer. It has also been
stated that in the absence of
consumption of electricity, the
subsequent purchaser was merely
seeking reconnection without there
being any statutory dues towards
consumption charges. We had
specifically posed a question to the
learned counsel for the respondent
in the order dated 15.11.2019, that
whether, in the context of the
judicial pronouncements sought to be
relied upon, there was a specific
clause in the nature of Clause 26 as
in the present E-auction sale
notice, which absolved the
Authorized Officer of various dues
including electricity dues . On the
conspectus of the judgments referred
to by the respondent, there were no
such clauses in the cases in
question.
(9.) We may also notice that there
have been subsequent judicial
pronouncements dealing with this
aspect of electricity dues. A three
Judge Bench of this Court has held
that the dues under the terms and
conditions of supply partake the
character of statutory dues
(Hyderabad Vanaspathi Ltd. v. A.P.
State Electricity Board & Ors.,
(1998) 4 SCC 470). The mere fact
that agreements were entered into
with every consumer only served the
purpose of bringing to the notice of
the consumer the terms and
conditions of supply, but did not
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make the dues purely contractual in
character.
(10.) We can draw strength from the
observations of this Court in
Dakshin Haryana Bijli Vitran Nigam
Ltd. v. Paramount Polymers (P) Ltd.,
(2006) 13 SCC 101 (2 Judges Bench)
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 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.
(11.) We may also notice that as an
auction purchaser bidding in an as
is where is, whatever there is and
without recourse basis, the
respondent would have inspected the
premises and made inquiries about
the dues in all respects. The facts
of the present case, as in the
judgment aforesaid, are more
explicit in character as there is a
specific mention of the
quantification of dues of various
accounts including electricity dues.
The respondent was, thus, clearly
put to notice in this behalf.
(12.) The same view in case of a
similar clause has been taken in
Paschimanchal Vidyut Vitran Nigam
Limited & Ors. v. DVS Steels and
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Alloys Private Limited & Ors.,
(2009) 1 SCC 210 (2 Judge Bench) It
has been further observed that 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 so long
as such rules and regulations or the
terms and conditions are not
arbitrary and unreasonable. A
condition for clearance of dues
cannot per se be termed as
unreasonable or arbitrary.
(13.) We may notice a slightly
contra view in Haryana State
Electricity Board v. Hanuman Rice
Mills, Dhanauri & Ors., (2010) 9 SCC
145 (2 Judge Bench) in a given
scenario where the pendency of
electricity dues was not mentioned
in the terms & conditions of sale,
and it was held in those facts that
the dues could not be mulled on to
the subsequent transferee.
(14.) We may notice that in Special
Officer, Commerce, North Eastern
Electricity Supply Company of Orissa
(NESCO) v. Raghunath Paper Mills
Private Limited & Anr., (2012) 13
SCC 479 (2 Judge Bench) a
distinction was made between a
connection sought to be obtained for
the first time and a reconnection.
In that case, no application had
been made for transfer of a service
connection from the previous owner
to the auction-purchaser, but in
fact, a fresh connection was
requested. In light of the
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regulations therein, previous dues
had to be cleared only in the case
of a reconnection. Hence, the
respondents were held to be free
from electricity liability. This
Court in Southern Power Distribution
Company of Telangana Limited
(through its CMD) & Ors. (supra)
found that the facts were similar to
the NESCO (supra) case, and thus
followed the same line.
(15.) We have gone into the
aforesaid judgments as it was urged
before us that there is some
ambiguity on the aspect of liability
of dues of the past owners who had
obtained the connection. There have
been some differences in facts but,
in our view, there is a clear
judicial thinking which emerges,
which needs to be emphasized:
A. That electricity dues, where
they are statutory in character
under the Electricity Act and as
per the terms & conditions of
supply, cannot be waived in view
of the provisions of the Act
itself more specifically Section
56 of the Electricity Act, 2003
(in pari materia with Section 24
of the Electricity Act, 1910),
and cannot partake the character
of dues of purely contractual
nature.
B. 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
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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).
C. The debate over connection or
reconnection would not exist in
cases like the present one where
both aspects are covered as per
clause 8.4 of the General Terms
& Conditions of Supply."
6.13) In support of her submissions,
learned advocate Ms. Bhaya further relied
upon the following decisions:
i) Paschimachal Vidyut Vitran Nigam Ltd. &
others v. M/s. DVS Steels and Alloys Pvt.
Ltd. and Ors. reported in AIR 2009 Supreme
Court 647, wherein the Hon'ble Apex Court
held as under:
"8. The appellant submitted that if
a consumer disposed of its premises,
or any portion thereof, without
clearing the dues in regard to the
electricity supplied to its
premises, any transferee seeking
fresh electricity connection or
supply of electricity to the
premises, will have to clear the
electricity dues of the previous
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occupant. The appellant referred to
sub-clauses (g) and (h) of clause
4.3 of the Electricity Supply Code,
which is extracted below :
"(g) Where the property has been
legally sub-divided, the
outstanding dues for the
consumption of energy on such
premises, if any, shall be
divided on pro-rata basis.
(h) A new connection to such
sub-divided premises shall be
given only after the share of
outstanding dues attributed to
such sub-divided premises, is
duly paid by the applicant.
Licensee shall not refuse
connection to an applicant only
on the ground that, dues on the
other portion(s) of such
premises have not been paid, nor
shall the licensee demand record
of last paid bills of other
portion(s) from such
applicants."
The appellant submitted that
similar provisions existed in
the relevant regulations of the
Board even before the said Code
came into force.
9. The supply of electricity by a
distributor to a consumer is `sale
of goods'. The distributor as the
supplier, and the owner/ occupier of
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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. The supplier can
therefore neither file a suit nor
initiate revenue recovery
proceedings against a purchaser of a
premises for the outstanding
electricity dues of the vendor of
the premises, in the absence of any
contract to the contrary.
10. 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
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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.
11. A stipulation by the distributor
that the dues in regard to the
electricity supplied to the premises
should be cleared before electricity
supply is restored or a new
connection is given to a premises,
cannot be termed as unreasonable or
arbitrary. In the absence of such a
stipulation, an unscrupulous
consumer may commit defaults with
impunity, and when the electricity
supply is disconnected for non-
payment, may sell away the property
and move on to another property,
thereby making it difficult, if not
impossible for the distributor to
recover the dues. Having regard to
the very large number of consumers
of electricity and the frequent
moving or translocating of
industrial, commercial and
residential establishments,
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provisions similar to clause 4.3(g)
and (h) of Electricity Supply Code
are necessary to safeguard the
interests of the distributor. We do
not find anything unreasonable in a
provision enabling the
distributor/supplier, to disconnect
electricity supply if dues are not
paid, or where the electricity
supply has already been disconnected
for non-payment, insist upon
clearance of arrears before a fresh
electricity connection is given to
the premises. It is obviously the
duty of the purchasers/occupants of
premises to satisfy themselves that
there are no electricity dues before
purchasing/occupying a premises.
They can also incorporate in the
deed of sale or lease, appropriate
clauses making the vendor/lessor
responsible for clearing the
electricity dues up to the date of
sale/lease and for indemnity in the
event they are made liable. Be that
as it may....."
ii) Special Officer, Commerce, North Eastern
Electricity Company of Orissa (NESCO) v.
Raghunath Paper Mills Private Ltd. reported
in (2012) 13 SCC 479, wherein the Hon'ble
Supreme Court held as under:
"16) In Isha Marbles vs. Bihar State
Electricity Board and Another (1995)
2 SCC 648, a three-Judge Bench of
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this Court had an occasion to
consider a similar question, viz.,
whether the auction-purchaser is
liable to meet the liability of old
consumer of electricity to the
premises which is purchased by him
in the auction sale from Bihar State
Financial Corporation under Section
29(1) of the State Financial
Corporations Act, 1951. After
considering relevant provisions of
the Electricity Act and the
Regulations, this Court held as
under:-
"56. From the above it is clear
that the High Court has chosen
to construe Section 24 of the
Electricity Act correctly. There
is no charge over the property.
Where that premises comes to be
owned or occupied by the
auction-purchaser, when such
purchaser seeks supply of
electric 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. Of course, the bona fides
of the sale may not be relevant.
61. ...It is impossible to impose
on the purchasers a liability
which was not incurred by them.
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62. No doubt, from the tabulated
statement above set out, the
auction- purchasers came to
purchase the property after
disconnection but they cannot be
"consumer or occupier" within
the meaning of the above
provisions till a contract is
entered into.
63. We are clearly of the
opinion that there is great
reason and justice in holding as
above. Electricity is public
property. Law, in its majesty,
benignly protects public
property and behoves everyone to
respect public property. Hence,
the courts must be zealous in
this regard. But, the law, as it
stands, is inadequate to enforce
the liability of the previous
contracting party against the
auction-purchaser who is a third
party and is in no way connected
with the previous
owner/occupier. It may not be
correct to state, if we hold as
we have done above, it would
permit dishonest consumers
transferring their units from
one hand to another, from time
to time, infinitum without the
payment of the dues to the
extent of lakhs and lakhs of
rupees and each one of them can
easily say that he is not liable
for the liability of the
predecessor in interest....."
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17) In Paschimanchal Vidyut Vitran
Nigam Ltd. & Ors. vs. DVS Steels &
Alloys Pvt. Ltd. & Ors. AIR 2009 SC
647= (2009) 1 SCC 210, the question
whether the supplier can recover
electricity dues from the purchaser
of a sub-divided plot was considered
by this Court. The following
conclusion is relevant:-
"9. 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. The supplier can
therefore neither file a suit
nor initiate revenue recovery
proceedings against a purchaser
of a premises for the
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outstanding electricity dues of
the vendor of the premises in
the absence of any contract to
the contrary.Learned counsel for
the appellant heavily relied on
para 10 of the very same
judgment which reads as under:-
10. But the above legal position
is not of any practical help to
a purchaser of 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 fulfilment 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
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long as such rules and
regulations or the terms and
conditions are not arbitrary and
unreasonable, courts will not
interfere with them." If we
apply the above principles as
pointed out by Mr. Tripathy,
learned counsel for the
appellant, undoubtedly,
respondent No. 1-purchaser of
the premises is liable to pay
entire arrears or outstanding of
power dues. However, as pointed
out by Mr. P.P. Rao, learned
is not a party to the contract
with the supplier, i.e., the
NESCO. We have already quoted
the relevant clauses,
particularly, sub-Clause 10(b)
of Regulation 13 of the
Electricity Supply Code, which
is not applicable to respondent
No. 1 herein. In other words, as
mentioned in the earlier paras,
in the case on hand, respondent
No. 1 has not applied for
transfer of service connection
from the name of the erstwhile
company to its name but applied
for a fresh connection to its
Unit after purchasing the same
from the Official Liquidator.
18) It is also relevant to refer a
decision of a three-Judge Bench of
this Court reported in Ahmedabad
Electricity Co. Ltd. vs. Gujarat
Inns Pvt. Ltd. and Others, (2004) 3
SCC 587. This Court, after finding
that the cases are of fresh
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connection, in para 3, held as
under:-
"3.....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 respect
of power supply to the premises
in the absence of there being a
specific statutory provision in
that regard....."
19) In a recent decision, i.e. in
Haryana State Electricity Board vs.
Hanuman Rice Mills, Dhanauri and
Others, (2010) 9 SCC 145, this
Court, after referring to all the
earlier decisions including Isha
Marbles (supra) and Paschimanchal
Vidyut Vitran Nigam Ltd. (supra)
etc., summarized the position in the
following manner which is as under:-
"12. ....(i) Electricity arrears
do not constitute a charge over
the property. Therefore in
general law, a transferee of a
premises cannot be made liable
for the dues of the previous
owner/occupier.
(ii) Where the statutory rules
or terms and conditions of
supply which are statutory in
character, authorise the
supplier of electricity to
demand from the purchaser of a
property claiming reconnection
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or fresh connection of
electricity, the arrears due by
the previous owner/occupier in
regard to supply of electricity
to such premises, the supplier
can recover the arrears from a
purchaser."
20) In the light of the above
discussion, specific factual details
regarding the position of respondent
No. 1 which purchased the said
premises under court auction sale
from the Official Liquidator on "as
is where is" and "whatever there is"
basis and in the light of the
regulations quoted above,
particularly, sub-clause 10(b) of
Regulation 13, we hold that the
request was not for the transfer
from the previous owner to the
purchaser, on the other hand, it was
a request for a fresh connection for
the Unit of respondent No. 1 herein.
We are in entire agreement with the
decision arrived at by learned
single Judge as affirmed by the
Division Bench of the High Court."
iii) Dakshin Haryana Bijli Vitran Nigam
Ltd. v. M/s. Paramount Polymers Pvt. Ltd
reported in AIR 2007 Supreme Court 2, wherein
the Hon'ble Supreme Court held as under:
"13. We must observe that the
decision in Isha Marbles (supra) is
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by itself not an answer to the
validity of clause 21A of the terms
and conditions inserted by
notification. Under section 49 of
the Supply Act, the licensee or
rather, the Electricity Board, is
entitled to set down terms and
conditions for 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 21A into the
Terms and Conditions for supply of
electrical energy is beyond the
power of the appellant. It is also
not merely contractual. This Court
in M/s Hyderabad Vanaspati Ltd. Vs.
Andhra Pradesh State Electricity
Board and others [(1998) 2 S.C.R.
620] has held that the Terms and
Conditions for Supply of Electricity
notified by the Electricity Board
under Section 49 of the Electricity
(Supply) Act are statutory and the
fact that an individual agreement is
entered into by the Board with each
consumer does not make the terms and
conditions for supply contractual.
This Court has also held that though
the Electricity Board is not a
commercial entity, it is entitled to
regulate its tariff in such a way
that a reasonable profit is left
with it so as to enable it to
undertake the activities necessary.
If in that process in respect of
recovery of dues in respect of a
premises to which supply had been
made, a condition is inserted for
its recovery from a transferee of
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the undertaking, it cannot ex facie
be said to be unauthorized or
unreasonable. Of course, still a
court may be able to strike it down
as being violative of the
fundamental rights enshrined in the
Constitution of India. But that is a
different matter. In this case, the
High Court has not undertaken that
exercise.
14. The position obtaining in Isha
Marbles (supra) was akin to the
position that was available in the
case on hand in view of the Haryana
Government Electrical Undertakings
(Dues Recovery) Act, 1970. There was
no insertion of a clause like clause
21A as in the present case, in the
Terms and Conditions of Supply
involved in that case. The decision
proceeded on the basis that the
contract for supply was only with
the previous consumer and the
obligation or liability was
enforceable only against that
consumer and since there was no
contractual relationship with the
subsequent purchaser and he was not
a consumer within the meaning of the
Electricity Act, the dues of the
previous consumer could not be
recovered from the purchaser. This
Court had no occasion to consider
the effect of clause like clause 21A
in the Terms and Conditions of
Supply. We are therefore of the view
that the decision in Isha Marbles
(supra) cannot be applied to strike
down the condition imposed and the
first respondent has to make out a
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case independent on the ratio of
Isha Marbles (supra), though it can
rely on its ratio if it is helpful,
for attacking the insertion of such
a condition for supply of electrical
energy. This Court was essentially
dealing with the construction of
Section 24 of the Electricity Act in
arriving at its conclusion. The
question of correctness or otherwise
of the decision in Isha Marbles
(supra) therefore does not arise in
this case especially in view of the
fact that the High Court has not
considered the question whether
clause 21A of the terms and
conditions incorporated is invalid
for any reason."
iv) Gujarat Electricity Board v. Jaisal
Silk Mills Pvt. Ltd. (Judgment dated
18.07.2005 passed in Letters Patent Appeal
No.691 of 2003), wherein this Court held as
under:
"An ancillary question which remains
to be considered is whether Clause
2(1) of the Conditions of Supply is
violative of Article 14 and 19 (1)
(g) of the Constitution. In this
context it is appropriate to observe
that the writ petitioners have not
laid factual foundation to support
their plea of discrimination. They
have neither pleaded nor any
material has been produced on the
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record of these cases to show that
the impugned clause seeks to divide
persons belonging to the same class
into two distinct groups and there
is no rational reason for doing so.
Rather, it is an admitted position
that, the impugned condition is
being enforced by the Board against
all those who apply for restoration
of earlier connection or for
issuance of fresh connection. Every
such applicant is required to
deposit the arrears of electricity
dues as a condition precedent to the
entertaining of application.
Therefore the plea of discrimination
is liable to be rejected.
We also do not find anything
manifestly arbitrary in the Board's
insistence on the deposit of the
arrears of electricity charges/dues
as an condition precedent for
restoration of the supply or release
of fresh connection. Clause 2(j) of
the Conditions of Supply has been
framed by the Board with a view to
ensure that unscrupulous consumers
are not able to dupe it of lakhs and
crores of rupees. It was felt that
in the absence of such a condition,
unscrupulous consumers were avoiding
payment of the electricity charges.
In large number of cases the
consumers resorted to legal
mechanics for being declared sick or
sold by public auction in
furtherance of decrees passed by the
Courts and the Tribunals or in
furtherance of the provisions like
Section 29 of the State Financial
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Corporation Act. The absence of such
a statutory provision had prompted
the Supreme Court to quash the
demand of arrears raised by the
Bihar State Electricity Board from
the prospective consumers.
Therefore, what the Board has done
by framing Clause 2(f) of the
Conditions of Supply is to remove
the loopholes from the scheme of
supply of electrical energy and we
do not find any justification to
strike down the same on the ground
of arbitrariness more so because the
interest of the applicants has been
amply safeguarded by making a
provision for payment of the amount
which may be recovered by the Board
from the erstwhile consumer by
availing appropriate legal remedies.
The challenge to Clause 2(1) of
Conditions of Supply on the ground
of violation of Article 19 (1) (g)
is liable to be rejected summarily
because the respondents in the
Letters Patent Appeals and the
petitioners in the Special Civil
Applications have not been able to
show as to how the impugned
condition can be treated as
unreasonable restriction on their
right to carry on trade or
business."
v) Jitendrabhai Babubhai Patel (supra),
wherein this Court held as under:
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"15. There is another aspect, which
requires to be addressed i.e. with
regard to alternative remedy. The
Apex Court in the case of Reliance
Energy Ltd and Ors. (supra), while
examining the provision of Section
42(5) of the Act has observed thus:
"33. As per the aforesaid
provision, if any grievance is
made by a consumer, then they
have a remedy under Section
42(5) of the Act and according
to sub-section (5) every
distribution licensee has to
appoint a forum for redressal of
grievances of the consumers.
In exercise of this power the
State has already framed the
Maharashtra Electricity
Regulatory Commission (Consumer
Grievance Redressal Forum and
Ombudsman) Regulations, 2003
(hereinafter referred to as "the
2003 Regulations") and created
Consumer Grievance Redressal
Forum and Ombudsman. Under these
2003 Regulations a proper forum
for redressal of the grievances
of individual consumers has been
created by the Commission.
Therefore, now by virtue of sub-
section (5) of Section 42 of the
Act, all the individual
Grievances of consumers have to
be raised before this forum
only. In the fact of this
statutory provision we fail to
understand how could the
Commission acquire jurisdiction
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to decide the matter when a
forum has been created under the
Act for this purpose. The matter
should have been left to the
said forum. This question has
already been considered and
decided by the Division Bench of
the Delhi High Court in Suresh
Jindal v. BSES Rajdhani Power
Ltd. and Dheeraj Singh v. BSES
Yamuna Power Ltd and we approve
of these decision. It has been
held in these decisions that the
forum and ombudsman have power
to grant interim orders. Thus a
complete machinery has been
provided in Section 42(5) and
42(6) for redressal of
grievances of individual
consumers. Hence wherever a
forum/ombudsman have been
created the consumers can only
resort to these bodies for
redressal of their grievances.
Therefore, not much is required
to be discussed on this issue.
As the aforesaid two decisions
correctly lay down the law when
an individual consumer has a
grievance he can approach the
forum created under sub-section
(5) of Section 42 of the Act.
34. In this connection, we may
also refer to Section 86 of the
Act which lays down the
functions of the State
Commission. Sub-section (1)(f)
of the said section lay down the
adjudicatory function of the
State Commission which does not
encompass within its domain
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complaints of individual
consumers. It only provides that
the Commission can adjudicate
upon the disputes between the
licensees and generating
companies and to refer any such
dispute for arbitration. This
dies not include in it an
individual consumer. The proper
forum for that is Section 42(5)
and thereafter Section 42(6)
read with the Regulations of
2003 as referred to
hereinabove."
16. The Apex Court has held that by
virtue of Section 42(5) of the Act,
all the individual grievances of
consumers have to be raised before
the forum only and in the face of
this statutory provision, the
Commission cannot acquire
jurisdiction to decide the matter
when a forum has been created under
the Act for this purpose and the
matter should have been left to the
said forum.
17. In the present case, the
partners of the petitioner-Company
has directly approached this Court,
without availing the remedy as
envisaged under Section 42(5) of the
Act."
vi) Torrent Power A.E.C. Ltd. v. Gayatri
Intermediates Pvt. Ltd reported in 2006(2)
GLR 1580, wherein this Court held as under :
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"19.3 In view of the provisions
of Section 172(b), it is clear
that licenses in favour of the
GEB and the AEC under the
repealed laws continued to be
valid till 9.12.2004 (for a
period not exceeding one year
from the appointed date which
was 10.12.2003 for the State of
Gujarat) and, therefore, the
contention urged on behalf of
the licensees must be accepted
without any difficulty for the
period upto 9.12.2004. Hence, as
regards the cases where theft
was detected prior to
10.12.2004, the matters will be
governed by the Conditions of
Supply and Miscellaneous Charges
for supply of Electrical Energy
framed by the GEB or by the AEC,
as the case may be. Since,
during this period, the
consumers were governed by the
Conditions of Supply and
Miscellaneous charges and not by
the provisions of the new Act,
the question of ouster of
jurisdiction of Civil Court
would not arise in cases where
theft was detected before
10.12.2004. But while deciding
applications for interim
injunction, Civil Court shall
have to consider the principles
laid down by this Court in Kiran
Industries v. GEB 1995 (2) GLR
1158."
7.Having heard the learned advocates for the
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respective parties and having considered the
material on record, it appears that the
facts of the case are not in dispute. The
petitioners purchased the property in
question from respondent no.1-GSFC in the
auction held in the year 2010 after making
payment of sale consideration of
Rs.12,02,000/- in the year 2011 on "As is
where is" basis under section 29 of the SFC
Act.
8.The industrial concern which was purchased by
the petitioners belonged to one M/s. Vaishnav
Fabrics Pvt. Ltd who had executed equitable
mortgage by depositing the title deeds of the
said property for securing term loan advanced
by the respondent no.1 Gujarat State
Financial Corporation.
9.It appears that registered sale deed was
executed in favour of the petitioners for the
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property in question on 28.03.2022 in the
office of Sub-Registrar, S.R.O. Mangrol.
10. After registration of the sale deed in
favour of the petitioners, an application was
made to get the electric connection by
petitioner no.6 on 04.07.2022 wherein
reference was made to the G.R. dated
07.02.2004. Respondent no.1- GSFC by letter
dated 25.05.2022 has clarified that amount of
Rs. 1,16,000/- was paid to the GUVNL on
28.03.2012 as per Government Resolutions
dated 07.02.2004 and 05.09.2005 by
apportionment of the amount out of sale
consideration of Rs.12,02,000/- on pro-rata
basis towards electric dues.
11. Government Resolution dated 07.02.2004
stipulates that when the sale is made under
section 29 of the SFC Act then the amount
left after adjusting the expenses of
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property, GSFC as well as Sales Tax
Department and Electricity Department, the
sale consideration shall be apportioned on
pro-rata basis towards their outstanding dues
and the purchaser shall not be liable to make
the payment of outstanding dues of the
erstwhile owner whose property is auctioned
under section 29 of the SFC Act. Section 29
of the SFC Act reads as under:
"29. Rights of Financial Corporation
in case of default.--
(1) Where any industrial concern,
which is under a liability to the
Financial Corporation under an
agreement, makes any default in
repayment of any loan or advance or
any instalment thereof [or in
meeting its obligations in relation
to any guarantee given by the
Corporation] or otherwise fails to
comply with the terms of its
agreement with the Financial
Corporation, the Financial
Corporation shall have the [right to
take over the management or
possession or both of the industrial
concerns], as well as the [right to
transfer by way of lease or sale]
and realise the property pledged,
mortgaged, hypothecated or assigned
to the Financial Corporation."
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12. Thus under the powers vested with the
respondent no.1- GSFC, the property is sold
to recover the outstanding dues of the
borrower. Therefore, the question which is
arising for consideration is whether the
circular dated 07.02.2004 would continue to
operate even after coming into force of the
Act, 2003 and the Supply Code framed by GERC
under the said Act.
13. Relevant provisions of the Act, 2003 and
the Supply Code are reproduced here in below:
"43. Duty to supply on request.-(1)
[Save as otherwise provided in this
Act, every distribution] licensee,
shall, on an application by the owner
or occupier of any premises, give
supply of electricity to such
premises, within one month after
receipt of the application requiring
such supply:
Provided that where such supply
requires extension of distribution
mains, or commissioning of new sub-
stations, the distribution licensee
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shall supply the electricity to such
premises immediately after such
extension or commissioning or within
such period as may be specified by the
Appropriate Commission:
Provided further that in case of a
village or hamlet or area wherein no
provision for supply of electricity
exists, the Appropriate Commission may
extend the said period as it may
consider necessary for electrification
of such village or hamlet or area.
Explanation - For the purposes of this
sub-section, "application" means the
application complete in all respects
in the appropriate form, as required
by the distribution licensee, along
with documents showing payment of
necessary charges and other
compliances.
(2) It shall be the duty of every
distribution licensee to provide, if
required, electric plant or electric
line for giving electric supply to the
premises specified in sub-section (1):
Provided that no person 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.
(3) If a distribution licensee fails
to supply the electricity within the
period specified in sub-section(1), he
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shall be liable to a penalty which may
extend to one thousand rupees for each
day of default.
45. Power to recover charges.-(1)
Subject to the provisions of this
section, the prices to be charged by a
distribution licensee for the supply
of electricity by him in pursuance of
section 43 shall be in accordance with
such tariffs fixed from time to time
and conditions of his licence.
(2) The charges for electricity
supplied by a distribution licensee
shall be-
(a) fixed in accordance with the
methods and the principles as may be
specified by the concerned State
Commission;
(b) published in such manner so as to
give adequate publicity for such
charges and prices.
(3) The charges for electricity
supplied by a distribution licensee
may include-
(a) a fixed charge in addition to the
charge for the actual electricity
supplied;
(b) a rent or other charges in respect
of any electric meter or electrical
plant provided by the distribution
licensee.
(4) Subject to the provisions of
section 62, in fixing charges under
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this section a distribution licensee
shall not show undue preference to any
person or class of persons or
discrimination against any person or
class of persons.
(5) The charges fixed by the
distribution licensee shall be in
accordance with the provisions of this
Act and the regulations made in this
behalf by the concerned State
Commission.
46. Power to recover expenditure. The
State Commission may, by regulations,
authorise a distribution licensee to
charge from a person requiring a
supply of electricity in pursuance of
section 43 any expenses reasonably
incurred in providing any electric
line or electrical plant used for the
purpose of giving that supply.
185 Repeal and Saving -
......
(2) Notwithstanding such repeal,
(a) anything done or any action taken
or purported to have been done or
taken including any rule,
notification, inspection, order or
notice made or issued or any
appointment, confirmation or
declaration made or any licence,
permission, authorisation or exemption
granted or any document or instrument
executed or any direction given under
the repealed laws shall, in so far as
it is not inconsistent with the
provisions of this Act, be deemed to
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have been done or taken under the
corresponding provisions of this Act.
Clause-4.30 of Supply Code reads as
under:-
"4.30 An application for new
connection, reconnection, addition or
reduction of load, change of name or
shifting of service line for any
premises need not be entertained
unless any dues relating to that
premises or any dues of the applicant
to the Distribution Licensee in
respect of any other service
connection held in his name anywhere
in the jurisdiction of the
Distribution Licensee have been
cleared. Provided that in case the
connection is released after recovery
of earlier dues from the new applicant
and in case the licensee, after
availing appropriate legal remedies,
get the full or part of the dues from
the previous consumer/owner or
occupier of that premise, the amount
shall be refunded to the new consumer/
owner or occupier from whom the dues
have been recovered after adjusting
the expenses to recover such dues."
14. As reproduced hereinabove, Clause No.7
of the sale deed refers to Government
Resolutions dated 07.02.2004, 21.05.2005 and
05.09.200. However, respondent no.3 - Dakshin
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Gujarat Vij Company Ltd. is not a party to
the sale deed. It is also not in dispute that
it has received Rs. 1,16,000/- from
respondent no.1-GSFC without a demur in the
year 2012.
15. It is also pertinent to note that
respondent nos. 3 and 4 have not raised any
claim against the petitioners who are the
purchasers of the property in question in
auction for more than 10 years for recovery
of dues of M/s. Vaishnav Fabrics Pvt. Ltd. As
per Clause no. 4.30 of the Supply Code which
is akin to Clause No.2(j) of condition of
supply which was inserted by notification
dated 10.08.2001 issued under section 49 of
the Act,2003 stipulates that an application
for new connection need not be entertained
unless any dues relating to that premises or
any dues of that applicant to the
Distribution license in respect of other
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service connection held in his name anywhere
in the jurisdiction of the Distribution
Licensee have been cleared. However, such
condition is subject to Government Resolution
dated 07.02.2004 which is acted upon by the
respondents inter-se. Therefore, the
contention raised on behalf of the respondent
nos. 3 and 4 that such resolution would not
be applicable on enactment of the Act, 2003
and Clause no. 4.30 of the Supply Code,
cannot be accepted.
16. When the petitioners purchased the
property in auction under section 29 of the
SFC Act, the Act, 2003 was in force.
Therefore, when the sale was made subject to
the Government Resolution dated 07.02.2004,
it is respondent no.1 GSFC is liable to make
the payment of outstanding dues of the
electricity of M/s. Vaishnav Fabrics Pvt.
Ltd. on pro-rata basis from the sale
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consideration realised and the petitioners
cannot be saddled with the liability to make
the payment of outstanding dues, if any.
Moreover, communication dated 16.07.2022 of
respondent no.3 demanding Rs. 17 lakhs plus
overdue charges and interest which is not
quantified is per-se illegal and arbitrary
inasmuch as such demand for giving new
connection to the petitioners is not tenable
in view of the facts of the case that
respondent no.1-GSFC has paid Rs. 1,16,000/-
on pro-rata basis out of sale consideration
to GUVNL, the parent company of respondent
no.3, which is never questioned by respondent
no.3 at any point of time. Therefore,
respondent nos.3 and 4 are estopped from
claiming any amount from the petitioners
towards outstanding dues of M/s. Vaishnav
Fabrics Pvt. Ltd. relying upon the provisions
of the Act, 2003 or the Supply Code.
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17. Reliance placed on the decision in case
of Telangana State Southern Power
Distribution Company Limited and another
(supra) would not be applicable in facts of
the case inasmuch as the Apex Court was
dealing with a case wherein there was a
Clause no.26 in the auction notice which
stipulated that the authorised officer will
not be responsible for any charge, lien,
encumbrance, property tax dues, electricity
dues or any other dues of the Government,
local authority or anybody in respect of the
property under sale whereas in the facts of
the present case, the auction sale has taken
place subject to the Government Resolutions
dated 07.02.2004 and 21.05.2005 which
provides that the purchaser in auction sale
would not be liable to pay the outstanding
dues of the electricity of the property in
question in auction under section 29 of the
SFC Act and the GSFC would be reqquired to
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apportion the sale consideration amongst
various Government department on pro-rata
basis. GSFC in accordance with such
resolutions has apportioned such amount and
paid Rs. 1,16,000/- in the year 2012.
Therefore, respondent nos. 3 and 4 cannot
demand outstanding dues of the erstwhile
consumer from the petitioners who have
purchased the property in auction under
section 29 of the Act, 2003.
18. Reliance placed by learned advocate Ms.
Bhaya upon the decisions with regard to
alternative remedy as well as applicability
of the Act, 2003 also would be of no help and
would not come in way of the petitioners to
get electric connection for the property
purchased in auction subject to Government
Resolution dated 07.02.2004 because the Act,
2003 provides for repeal and saving whereas
condition of Supply Code is in respect of
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giving connection by licensee whereas
Government Resolution dated 07.02.2004 refers
to sale of property under section 29 of the
SFC Act and dues of the electricity is also
made subject to such sale consideration
received in auction so as to see that the
purchaser of the property in question is not
put to any further liability to make payment
of the outstanding dues of the electricity,
sales tax etc. of the defaulter who failed to
make payment of loan taken from the State
Financial Corporation. As the petitioners
have purchased the property in question in
auction is subject to G.R. dated 07.02.2004,
the sale tax liability or electricity dues
which are attached with the property have
been severed by the resolution passed by the
State Government so as to see that the
purchaser gets the clear title to the
property and enjoy the same after payment of
the highest bid amount in auction conducted
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under section 29 of the SFC Act.
19. In view of the object and purport of the
Government Resolutions to see that the
auction purchaser is not put to any further
liability of payment of outstanding dues of
sales tax or electricity, immunity is granted
to the successful purchaser from payment of
outstanding liability and the purchaser of
the property in auction under section 29 of
the SFC Act is therefore, entitled to get the
benefits of such resolutions of the State
Government. The provisions of the Act, 2003
and the Supply Code would therefore, be
subject to stipulation in such resolutions
and respondent nos. 3 and 4 are bound by such
Government Resolutions.
20. It is pertinent to note that respondent
no. 3 is the State-owned company and any
resolution passed by the State would be
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binding upon it irrespective of the
provisions of the Act and the Supply Code.
The State Government has passed the
resolution in the year 2004 followed by
subsequent resolutions to facilitate the sale
of the properties in auction under section 29
of the SFC Act so as to recover the
outstanding dues of the respondent no.1 -
GSFC which is also a State Government entity
and thereby the liability of outstanding dues
of sales tax, electricity dues are not
fastened upon the successful purchaser of the
property in auction. Respondent no.3
therefore, cannot demand any dues of the
erstwhile consumer from the successful
purchaser in auction of the property.
21. Reliance placed on the decision of the
Apex Court in case of Paschimachal Vidyut
Vitran Nigam Ltd. & others (supra) would also
not be applicable as the same also refers to
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the provisions of the Supply Code, 2006.
However, in facts of the case, respondent
no.3 cannot independently rely upon the
provisions of Act, 2003 or the Supply Code
ignoring Governent Resolution dated
07.02.2004, more particularly, when it has
received pro-rata amount of Rs.1,16,000/-
from the sale consideration paid by the
petitioners to respondent no.1 - GSFC in the
year 2012. The petitioners are therefore,
entitled to get electric connection without
making any further payment to respondent nos.
3 and 4.
22. In view of the foregoing reasons, the
impugned communication dated 16.07.2022 is
quashed and set aside. Respondent nos. 3 and
4 are directed to give electric connection to
the petitioners in accordance with the rules
and as per the provisions of Supply Code
without insisting for payment of outstanding
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dues of M/s. Vaishnav Fabrics Pvt. Ltd. from
the petitioners.
23. The petition therefore succeeds. Rule is
made absolute to the aforesaid extent. No
order as to costs.
(BHARGAV D. KARIA, J)
RAGHUNATH R NAIR
