Gujarat High Court
J.B. Chemicals And ... vs Dakshin Gujarat Vij Company ... on 31 March, 2023
Bench: Biren Vaishnav
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17582 of 2017
With
R/SPECIAL CIVIL APPLICATION NO. 19007 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 1224 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 443 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 8095 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 9160 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 2089 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BIREN VAISHNAV
==========================================================
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 ?
==========================================================
J.B. CHEMICALS AND PHARMACEUTICALS LIMITED
Versus
DAKSHIN GUJARAT VIJ COMPANY LIMITED & 1 other(s)
==========================================================
Appearance:
Petitioners:
MR SAURABH SOPARKAR, SR COUNSEL assisted by MR AMAR N
BHATT(160) for the Petitioner(s) No. 1 in SCA Nos.17582/2017 &
19007/2018
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
MR ABHISHEK M MEHTA (160) for the Petitioner(s) No. 1 in SCA
No.443/2021
MS LILU BHAYA, for the Petitioner(s) No. 1 in SCA Nos.8095/2021,
2089/2022 & 9160/2021
MS.NISHA OZA, ADVOCATE for M/S. WADIA GANDHY & CO. for the
Petitioner(s) No. 1 in SCA No.1224/2019
Respondents:
MS LILU K BHAYA(1705) for the Respondent(s) No. 1 in SCA
Nos.19007/2018, 1224/2019, 17582/2017, 443/2021
MR NACHIKET D MEHTA, for the Respondent(s) No. 1 in SCA
No.8095/2021
MR KAUSHAL H PATEL, for the Respondent(s) No. 1 in SCA
Nos.9160/2021 & 2089/2022
MR ANAL S SHAH, for the Respondent(s) No. 2 - 3 in SCA
No.443/2021
==========================================================
CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
Date : 31/03/2023
1. All these petitions raise a common question -
Whether a distribution licensee can compel a
consumer of electricity who has separate connections
as an HT Consumer can be compelled to merge his
connections as one by operation of Clause 4.1.17 and/
or Clause 4.28 of the Electricity Code, 2005. The
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
other consequential question in addition to this that
arises in some petitions is whether it is open for the
Electricity Company to issue notices for payment of
tariff on the basis of consumption of energy
calculated as if merger is in force and assess amounts
beyond a period of three years.
2. Facts of each Special Civil Application are set out
as under:
Special Civil Application No. 17582 of 2017
2.1 Prayers in the petition read as under:
(A) Issue writ of certiorari and/or any other
appropriate writ, order or direction and quash
and set aside the bills at Annexure A and B and
the order of the respondent No. 2 at Annexure -
H and further command the respondent No. 1 to
complete the merger of electric connection No.
39255 with 39222 within such time as the
Hon'ble Court may deem appropriate and
restrain the respondent No. 1 from raising
supplementary bills.
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(AA) Direct the respondent No. 1 to refund to the
petitioner an amount of Rs.73,84,132.12 +
8,66,689.10 totalling to Rs. 82,50,821.22 along
with interest @ 13% from the date of payment of
the same till realization.
(III) Quash and set aside the supplementary bill
from coercively recovering any amount in
respect of the supplementary bill at Annexure V.
(IV) Command the respondent No. 1 to merge of
electric connections Nos. 39255 and 39222
expeditiously and within such time as the
Hon'ble Court may deem appropriate and further
restrain the respondent No.1 from raising any
supplementary bills in respect of electric
connection No. 39255, 39222 and 40744 on the
grounds of non-merger thereof.
2.2 Facts as per the petition are as under:
2.3 The petitioner was allotted plot no. 129/a in
Gujarat Industrial Development Corporation (GIDC),
Ankleshwar. Similarly, for the purpose of Unique
Pharmaceuticals Ltd. (Unique) and IFIUNIK
Pharmaceuticals Ltd. (IFIUNIK), were allotted plots
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no. 128/1 and 128/1/1 respectively by GIDC,
Ankleshwar. the erstwhile Gujarat Electricity Board
(GEB) granted 3 electric connections bearing
connection nos. 39222, 39255 and 39271 to the
petitioners Unique and IFIUNIK respectively. the
said companies were carrying on business separately
until November 2000.
2.4 On 08.11.2000, the Bombay High Court passed
an order in Company Petition No. 869 of 2000
whereby Unique and IFIUNIK were ordered to be
merged into the petitioner. Pursuant to the merger
the connection nos.39222 and 39255 were
transferred in the name of the petitioner.
2.5 On 22.01.2008, the petitioner vide its letter
requested the respondent no. 1 to discontinue electric
connection no. 39271. On 09.02.2011, the petitioner
requested for a new connection for plot no. 128/1/1
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and the respondent no. 1 granted new connection no.
40744 for the said plot no. 128/1/1.
2.6 The respondent no. 1 for the first time vide
letters dated 07.03.2014 and 21.04.2014 informed the
petitioner inter alia asking it to merge all the three
connections into one connection. the petitioner relied
on clause 4.1.17 of the Electricity Supply Code, 2005.
2.7 On 07.05.2014, the petitioner replied to the said
letters dated 07/03/2014 and 21/04/2014 to the
respondent No.1 interalia pointing out that the said
clause 4.1.17 of the Electricity Supply Code, 2005
was not applicable to the petitioner. the said letter
dated 07/05/2014 of the petitioner was not replied to
by the respondent No.1.
2.8 On 24.09.2015, the Electricity Supply Code,
2015 came into force wherein clause 4.28 was akin to
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clause 4.1.17 of the Electricity Supply Code, 2005.
2.9 On 06.01.2016 and 25.01.2017, the respondent
No.1 carried out inspection of all the three
connections of the petitioner.
2.10 On 02.02.2017, the respondent No.1 sent a letter
to the petitioner calling upon the petitioner to merge
the three connections within 7 days. the said letter
was received by the petitioner on 10/02/2017.
2.11 On 15.02.2017, the petitioner replied to the said
letter dated 02/02/2017 inter alia stating that, if
necessary, the petitioner is willing to merge the three
connections and requested for 4 months' time to
undertake necessary electric works for merger of the
three connections. Respondent No.1 wrote letters to
the petitioner to merge the connections.
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2.12 On 18.02.2017, the petitioner replied to the
letter dated 15/02/2017 of the respondent No.1 inter
alia pointing out about the letter dated 15/02/2017 of
the petitioner what was stated by the petitioner in its
letter dated 15/02/2017 was reiterated.
2.13 On 11.03.2017, the petitioner informed
Respondent No.1 inter-alia that pursuant to the oral
discussions, the petitioner will surrender connection
No.40744 and requested the respondent No.1 to do
the needful to merge connection No.39255 into
39222.
2.14 On 03.04.2017 the petitioner submitted
documents for merger. the petitioner incurred
expenses of Rs. 25 Lakhs.
2.15 On 15.04.2017, petitioner's letter to the
respondent inter alia to give credit of security deposit
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for connection no. 40744 & 39255.
2.16 On 16.05.2017, the respondent No.1 all of a
sudden issued a bill for Rs.73,84,132,12 which is
annexed at Annexure-A based on the ground that the
petitioner has failed to merge three connections into
one.
2.17 On 24.05.2017, the petitioner under protest paid
the amount of Rs.73,84,132.12 and raised objections
to the bill dated 16/05/2017.
2.18 On 06.07.2017, the petitioner filed a Complaint
before the respondent No.2 inter- alia for quashing of
the bill dated 16/5/2017.
2.19 On 11.08.2017, the respondent No.2's order
inter-alia holding that the bill dated 16/05/2017 of the
respondent No.1 should be revised with effect from
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24/09/2015 i.e. the date on which the Electricity
Supply Code, 2015 came into force. In the same
month, the respondent No.1 mechanically issued a
Supplementary Bill demanding Rs. 8,66,689/- from the
petitioner.
2.20 On 11.09.2017, the petitioner made further
payment of Rs. 8,66,689/- under protest.
Special Civil Application No. 19007 of 2018
3. Prayers in the petition read as under:
"(AA) issue writ of certiorari and/or any
other appropriate writ, order or direction and
command the respondent to grant additional
power for its connection No.39725 as
requested by the petitioner at Annexure-E1
hereto forthwith and without insisting for
payment of supplementary bill at Annexure-A
hereto.
(i) stay the implementation, operation and
execution of the Bill at Annexure-A hereto;
(ii) restrain the respondent No.1 from taking
any coercive steps in respect of the electricity
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connection Nos.39415 and 39416 of the
petitioner and further restrain the respondent
No.1 from raising any supplementary bills; and
(iii) Direct the respondent to merge connection
No.39664 into 39415 forthwith and without
insisting for payment of the demand at
Annexure A as a precondition for such merger.
B(iv) Direct the respondent to grant
additional power for its connection No.39725
as requested by the petitioner at Annexure-E1
hereto forthwith and without insisting for
payment of supplementary bill at Annexure-A
hereto"
3.1 Facts as per the petition are as under:
3.2 On 05.10.1989, the petitioner was allotted Plot
No.215 and 216 at GIDC, Panoli.
3.3 On 09.11.1990, the petitioner was allotted Plot
No.217 at GIDC, Panoli.
3.4 On 10.01.1993, the petitioner was allotted Plot
No.218 and 219 at GIDC, Panoli.
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3.5 On 30.06.1993, the petitioner was allotted Plot
No.308 to 310 at GIDC, Panoli.
3.6 All the aforementioned plots at GIDC, Panoli are
being used by the petitioner to manufacture tablets,
liquids and capsules. Erstwhile GEB granted
connection No. 39415 for the said Plot Nos. 215 to
219, 309 and 310 and the same has been existing in
the name of the petitioner since 1992.For the purpose
of manufacturing injectable ointment the petitioner
set up a separate division called Unique
Pharmaceutical Laboratories (for short "Unique").
3.7 On 15.02.1997, Unique was allotted Plot Nos.
304 and 305 to at GIDC, Panoli.
3.8 On 07.04.1998, Plot Nos.306 and 308 were
transferred in the name of Unique.
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3.9 On 23.11.2000, Unique was declared as a 100 %
EOU by the office of the Development Commissioner,
Kandla Free Trade Zone, Government of India vide
letter No.KFTZ/467/2000-01.
3.10 On 08.09.2001, Unique was granted Connection
No.39664 for Plot No. 304 to 307. the said connection
No.39664 has been existing in the name of the
Unique.
3.11 On 28.01.2005, Electricity Code came into force.
Clause 4.1.17 provided for merger of 2 connections in
the name of one entity.
3.12 On 15.10.2010, Guideline of GUVNL provided
that in case of an EOU there was no restriction for
releasing the second connection in the same
name/same owner.
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3.13 On 15.04.2015, Unique exited from 100% EOU on
14.04.2015.
3.14 On 24.09.2015, Electricity Code 2005 was
replaced by a new Code.
3.15 On 23.10.2018, the respondent issued a notice to
the petitioner inter alia informing the petitioner that
the two connections ought to have been merged in
view of Clause 4.28 of the Electricity Supply Code,
2015 and called for proof for requirement of separate
connection.
3.16 On 19.11.2018, the petitioner addressed a letter
to the respondent inter alia stating that the two
divisions were required to be treated as separate
entities and submitted several documents in support
thereof. the petitioner also informed that the
petitioner is willing to merge the said two connections
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and that the petitioner was ready for discontinuing
Connection No.39664 while continuing connection
39415 and requested the respondent to carry out the
procedure for merger of connections.
3.17 On 29.11.2018, without considering the requests
and representation of the petitioner, the respondent
decided to issue supplementary bill claiming Rs.
2,81,51,934.15/- from the petitioner with
retrospective effect from 2005 on the assumption that
the petitioner was required to and has failed to merge
electric connections into one connection.
3.18 On 10.12.2018, the interim relief was granted
by this Hon'ble Court in this SCA on condition that
the petitioner deposits an amount of Rs.
1,20,00,000/-. Which the petitioner has deposited.
Special Civil Application No. 1224 of 2019
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4. The prayer in this petition is to quash and set
aside the impugned notice dated 09.10.2018. By the
aforesaid notice, the petitioner was informed by the
respondent Electricity Company that while checking
the installation and the location, there was breach of
Clause 4.2.8 of their Supply Code 2015 and therefore,
the petitioner was called upon to prove that the
connections in the name of M/s.Agropack and
M/s.Trimurty Corporation based on the documents for
different legal entities so as to be eligible for separate
connections. the case of the petitioners was that the
petitioner was carrying on manufacturing activities at
plot nos.226/2, 227/1 and 226/1 at Panoli, GIDC,
Ankleshwar. That, they were different legal entities
entitled to separate connections.
Special Civil Application No. 443 of 2021
5. The prayers in the petition are to set aside the
notice dated 18.12.2014 issued by the Executive
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Engineer (Rural) Paschim Gujarat Vij Company,
Bhavnagar, order dated 15.07.2015 passed by the
CGRF rejecting the challenge to this notice, challenge
to the order dated 17.10.2015 and 19.02.2016 passed
by the Electricity Ombudsman confirming the order of
the CGRF and order dated 21.12.2019 passed by
GERC dismissing the petition and confirming the
merger notice issued by the Electricity Company.
Also under challenge is the bill dated 30.03.2020 for
recovery of an amount of Rs.45,33,613.45 and
disconnection notice.
5.1 It is the case of the petitioner that it established
its first unit by the name of Acrysil Ltd. which was
provided with an HT connection No.23140 with a
contract demand of 200 KVA which was released on
14.08.1989 by the then Gujarat Electricity Board. the
petitioner, in view of the benefits provided under the
Foreign Trade Policy of 2004-2009, decided to
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establish a separate unit i.e. an Export Oriented Unit
(EOU), which unit was to specifically cater to the
goods manufactured and to be exported out of the
country. the EOU of the petitioner which was by the
name of Acrysil Limited (EOU) was established as per
the requirements of the EOU Rules, which was
supposed to be a separate bonded warehouse and to
be an independent area having an independent entry
or exit from a public area and having no other entry
or exit. A separate Excise Registration no. of Acrysil
Ltd. and Acrysil Ltd. (EOU) and a separate
demarcation was provided. Application was made to
erstwhile GEB for release of separate connection in
the name of EOU unit.
5.2 A circular dated 28.01.2005 was issued by
erstwhile GEB granting permission for issuance of
Separate Connection to two separately established
entities, though adjacent to each other. the Circular
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provides the requirements of releasing two
connections which includes showing separate sales
tax number, rent deed as also separate premises
demarcating wall, etc. On 31.05.2005, GERC
Regulation no. 11 of 2005 issued by the respondent
no. 01. On 15.09.2010, Respondent No.6 - GUVNL
issued circular pointing out that as per GERC Supply
Code, "two connections can be released in the same
name / same owner in two separate premises
provided the condition of being separate premises are
fulfilled and there should be clear-cut physical
demarcation since separate connection in separate
premises may be required for various reasons as they
are separate profit centres with different products
and one unit is EOU whereas other is not EOU.
5.3 On 18.12.2014, the petitioner received notice
from Respondent no. 05 - PGVCL for the merger of
electricity connection No.23140 and No.23715. the
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petitioner challenged the notice dated 18.12.2014
before the respondent no. 04 - CGRF by way of case
no. 06/15-16 but the same was rejected by way of
order dated 15.07.2015. The petitioner challenged the
aforesaid order dated 15.07.2015 before Respondent
no. 03- Ombudsman vide case no. 103/2015 but the
same was rejected. The petitioner preferred a review
petition before Ombudsman and the same also came
to be rejected by stating that Clause 4.1.17 was under
consideration before this Hon'ble Court and that the
interpretation of the same can only be given by the
respondent No.2 GERC and that the respondent No.3
is not the competent authority to interpret the said
provision notified by GERC. The petitioner thereafter
approached the respondent no. 02 - GERC vide
petition no. 1566 of 2016 which came to be disposed
of.
5.4 On 30.03.2020, pursuant to order dated
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21.12.2019, a Supplementary bill issued by the
respondent no. 05- PGVCL for recovery of amount of
Rs. 45,33,613.45. thereafter, on 26.05.2020, notice
issued by Respondent no. 05 - PGVCL threatening
disconnection in case of non-payment of the said
amount. On 30.05.2020, the amount of Rs.
45,33,613.45/- was paid by the petitioner under
protest to the respondent no.5.
Special Civil Application No. 2089 of 2022
6. In this petition, Dakshin Gujarat Vij Company has
prayed for quashing and setting aside the order dated
23.12.2019 passed by the Electricity Ombudsman in
Case No.97 of 2019 insofar as it has not permitted the
petitioner to issue bill and recover from the
respondent no. 1 on account of non-merging of two
HT connections from the date of relief of the second
connection. Though the Electricity Ombudsman held
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that the action of the company of merger of load of
both the connections and issuing a single energy bill
was valid in light of the decision in Letters Patent
Appeal No. 1483 of 2013, it prevented the company
from recovering the amounts.
6.1 The case of the respondent no.1 before the
Electricity Ombudsman was that it was having two
connections released in the year 1995 and 2002
respectively. Both were in separate plots being plot
numbers 57 and 58 having a separate independent
legal status. Action of merger by operation of Clause
4.1.17 of the Electricity Code, 2005 was challenged
and also the retrospective operation thereof.
Special Civil Application No. 8095 of 2021
7. The prayer on behalf of a petition at the hands of
the Electricity Company was to quash and set aside
the order dated 23.12.2019 passed by the Electricity
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Ombudsman in Case No. 98 of 2019 directing the
petitioner to cancel the bill for Rs.9,65,584.75 ps.
Special Civil Application No. 9160 of 2021
8. The prayer here too, on behalf of the Electricity
Company was to quash and set aside the order dated
23.12.2019 in Case No. 99 of 2019 directing the
petitioner to cancel the supplementary bill for
Rs.37,35,548.05 ps. In all these three petitions,
namely Special Civil Application No. 2089 of 2022,
8095 of 2021 and 9160 of 2021, the Electricity
Company's challenge was to the three orders of the
Electricity Ombudsman though accepting the legality
of merger notices but the bills were set aside on the
ground of they being for retrospective periods.
9. In Special Civil Application No.17582 of 2017
and Special Civil Application No. 19007 of 2018, Shri
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S.N. Soparkar, learned Senior Advocate appearing
with Mr. Amar Bhatt, learned advocate for the
petitioners would submit that as far as though ratio
on the question of interpretation of clause 4.17 and
clause 4.28 of settled in view of the Division Bench
decision, the demand raised in the bills is not tenable
for the following reasons:
(i) In response to the respondent No. 1's letter
dated 21.01.2014, the petitioner already made a
representation dated 07.05.2014 to which
nothing was heard from respondent no. 1.
(ii) Even during inspection between 2014 and
2017, the petitioner was never informed
regarding requirement of merger.
(iii) It is submitted that in view of (i) and (ii)
above, the petitioner was entitled to have
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legitimate expectation that the representation of
the petitioner dated 07.05.2014 was accepted by
the respondent No. 1. On the ground of
promissory estoppel and doctrine of legitimate
expectation, the respondent No. 1 is not entitled
to recover the amount of the bills in question.
(iv) Under the threat of disconnection, the
petitioner made payment under protest and
therefore the same is liable to be refunded.
Even on the principle of unjust enrichment the
respondent is liable to refund the amount.
(v) Without prejudice to what is stated above, it
is submitted that as per the order of the
respondent no. 1 dated 11.08.2017, the
respondent was required to issue a revised bill
with effect from 24.09.2015. No such bill is
received from the respondent and therefore the
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bills are liable to be quashed and set aside.
9.1 So far as Special Civil Application No.19007 of
2018 is concerned, Shri S.N. Soparkar, learned
Senior Advocate would submit that from 2005 to
2015, the petitioner was EOU and therefore the
clause for merger would not apply to the petitioner
under the guidelines dated 15.09.2010 and that the
bill raising demand from 2005 is arbitrary and
contrary to the guideline of GUVNL.
9.2 Mr. Soparkar would submit that even otherwise
the said bill contains demand from 2005 which is
clearly time barred. the demand raised in the bill is
on an erroneous assumption that the connections
were required to be merged. the demand itself being
wrong, the amount of bill is also not recoverable
under Section 56(2) of Electricity Act, 2003.
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9.3 Mr. Soparkar, learned Senior Advocate, without
prejudice would submit that as per the decision of
CGRF in Special Civil Application No. 17852 of 2017,
the CGRF has directed the respondent herein to
revise the bill from 24.09.2015 i.e. the date on which
the GERC Code came into force. the said decision is
not challenged by the respondent and that at any rate
the recovery cannot be affected from April 2005 when
the clause 4.28 of the new Code is notified in
September 2015 and the amount paid by the
petitioner is liable to be refunded.
10. In Special Civil Application No. 443 of 2021, Mr.
Abhishek Mehta, learned counsel for the petitioners
would submit that both the units i.e. petitioner no. 1
and petitioner no. 2 were established on separate
dates. the petitioner no. 1 unit was catering to the
domestic market whereas the petitioner no. 2 was
established as an EOU solely for the purposes of
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exports. there was a clearly demarcated boundary
between the two establishments. Even otherwise the
EOU unit was established for the purposes of export
and the very requirement of EOU Rules is that the
unit has to be run in form of a bonded warehouse and
having a boundary with only one entry and exit. the
two premises are distinct and separate and Excise
registration is also separate.
10.1 Mr. Mehta submitted that Clause 4.1.17 of the
GERC Supply Code is to be read in the facts of the
case and not de hors the facts of the case. Clause
4.1.17 provides for a separate connection i.e. two
separate meters if the two units have separate legal
entity for which documents "such as" separate
income tax, sales tax, ration card, etc. are to be
considered. the list is not limited but exhaustive and
the intention is to see to it the two units for which two
separate connections are being provided are having
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separate legal identity like in the present case one is
EOU unit registered under the Foreign Trade Policy
2004-2009 in which EOU units are required to be set
up in the country which are separately governed by
EOU Rules.
10.2 Mr. Mehta would submit that the respondent
No.4 erred in ignoring the earlier Circular dated
28.01.2005 which was in force when the connection
was released. As per the condition no. 1.6 of the
Circular dated 28.01.2005, in order to release
separate connection to adjoining premises, there is a
pre-requirement of a Separate Main entrance which
is duly fulfilled in the case of the petitioner.
10.3 Mr. Mehta would further submit that the
respondent No.4 erred in seeking to apply the order
of this Court in Special Civil Application No.15262 of
2012 in the case of Modern Denim Ltd. Vs. UGVCL,
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when the facts of the aforesaid case were completely
different to the facts of the petitioners' case.
10.4 Mr. Mehta would submit that the conduct of the
respondents more particularly of the respondent No.5
in issuing merger notice in the year 2015 for merging
connections of the petitioners which have been
separate since the year 2005 amounts to gross
illegality and is hit by vice of delay and laches and is
an act of illegality which amounts to causing
prejudice to the petitioners. That the word merger is
not defined anywhere in the Electricity Code or the
Electricity Act and the respondent in fact had no
power to issue directions to merge two separate and
distinct connections.
10.5 It is Mr. Mehta's submission that the respondent
authorities ought to have appreciated that the EOU
unit of the petitioner was, by legal fiction, a separate
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entity and provided the status of a separate entity in
view of the having been established under the
provisions of the Foreign Trade policy prevalent the
relevant point of time as a "EOU". This itself was
sufficient for the authorities to hold that the
petitioner was a separate and distinct entity and
therefor the requirement of two connections.
10.6 The bills/ notice issued by the respondent No.5
PGVCL towards differential charges being an outcome
of the illegality on the part of the respondent No.5
PGVCL and the said demand being unsustainable in
law and violative of Article 14 and 19(1)(g) of the
Constitution of India, are required to be quashed and
set aside.
10.7 Mr. Mehta submitted that the Notifications of the
GERC for that matter of fact, the relevant clause
4.1.17 or other equivalent clauses in subsequent
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notifications do not in any manner state that the 2 nd
connection cannot be granted. they merely lay down
that 2nd connection can be granted only under certain
circumstances and not otherwise. Whether the 2 nd
connection can be granted or was rightly or wrongly
granted has to be considered as per the facts of the
case and for which the judgments relied upon by the
respondents is inconsequential as the said judgments
consider the clause of the Notifications as per the
facts of the case and therefore, the said judgments
cannot be applied in toto. Considering the facts of
the present case, it is evident that it is governed by
the Circular dated 15.09.2010 of respondent GUVNL
in respect of 2nd connection for EOU unit. the
Notification of the GERC lays down a general
proposition regarding release of two connections
which can be released on case-to-case basis
depending on the considered facts. In the present
case, the two units of the petitioner are separate
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
entities and have been rightly granted separate
connections and therefore, the merger notice which is
impugned in the present petition as well as other
impugned orders are required to be set aside and the
impugned notice / bill dated 30.03.2020 for recovery
of an amount of Rs.45,33,613.45 and disconnection
notice are required to be set aside and the amount
which has been deposited under protest is required to
be refunded consequentially.
11. Ms. Lilu Bhaya, learned advocate in support of
her submissions as a respondent in the petitions
challenging the notices of merger and where the
petitioner company has had to challenge the order of
the Electricity Ombudsman would make common
submissions as under:
(a) In Special Civil Application No. 464 of 2013 in
case of Aarvee Denims & Exports Ltd. Vs.
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
UGVCL decided on 12.8.2013 identical issue had
come up before this Court wherein amalgamation
dated 7.11.2012 and 8.10.2012 were challenged.
It was specific case of the petitioner therein that
they were having two separate electric
connections but in view of Clause No.4.1.17, the
Electricity Company in absence of separate legal
entity having separate Income-tax number, Sales-
tax number, ration card number, rent receipt had
to amalgamate the units. This was on the basis of
audit remarks that the bill was issued. This Court
in the said judgment has referred to various
provisions of Electricity Act,2003 and in para-10
referred to various definitions under the Act and
considering tariff loss which has been worked
out as mentioned in Para-12 if individual
metering demand charges calculation for single
meter which has been amalgamated and after
merging both the figures have been worked out
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
to show that what will be the loss of revenue if in
one premises two connections are allowed. the
Court came to the conclusion that unless they
show separate entity as provided under the Act,
they have to merge the connections as
mentioned in Para-13 & 14. Licenses issued
under Factories Act and Excise Act have no
bearing qua supply of electricity under the
Electricity Act, 2003. the said judgment has been
confirmed by the Division Bench in Letters
Patent Appeal No.1483 of 2013 decided on
21.6.2019.
(b) The same view has been taken in Special Civil
Applications No.15262 of 2012 and 15263 of
2012 in case of Modern Denim Ltd. Vs. UGVCL
decided on 12.8.2013. the said judgment was
confirmed in Letters Patent Appeal No.1069 of
2013 with Letters Patent Appeal No.1068/2013
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
decided on 17.9.2013, considering the
submissions of the consumer that they were
having connections since 1990 and they were
enjoying connections in different names.
(c) In Special Civil Application No.15105 of 2012
in case of Lakhani Filaments Pvt. Ltd. Vs. DGVCL
decided on 8.4.2015, this Court has considered
in Para-6 retrospective effect that if the
connection is released prior to 2005 that the
Company can recover the dues. In Paras-21.2 &
22, this Court has specifically dealt with the
issue whether electricity company is justified in
raising the bill and claiming bill for the past
period prior to issuance of notice and connection
and action of clubbing is justified or not. In Para-
23, the Court came to the conclusion that it does
not have any retrospective effect. This Court has
in detail interpreted Clauses No.4.1.7 and 3.5.1
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of Supply Code.
(d) Regarding the period, reliance is placed on
the judgment of Hon'ble Supreme Court reported
in 2021(11) Scale 743 in case of Prem Cottex
Vs. Uttar Haryana Bijlee Vitran Nigam Ltd.
An identical issue arose that dues can be
recovered from the date of notice or prior to that.
the Apex Court has considered the provisions of
Sec.56. In Para-16 of the said judgment, the
Apex Court has interpreted the words first due
means the date on which the bill is raised. In
Para-17, the Hon'ble Court also distinguished
Rahamatullah Khan and came to the conclusion
in Para-18 that it was distinguishable on facts
and finally in Para-23 the Hon'ble Court has
interpreted the sub-section(1) and sub-section(2)
of Sec.56. It has been held that the bottom line of
Sub section (1) is the negligence of any person to
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pay any charge for electricity. Subsection (1)
starts with the words "where any person neglects
to pay any charge for electricity or any some
other than a charge for electricity due from him".
In para-24 it is held that Subsection (2) uses the
words "no sum due from any consumer under
this Section". therefore, the bar under Sub-
section (2) is relatable to the sum due under
Section 56. This naturally takes us to Subsection
(1) which deals specifically with the negligence
on the part of a person to pay any charge for
electricity or any sum other than a charge for
electricity. What is covered by section 56, under
subsection (1), is the negligence on the part of a
person to pay for electricity and not anything
else nor any negligence on the part of the
licensee. It is concluded that consequently, any
claim so made by a licensee after the detection of
their mistake, may not fall within the mischief,
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
namely, "no sum due from any consumer under
this Section", appearing in Subsection (2). the
Apex Court held that the matter can be examined
from another angle as well. Sub section (1) of
Section 56 as discussed above, deals with the
disconnection of electric supply if any person
"neglects to pay any charge for electricity". the
question of neglect to pay would arise only after
a demand is raised by the licensee. If the demand
is not raised, there is no occasion for a consumer
to neglect to pay any charge for electricity. Sub-
section (2) of Section 56 has a nonobstante
clause with respect to what is contained in any
other law, regarding the right to recover
including the right to disconnect. therefore, if the
licensee has not raised any bill, there can be no
negligence on the part of the consumer to pay
the bill and consequently the period of limitation
prescribed under Subsection (2) will not start
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running. So long as limitation has not started
running, the bar for recovery and disconnection
will not come into effect. Hence the decision in
Rahamatullah Khan and Section 56(2) will not
come to the rescue of the appellant.
(e) As per the submission of Ms. Bhaya, this is
how the Hon'ble Supreme Court has confirmed
that the law of limitation will not come in the way
of electricity company and interpreted Sec.56(1)
& 56(2) which does not leave any room that
whether the electricity company can recover the
dues or nor. therefore right of recovery is not
limited for a period of two years or three years.
Once the supplementary bill is raised the amount
has become first due and therefore the
contention that it is after 17 years does not have
any bearing. there is continuous violation of tariff
and it has been held by the Hon'ble Supreme
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Court while deciding the issue in case of Prem
Cottex, Lakhani Filaments Pvt. Ltd. and Special
Civil Application No.10734 of 2017 filed by
Gujarat Shalimar Hotels Vs. State of Gujarat &
ors. decided on 10.10.2018.
(f) In the affidavit in reply filed by the
Electricity Company, it was their case that the
ownership of all connections was one. Merely
because the plots were adjacent to each other,
they cannot be eligible for separate connections.
the petitioner had failed to produce any
documents such as PAN card, income tax returns
to satisfy the authority that they were separate
legal entities.
12. Mr. Nachiketa Mehta and Mr. Kaushal Patel,
learned advocates for the respondents in the petitions
at the hand of the Electricity Company would submit
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that admittedly there were two separate connections
released at two different points of time. these
connections were issued after examining all the
documents. Show-cause notices for merger were bad.
the petitioners have acted in contravention of clause
4.76 which provides for re-classification of the
consumer category. Even clause 3.51 of the code
only gives power to the licensee to reclassify the
consumers but have no right to issue any
supplementary bills. there was a period of limitation
and it cannot be the case of the company that they
had no knowledge. the issue was that the
supplementary bill was delayed and the licensee
cannot take shelter of bona-fide mistakes. the
question of issuing a supplementary bill has never
been examined by this court in its judgement in the
case of Lakhani Filaments Pvt. Ltd. (supra).
13. Having considered the submissions made by the
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respective counsels, the answer to the question
whether notices to the respective consumers
compelling them to merge two or more separate
connections though in the perception of such
consumers they had distinct and unique identity
individually and therefore were entitled to separate
connections is what is at the heart of the controversy.
13.1 Clauses 4.1.17, 4.28 and 3.51 of the Electricity
Code, 2005 and Section 56 of the Indian Electricity
Act, 2003 have been a matter of deliberation even on
earlier occasions before this court in a similar set of
facts and circumstances. the distribution licensee i.e.
the respective electricity companies had issued
notices to the consumers invoking clauses 4.1.17 and/
or 4.28 of the GERC Supply Code, 2005 taking a
stand that they will not provide more than one
connection/meter for one premises. the consumers
opting for second meter will have to produce proof of
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
they being separate legal entities such s documents of
separate income tax no./ pan card/sales tax no./ ration
card and rent or lease agreement. the case of the
consumers was that their initial connections were
granted in different plots at respective different
times. the premises were separate, either divided
through a wall or separate buildings. It was their
case that separate GPCB consents, separate licences
under excise laws were issued.
13.2 In the case of the petitioners of Special Civil
Application No. 443 of 2021, it was their case that the
two units were separate, one catering to a domestic
market and the other an EOU which was completely
export oriented unit. There was therefore no question
of merging such connections. Moreover, in Special
Civil Application No. 443 of 2021 reliance was also
placed on order/circular dated 15.09.2010 where two
connections can be released in the same name in two
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
separate premises where there is a clear physical
demarcation as of their case.
13.3 In the petitions at the hands of the company, the
only question that was held against them was on the
aspect of retrospective application of clauses 4.1.17
and 4.28 in light of clause 3.51 of the code and the
consequential recovery with retrospective effect
beyond a period of three years.
14. In the case of Aarve Denims and Exports Ltd
vs. Uttar Gujarat Vij Company Ltd. in Special
Civil Application No. 464 of 2013, this court was
considering the action of the Electricity Company
which wanted the consumers to merge the electric
connections. the Electricity company's case was that
in accordance with clause 4.1.17 of the Electricity
Code, 2005, in absence of any document that all the
entities were different and merely because of a
C/SCA/17582/2017 CAV JUDGMENT DATED: 31/03/2023
communication addressed by the CAG denial of two
separate connections was arbitrary. the court found
that mere licence in the form of excise or sales tax by
itself would not show any separate existence in law as
required for supply of electricity, fixing of tariff and
charges for consumption of electricity. the court held
as under:
"10. Upon consideration of the submissions
advanced by learned Counsels appearing for both
the parties and on perusal of the records of the
case, the following definitions of the Act, 2003 as
also relevant definitions under Regulations, 2011
are necessary to be reproduced :-
PART I
PRELIMINARY
2. Definitions. -
(13) Company means a company formed and
registered under the Companies Act, 1956
(1 of 1956) and includes any body corporate
under a Central, State or Provincial Act;
(15) Consumer means any person who is
supplied with electricity for his own use by a
licensee or the Government or by any other
person engaged in the business of supplying
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electricity to the public under this Act or any
other law for the time being in force and
includes any person whose premises are for
the time being connected for the purpose of
receiving electricity with the works of a
licensee, the government or such other
person, as the case may be;
(47) open access means the non-
discriminatory provision for the use of
transmission lines or distribution system or
associated facilities with such lines or
system by any licensee or consumer or a
person engaged in generation in accordance
with the regulations specified by the
Appropriate Commission;
(49) person shall include any company or
body corporate or association or body of
individuals, whether incorporated or not, or
artificial juridical person;
(51) premises includes any land, building or
structure;
PART VII
TARIFF
61. Tariff regulations. - the Appropriate
Commission shall, subject to the provisions
of this Act, specify the terms and conditions
for the determination of tariff, and in doing
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so, shall be guided by the following,
namely :-
(a) The principles and methodologies
specified by the Central Commission for
determination of the tariff applicable to
generating companies and transmission
licensees;
(b) The generation, transmission,
distribution and supply of electricity are
conducted on commercial principles;
(c) The factors which would encourage
competition, efficiency, economical use of
the resources, good performance and
optimum investments;
(d) Safeguarding of consumers' interest and
at the same time, recovery of the cost of
electricity in a reasonable manner;
(e) The principles rewarding efficiency in
performance;
(f) Multi-year tariff principles;
[(g) That the tariff progressively reflects the
cost of supply of electricity and also reduces
cross-subsidies in the manner specified by
the Appropriate Commission;]
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(h) The promotion of co-generation and
generation of electricity from renewable
sources of energy;
(i) The National Electricity Policy and tariff
policy:
Provided that the terms and conditions
for determination of tariff under the
Electricity (Supply) Act, 1948 (54 of
1948), the Electricity Regulatory
Commissions Act, 1998 (14 of 1998)
and the enactments specified in the
Schedule as they stood immediately
before the appointed date, shall
continue to apply for a period of one
year or until the terms and conditions
for tariff are specified under this
section, whichever is earlier.
REGULATIONS, 2011
CHAPTER 1
PRELIMINARY
Definitions
Open Access means the non-discriminatory
provision for the use of transmission lines or
distribution system or associated facilities
with such lines or system by any licensee or
consumer or a person engaged in generation
in accordance with these regulations and
includes long-term access, medium-term
open access and short-term open access.
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Open access customer means a consumer,
trader, distribution licensee or a generating
company who has been granted open access
under these regulations.
CHAPTER 4
APPLICATION PROCEDURE AND
APPROVAL
12. Application procedure for Open
Access
(1) All applications for open access shall be
made in the prescribed Form and submitted
to the Nodal agency in accordance with
these regulations.
(2) All applicants seeking open access shall
submit an undertaking of not having entered
into Power purchase agreement (PPA) or
any other bilateral agreement with more
than one person for the capacity (quantum
of power) for which open access is sought.
(3) Subject to the provisions of these
regulations, the Nodal agency, Application
fee, Documents to accompany the
application and time frame for disposal of
application shall be specified in the
following Tables:
11.That a perusal of the above definitions
prescribe what 'open access' is about, who is
eligible and entitled to have 'open access'.
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To find out the answer, one has to see the
definition of 'consumer', defined under
Section 2.(15) of the Act, 2003 which also
includes any person who is supplied with
electricity for his own use by the licensee
and also any person whose premises are for
the time being connected for the purpose of
receiving electricity with the works of a
licensee, the Government or such other
person, as the case may be.
12.If the above definition of 'consumer' is
considered, alongwith Section 2(49) about
definition of a person which includes any
Company or Body Incorporate or Association
or Body of individuals whether incorporated
or not or artificial Juridical person and the
definition of Section 2.(51) about 'premises'
which includes any land, building or
structure, the above definitions if considered
conjointly would establish that electricity is
to be supplied no doubt to premise, but such
premise is to be owned and occupied by a
person, who is also a consumer and having a
separate legal identity.
the above definitions are considered with
the object and purpose of the Act and other
provisions of the Act including
determination of tariffs, functions and duties
cast upon GERC would mean that alongwith
protection of interests of consumers of
electricity, distribution licensees and other
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such licenses, functioning of licensees are
also to be kept in mind, viz. Cost-
effectiveness, competitive profit and
efficiency etc. If a consumer like the
petitioner are allowed to have different
meters and supply of electricity, it would
certainly have effect on the distribution of
electricity and and contracted demand and
also will have bearing on fixation of tariff
and consumption charges. the above fact is
correctly demonstrated by the illustrative
example of demand and consumption
charges in case of single meter and of two
meters by one legal entity.
Formula for calculation of energy bill :-
(A) With individual metering
(1) Demand charge calculation :-
Consume Actual Rate per Total Charges
r no Demand KVA in Rs.
17243 1501 KVA Rs.100 x 500 Rs. 50,000
KVA
Rs.200 x 500 Rs.1,00,000
KVA
Rs.270 x 400 Rs.1,08,000
KVA
Rs.370 x 101 Rs. 37,370
KVA
Total 1501 KVA Rs.2,95,370
Consumer Actual Rate per KVA Total Charges in
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no Demand Rs.
17363 1816 Rs.100 x 500 Rs. 50,000
KVA KVA
Rs.200 x 500 Rs.1,00,000
KVA
Rs.270 x 816 Rs.2,20,320
KVA
Total 1816 KVA Rs.3,70,320
Total of demand charges- Rs.2,95,730 +
Rs.3,70,320 = Rs.6,65,690
(2) Energy charge calculation :-
Consume KWH Rate per Total Charges
r no Drawl KWH in Rs.
17243 831060 Rs.4.20 per Rs.34,90,452
KWH unit
17363 991179 Rs.4.20 per Rs.41,62,951
KWH unit
Total of Energy Charges- Rs.34,90,452 +
Rs.41,62,951 = Rs.76,53,403.
Grand Total of Energy bill
= Demand Charge + Energy Charge
= Rs.6,65,690 + Rs.76,53,403
= Rs.83,19,093/-
(B) With Single meter (After merging) :-
(1) Demand charge calculation :-
Consume Actual Rate per KVA Total Charges
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r no Demand in Rs.
17243 & 3317 Rs.100 x 500 Rs. 50,000
17363 KVA KVA
Rs.200 x 500 Rs.1,00,000
KVA
Rs.270x 2317 Rs.6,25,590
KVA
Total 3317 KVA Rs.7,75,590
(2) Energy charge calculation :-
Consum KWH Rate per Total
er no Drawl KWH Charges in
Rs.
17243 & 1822239 Rs.4.30 per Rs.78,35,628
17363 KWH unit
Grand Total of Energy Bill
Demand charge + Energy charge
= Rs.7,75,590 + Rs.78,35,628
= Rs.86,11,218/-
13.Thus, upon overall consideration of
provisions of the Act, 2003, Rules and
Regulations made therein and Clause
No.4.1.17 of the Code, it certainly envisages
two meters in a case of consumer using
electricity facility shall have to satisfy
conditions enumerated therein which may
not only include separate Income Tax No.,
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PAN Card No., Sales Tax No. but also about
legal entities so defined in the definition of
person and consumer under Section 2.(15)
and 2.(49) of the Act.
14.Thus, contentions raised by learned
Counsel for the petitioner about furnishing
the documents in the form of Licenses
issued under Excise or Factory Act or
similar such Act, have no bearing towards
supply of electricity and the duty cast upon
distribution companies under Section 42 of
the Act. That Audit Report by the
Comptroller and Auditor General of India
was a reminder to the distributing licensees
about practices followed by such a licensee
which was contrary to law and provisions of
the Act, 2003 and the action taken in this
regard rejecting the application of the
petitioner for extra and/or extension and/or
separate meter cannot be said to be in any
manner contrary to law. That order
produced and passed by GERC in which
none of the above provisions was taken care
of and conclusions were drawn on the basis
of separate premises and entitlement of
consumer to have open access by
misreading the provisions of the Act, 2003
and the Regulations, 2011."
14.1 The Division Bench by its CAV judgement dated
21.06.2019 in Letters Patent Appeal No. 1483 of 2013
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confirmed the order of the learned Single Judge.
Paragraph no. 25 of the Division Bench in the appeal
read as under:
"25. We are in total agreement with
the conclusion arrived at by the
learned Single Judge. the appellant
has admittedly not produced any
documents establishing even prima facie
that it is a separate entity and the
respondent electricity company has
rightly acted upon the objections raised
by the Accountant General and if the
interpretation which is put forward by
the appellant is accepted, the same would
also affect the public exchequer at
large. the provisions of Regulation
4.1.17 provides for inbuilt requirements
which are absent in the case on hand
and what is decided by the GERC is entirely
on different set of circumstances and
provisions of the Act and Regulations.
Apart from the dictionary meaning of
"one premises" what is to be seen is in
light of definition of word "consumer" as
defined under the Electricity Act, 2003
and the requirements of Regulation
4.1.17 and considering the relevant
provisions, the learned Single Judge has
rightly come to the conclusion that the
appellant is not entitled for a separate
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meter. As the appellant is not a separate
legal entity and documents as provided
under Regulation 4.1.17 are not
furnished by the appellant, the
decision taken by Electricity Company is
legal and proper and in accordance with
regulations and rules. the learned Single
Judge has committed no error in dismissing
the petition. the facts considered by
the Hon'ble Apex Court in the case
of Associated Cement Companies, Ltd.
(supra) are totally different and only
because there are two separate factory
buildings, it cannot be gainsaid that they
are independent establishment more
particularly keeping in mind the provisions
of the Electricity Act and the definition of
the word "consumer" under the
Electricity Act and the requirement of
Regulation 4.1.17 of the GERC. the issue
decided by GERC relates to open access and
tariff and the same would not taken the case
of the appellant any further. the
respondent electricity company has
rightly considered the objection of the
Accountant General. the respondent
electricity company is a public utility
company and if any decision taken by
it manned by human error, the
Accountant General is within his
jurisdiction and duty to point out the same
as ultimately it results into loss of public
exchequer and acting on the same, the
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respondent electricity company and upon
examining the issue, has correctly
interpreted Regulation 4.1.17 and has
taken decision in accordance with the Act,
Regulations and Rules.
26. Consequently therefore, the
conclusion arrived at by the learned
Single Judge is correct interpretation of
the provisions of the Electricity Act, and
Regulations of 2005. None of the
contentions raised by the learned counsel
appearing for the appellant deserve
any merit. the appeal therefore fails
and is hereby dismissed. However, in
facts of this case, there shall be no order
as to costs."
14.2 The author of the judgement of Special Civil
Application No. 464 of 2013 reiterated the same in
the case of Modern Denim Limited vs. Uttar Gujarat
Vij Company Ltd in Special Civil Application No.
15262 of 2012 with Special Civil Application No.
15263 of 2012 decided on 12.08.2013.
14.3 In Special Civil Application No. 15105 of 2012
decided on 08.04.2015 in the case of Lakhani
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Filaments Pvt Ltd vs. Daxin Gujarat Vij Co. Ltd., this
court was considering a challenge to the order of the
Ombudsman who had rejected the appeal of the
consumer to a challenge to the merger notices. The
only grounds of challenge was to the fact that code
cannot be given retrospective effect.
14.4 This is also one of the grounds that was raised in
the present group of petition during the course of
arguments. the other contention with regard to
Section 56(2) of the Electricity Act was also dealt with
in the case of Lakhani Filament (supra) in paras 11 to
14.5 which read as under:
"11. I have considered the submissions
made by learned advocates for the
respective parties and the reply filed by the
learned advocate for the respondents and
also considered the material available on
record.
12. It is not in dispute that from time to
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time, the respondents accepted said three
applications of the petitioner and granted/
released three separate connections to the
petitioner. the details are summarized in the
communication dated 07.10.2010:-
The Under Secretary, Finance
Depatt, Gandhinagar has sent draft
paragraph on loss of revenue due to
non amalgamation of below
mentioned three numbers of H.
T.connections.
01.M/s. Lakhani Filaments
petitioner. Ltd. H.T.No.39594 C.D
475 KVA
02.M/s. Lakhani Filaments
petitioner. Ltd. H.T.No.11174 C.D
400 KVA
03.M/s. Lakhani Filaments
petitioner. Ltd. H.T.No.11308 C.D
475 KVA
It was pointed out that your
premises is a single unit having
different plot number and
defined power boundary and
within that power boundary you
have availed H. T.connections
as above for running textile
machineries. Previously, you
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have explained that these
connections are availed just to
get tariff benefit and to keep
your contract demand within
500 KVA.
Your above contention is not agreed with
and you are required to submit your reply
for clubbing of your three numbers of H.T
connections in a single one. For these,
you will have to procure your own circuit
breaker, lightening arresters etc. as
required for H.T Connections above 500
KVA.
Your clarification in above is expected
within 10 days and on expiry of this
period, D.G.V.C.L will start issuing one
bill by clubbing all H.T. Connections
D.G.V.C.L also reserves the right to issue
supplementary bill for loss endured on
account of above reason.
Thanking You,
Yours faithfully
I/c. Executive Engineer (O&M)
DGVCL, IND.DN.Pandesara
12.1 According to the learned advocate for
the petitioner, HT connection no.39594 was
granted and released in July-1998 and
additional load was granted in the Year-
2002. So far as HT connection No.11174 is
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concerned, according to the petitioner, the
respondents released and granted the said
higher tension connection in June-2003 and
additional load was granted in February-
2005, whereas third connection i.e. HT
Connection No. 11308 came to be granted
and released by the respondents in March-
2006 and additional load came to be
approved / granted in June-2006.
12.2 In the light of the facts given out by the
learned advocate for the petitioner, it
becomes clear that even according to the
petitioners own claim and contention, the
objection raised by the petitioner does not
hold good so far as the third HT connection
i.e. HT Connection 11308 is concerned
inasmuch as, the Notification No.11/05 is
notified on 31.03.2005, whereas the said
third connection is granted and released in
March-2006 and additional load for said
connection was approved and granted in
June-2006.
12.3 Under the circumstances, even by its
own submission, the objection raised
against the respondents action with regard
to the third connection does not hold good.
13. So as to support and justify their action
and their communication dated 07.10.2010,
the respondent Electricity Company has
relied on Clause No.3.5.1 and Clause
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No.4.1.17 of the Electricity Supply Code and
submitted that action of the respondent
Electricity Company is in light of and in
pursuance of said two provisions. the said
two provisions read thus:-
3.5.1 If it is found that a consumer
has been classified in a particular
category erroneously, or the purpose
of supply as mentioned in the
distribution service Agreement has
changed or the consumption of power
has exceeded the limit of that
category or any order of reduction or
enhancement of contract demand has
been obtained, the distribution
licensee may reclassify him under
appropriate category after issuing
notice (with minimum notice period of
30 days) to him to execute a fresh
Agreement on the basis of the altered
classification or modified Contract
Demand. If the Consumer odes not
take steps within the time indicated in
the notice to execute a fresh
Agreement, the distribution licensee
may, subject to the provisions of the
Acts, Rules and Regulations for the
time being inforce, after issuing a
clear 21 days show cause notice and
after considering his explanation, if
any, disconnect the supply of power.
Further, the Distribution Licensee
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shall dispose all of such applications
for change tariff class by a Consumer
within maximum period of 7 days
after receipt of such application
regarding the change of tariff class or
communicate the reasons for not
changing the tariff class, as
applicable. In case of any dispute, the
matter shall be referred to Forum for
redressal of consumer grievance.
4.1.17 the Distribution Licensee will
not provide more than one
connection/meter for one premises.
the consumers opting for second
meter will have to produce separate
legal entity such as documents of
separate Income Tax No / Sales Tax
No, ration cared and rent or lease
agreement.
13.1 Learned advocate for the petitioner
also referred to and relied on the said
clause (which are relied on by the learned
advocate for the respondents) and claimed
that the said provision came into effect upon
publication being Notification No.11/05 with
effect from 31.03.2005 and since the said
provisions are not retrospective, any action
under the said provision is not warranted
and not unjustified.
14. the submission raised on the ground of
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retrospective operation of the rules is
misconceived and unsustainable.
14.1 Though, it is true that the factual
aspects i.e. the first HT connection came to
be granted and released in favour of the
petitioner in July-1998 and second HT
connection granted and released in favour
of the petitioner in June-2003 and third HT
Connection came to be granted and
released in favour of the petitioner in July-
2006 is not disputed even by the
respondents, it is equally true that since the
dates on which the said connections came to
be released and granted, the petitioner is
enjoying the said connections and even on
the date of which the communication /
notice dated 07.10.2010 came to be issued,
the petitioner was operating said three
Electricity Supply Connections.
14.2 According to the respondent Company,
the petitioner made such arrangement only
with a view to escaping appropriate and
applicable tariff.
14.3 At this stage, it is appropriate to
consider the observations and reasons
recorded by the Ombudsman. It is observed
and recorded in the order that:-
4.0 On the basis of representations
and documents submitted by the
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Appellant and Respondent, may
findings are as under:-
1.As per the tariff applicable to
High Tension supply, the rate
of demand charges, energy
changes and time of use
charges continue to increase
for the supply having Contract
Demand about 500 KVA and
about 1000 KVA when
compared to the supply for the
Contract Demand less than 500
KVA.
2.Refer to letter No.647 dated
17.01.2005 of Para No.3.5, the
respondent neither
amalgamated the two
connections for started issuing
single bill as contemplated. On
the contrary, the respondent
had not only allowed the
enhancement of Contract
Demand to 400 KVA in
connection No.11174 in
February,2005, but also
released a third connection
No.11308 with Contract
Demand of 250 KVA in
March,2006 and permitted
extension of Contract Demand
to 475 KVA in June,2006, in the
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same premises.
3.Physical verification of
premises needs to be done by
Executive Engineer personally
to ascertain the separate
individual legal entity of the
exclusive premises. Such
nothing should be done in
technical proposal by the
respective Engineer.
This condition No.1.7 of Commercial
Circular No.769 dated 28.01.2005 is not
at all followed while releasing the
connection and while granting extension
of Contract Demand.
4.During most of period of
billing, Maximum Demand
billed as per sum of three
meters is less than 85% of
aggregated contract demand in
KVAA. there is 3 to 7.5%
deviation in MD billed and MD
a per MRI data.
5.the licensee had issued the
Notice on 17.01.2005 as per
Para No.4.2 amalgamation of
the connections. thereafter, no
procedure was adopted as per
supply code Clause No.3.5.1 to
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regularise the connections.
6.the Appellant could not
produce separate documents
that it is separate legal entity
I.e separate Income Tax
Number, Sales Tax number etc.
All the three HT connections are
adjacent to each other i.e. they are in the
same premises.
All the connections are used for
producing single and product.
the name of firm and Directors of Boards
are also same.
the supplementary bill issued as per
Paragraph No.3.8 is in accordance with
provisions of Regulations and it is
recoverable.
Thus, even before the forum and before the
Ombudsmen, the petitioner failed to
establish that three entities are separate
legal entities. the petitioner did not and
could not produce separate documents to
establish the factual aspect etc."
14.4 Learned advocate for the respondents
contended that, despite the fact that the
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petitioner owns/runs single entity, it
artificially operated its
establishment/undertaking on lower tariff.
14.5 According to the respondents, the
petitioner is single entity and enjoying three
connections despite being single entity it
availed and enjoyed three connections and
that therefore, the load of three HT
connections is required to be clubbed/
merged and on that basis, the Electricity
Consumption had to charged. However, by
seeking and securing three separate
connections, the petitioner artificially
managed to keep the contracted demand on
lower side, though the de-facto the
petitioner was consuming higher load and
that therefore, the petitioner was informed
that three connections shall be clubbed and
billing for the consumption shall be done
accordingly."
14.5 On the aspect of retrospectivity and on clause
3.5.1 the court held as under:
"15.6 the said expression clarifies and
emphasises that even if any action had been
taken at any prior point of time and if by
virtue of such action, any consumer came to
be classified in particular category, which is
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not proper as per the electricity code (which
came into force by Notification No.11/05),
then in such circumstances, the licensee is
obliged to reclassify such consumer and
bring the connection / consumer in
consonance with the Rules.
15.7 From the said provision, it becomes
clear that power and authority to reclassify
a consumer after the code came into force is
conferred on the licensee even in case of
those consumers who were reclassified in
different category, before the Code came
into force.
23. So far as the contention that the said
provision does not have retrospective effect
is concerned, the said contention, for the
foregoing reasons, the said contention is
found to be without merits.
23.1 So far as the decisions on which
learned Counsel for the petitioner relied,
are concerned, it is relevant to mention that
in view of the facts involved in present case
and more particularly in view of Clause
3.5.1 and Clause No.4.1.17 of the Electricity
Supply Code ( which are applicable in
present case and on which learned counsel
for the petitioner has placed reliance), the
said decisions are not applicable and they
do not render any assistance to the case of
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the petitioner. the facts involved in the case
decided by the decisions on which learned
counsel for the petitioner relied are
materially and substantially different from
the facts in present case, more particularly,
in view of the fact that neither the said two
clause no.3.5.1 and Clause No.4.1.17 nor
any clause similar to the said two clauses
was not under consideration before the
Hon'ble Court in the cited decisions. Thus,
the petitioner cannot derive any support
from the said decisions. In light of the said
clauses the contention on the ground that
the provision cannot be applied
retrospectively is not sustainable. Having
regard to the said two clauses, it cannot be
said that the company has given
retrospective effect to the said Rules. the
said provision contemplates and requires
rectification / correction of existing /
prevailing position in respect of the supply
connections which have been granted and
that therefore, the said contention cannot
be entertained.
23.2 Actually, in present case, the said
provisions empower and enable, rather
oblige, the respondent Electricity Company
to take appropriate actions i.e. corrective
measures, so as to reclassify the consumer
in whose favour more than one supply
connection (contrary to the provisions
contained under clause No.4.1.17 read with
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3.5.1) is granted. the electricity company /
licensee under the Act is obliged by the said
provision to take corrective measures in
those cases where more than one supply
connections are granted to the one
consumer though the units/undertakings (in
respect of which such additional
connections are granted) of said consumer
are not, and cannot be treated as,
independent legal entities. the respondent
Company has taken the impugned action in
view of the requirements prescribed by said
two clauses. the facts of the cases in the
cited decisions do not arise from or involve
said or similar clauses. therefore, the said
two decisions relied on by learned counsel
for the petitioner do not help the case of the
petitioner. In this view of the matter, the
said contention fails and is rejected."
15. All the arguments therefore raised by the learned
counsels for the petitioners in the present group of
matters including that of Special Civil Application No.
443 of 2021 which in the case are two separate
entities as the second one being an EOU are also
answered in these decisions. the fact that there are
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no other documents and merely because one premises
is an EOU would not make his case better. Even the
circular pressed in service will not be of any
assistance once the courts have held the statutory
regulations of the GERC (Code) as valid.
16. That brings me to answer the challenge at the
hands of consumers in Special Civil Application No.
17582 of 2017 and Special Civil Application No.
19007 of 2018 to the challenge to the bills raised
beyond three years. Even the Electricity Company
has in Special Civil Application No. 2089 of 2022 and
Special Civil Application No.8095 of 2021 have
challenged the findings of the Ombudsman where
recovery was restricted to a three year period.
17. the Apex Court in the case of Assistant
Engineer (D1), Ajmer Vidyut Vitran Nigam
Limited & Anr. vs. Rahmatullah Khan alias
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Rahamjulla rendered in Civil Appeal No. 1672 of
2020 was considering the meaning of "first due" in
Section 56 of the Electricity Act and whether
recourse to disconnection can be taken after two
years. Also the question of whether in case of a
mistake, the starting point of limitation should be the
date when the mistakes was discovered. Relevant
paras are reproduced as under:
"7.4 the period of limitation of two years
would commence from the date on which
the electricity charges became "first due"
under sub-section (2) of Section 56. This
provision restricts the right of the licensee
company to disconnect electricity supply
due to non-payment of dues by the
consumer, unless such sum has been shown
continuously to be recoverable as arrears of
electricity supplied, in the bills raised for
the past period.
If the licensee company were to be allowed
to disconnect electricity supply after the
expiry of the limitation period of two years
after the sum became "first due", it would
defeat the object of Section 56(2).
8. Section 56(2) however, does not preclude
the licensee company from raising a
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supplementary demand after the expiry of
the limitation period of two years. It only
restricts the right of the licensee to
disconnect electricity supply due to non-
payment of dues after the period of
limitation of two years has expired, nor does
it restrict other modes of recovery which
may be initiated by the licensee company for
recovery of a supplementary demand.
9. Applying the aforesaid ratio to the facts of
the present case, the licensee company
raised an additional demand on 18.03.2014
for the period July, 2009 to September,
2011.
The licensee company discovered the
mistake of billing under the wrong Tariff
Code on 18.03.2014. the limitation period of
two years under Section 56(2) had by then
already expired.
Section 56(2) did not preclude the licensee
company from raising an additional or
supplementary demand after the expiry of
the limitation period under Section 56(2) in
the case of a mistake or bona fide error. It
did not however, empower the licensee
company to take recourse to the coercive
measure of disconnection of electricity
supply, for recovery of the additional
demand.
As per Section 17(1)(c) of the Limitation Act,
1963, in case of a mistake, the limitation
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period begins to run from the date when the
mistake is discovered for the first time."
17.1 the Apex Court categorically held that Section
56(2) of the Electricity Act, 2003 did not preclude the
licensee company from raising an additional or
supplementary demand expiry of the limitation
period.
18. In the case of M/s. Prem Cottex (supra), the
Apex Court in paras 14 to 27 held as under:
"14. But a careful reading of Section
56(2) would show that the bar
contained therein is not merely with
respect to disconnection of supply but
also with respect to recovery. If Sub-
section (2) of Section 56 is dissected
into two parts it will read as follows:-
(i) No sum due from any consumer
under this Section shall be
recoverable after the period of two
years from the date when such
sum became first due; and
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(ii) the licensee shall not cut off the
supply of electricity.
15. therefore, the bar actually operates
on two distinct rights of the licensee,
namely, (i) the right to recover; and (ii)
the right to disconnect. the bar with
reference to the enforcement of the
right to disconnect, is actually an
exception to the law of limitation.
Under the law of limitation, what is
extinguished is the remedy and not the
right. To be precise, what is
extinguished by the law of limitation, is
the remedy through a court of law and
not a remedy available, if any, de hors
through a court of law. However,
section 56(2) bars not merely the
normal remedy of recovery but also
bars the remedy of disconnection. This
is why we think that the second part of
Section 56(2) is an exception to the law
of limitation.
16. Be that as it may, once it is held
that the term "first due" would mean
the date on which a bill is issued, (as
held in para 6.9 of Rahamatullah Khan)
and once it is held that the period of
limitation would commence from the
date of discovery of the mistake (as
held in paragraphs 9.1 to 9.3 of
Rahamatullah Khan), then the question
of allowing licensee to recover the
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amount by any other mode but not take
recourse to disconnection of supply
would not arise. But Rahamatullah
Khan says in the penultimate paragraph
that "the licensee may take recourse to
any remedy available in law for
recovery of the additional demand, but
barred from taking recourse to
disconnection of supply under sub-
section (2) of section 56 of the Act".
17. It appears from the narration of
facts in paragraph 2 of Rahamatullah
Khan (supra) that this Court was
persuaded to take the view that it did,
on account of certain peculiar facts. the
consumer in that case was billed under
a particular tariff code for the period
from July-2009 to September-2011. But
after audit, it was discovered that a
different tariff code should have been
applied. therefore, a show cause notice
was issued on 18.03.2014 raising an
additional demand for the period from
July2009 to September-2011. then a bill
was raised on 25.05.2015 for the
aforesaid period. therefore, the
consumer successfully challenged the
demand before the District Consumer
Forum, but the Order of the District
Forum was reversed by the State
Commission on an appeal by the
licensee. the National Commission on a
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revision filed by the consumer, set aside
the order of the State Commission and
restored the order of the District
Forum. It was this Order of the
National Commission that was under
challenge before this Court in
Rahamatullah Khan (supra).
18. Eventually, this Court disposed of
the appeals, preventing the licensee
from taking recourse to disconnection
of supply, but giving them liberty to
take recourse to any remedy available
in law for recovery of the additional
demand. therefore, the decision in
Rahamatullah Khan (supra) is
distinguishable on facts.
19. Even otherwise there are two things
in this case, which we cannot overlook.
the first is that the question whether
the raising of an additional demand, by
itself would tantamount to any
deficiency in service, clothing the
consumer fora with a power to deal
with the dispute, was not raised or
considered in Rahamatullah Khan
(supra). the second is the impact of
Subsection (1) of Section 56 on Sub-
section (2) thereto.
20. the fora constituted under the
Consumer Protection Act, 1986 is
entitled to deal with the complaint of a
consumer, either in relation to defective
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goods or in relation to deficiency in
services. the word "deficiency" is
defined in Section 2(1)(g) of the
Consumer Protection Act, 1986 as
follows:
"2(1)(g) "deficiency" means any
fault, imperfection, shortcoming or
inadequacy in the quality, nature
and manner of performance which
is required to be maintained by or
under any law for the time being in
force or has been undertaken to be
performed by a person in
pursuance of a contract or
otherwise in relation to any
service;
21. the raising of an additional demand
in the form of "short assessment
notice", on the ground that in the bills
raised during a particular period of
time, the multiply factor was wrongly
mentioned, cannot tantamount to
deficiency in service. If a licensee
discovers in the course of audit or
otherwise that a consumer has been
short billed, the licensee is certainly
entitled to raise a demand. So long as
the consumer does not dispute the
correctness of the claim made by the
licensee that there was short
assessment, it is not open to the
consumer to claim that there was any
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deficiency. This is why, the National
Commission, in the impugned order
correctly points out that it is a case of
"escaped assessment" and not
"deficiency in service".
22. In fact, even before going into the
question of Section 56(2), the consumer
forum is obliged to find out at the
threshold whether there was any
deficiency in service. It is only then that
the recourse taken by the licensee for
recovery of the amount, can be put to
test in terms of Section 56. If the case
on hand is tested on this parameter, it
will be clear that the respondents
cannot be held guilty of any deficiency
in service and hence dismissal of the
complaint by the National Commission
is perfectly in order.
23. Coming to the second aspect,
namely, the impact of Sub-section (1)
on Sub-section (2) of Section 56, it is
seen that the bottom line of Sub-section
(1) is the negligence of any person to
pay any charge for electricity. Sub-
section (1) starts with the words "where
any person neglects to pay any charge
for electricity or any some other than a
charge for electricity due from him".
24. Sub-section (2) uses the words "no
sum due from any consumer under this
Section". therefore, the bar under Sub-
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section (2) is relatable to the sum due
under Section 56. This naturally takes
us to Sub-section (1) which deals
specifically with the negligence on the
part of a person to pay any charge for
electricity or any sum other than a
charge for electricity. What is covered
by section 56, under sub-section (1), is
the negligence on the part of a person
to pay for electricity and not anything
else nor any negligence on the part of
the licensee.
25. In other words, the negligence on
the part of the licensee which led to
short billing in the first instance and
the rectification of the same after the
mistake is detected, is not covered by
Sub-section (1) of Section 56.
Consequently, any claim so made by a
licensee after the detection of their
mistake, may not fall within the
mischief, namely, "no sum due from any
consumer under this Section",
appearing in Sub-section (2).
26. the matter can be examined from
another angle as well. Sub section (1) of
Section 56 as discussed above, deals
with the disconnection of electric
supply if any person "neglects to pay
any charge for electricity". the question
of neglect to pay would arise only after
a demand is raised by the licensee. If
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the demand is not raised, there is no
occasion for a consumer to neglect to
pay any charge for electricity. Sub-
section (2) of Section 56 has a non-
obstante clause with respect to what is
contained in any other law, regarding
the right to recover including the right
to disconnect. therefore, if the licensee
has not raised any bill, there can be no
negligence on the part of the consumer
to pay the bill and consequently the
period of limitation prescribed under
Sub-section (2) will not start running.
So long as limitation has not started
running, the bar for recovery and
disconnection will not come into effect.
Hence the decision in Rahamatullah
Khan and Section 56(2) will not go to
the rescue of the appellant.
27. therefore, we are of the view that
the National Commission was justified
in rejecting the complaint and we find
no reason to interfere with the Order of
the National Commission. Accordingly,
the appeal is dismissed. However, since
the appellant has already paid 50% of
the demand amount pursuant to an
interim order passed by this Court on
19.08.2014, we give eight weeks time
to the appellant to make payment of the
balance amount. there shall be no order
as to costs."
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19. These decisions therefore would support the
contentions of the counsel for the Electricity
Company that the bar with reference to the
enforcement of the right to disconnect is actually an
exception to the law of limitation. Therefore, the law
of limitation will not come in the way of the Electricity
Company to recover dues for a period beyond three
years.
20. The submissions of Mr. S.N. Soparkar, learned
Senior Counsel in Special Civil Application No. 17582
of 2017 and Special Civil Application No. 19007 of
2018 have therefore to be answered in the negative
on these aspects too. the findings of the Electricity
Ombudsman, Gujarat State in Cases No. 97, 98 and
99 of 2019 and the order dated 23.12.2019 are not
sustainable in light of the decision of the Apex Court
in the case of Prem Cottex (supra).
21. For all the aforesaid reasons, Special Civil
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Application No. 17582 of 2017, Special Civil
Application No. 19007 of 2018, 1224 of 2019 and
Special Civil Application No. 443 of 2021 are
dismissed. Accordingly, Special Civil Application No.
2089 of 2022, Special Civil Application No. 8095 of
2021 and Special Civil Application No. 9160 of 2021
are allowed.
(BIREN VAISHNAV, J)
FURTHER ORDER
After pronouncement of the judgement / order,
learned counsel Mr.Amar Bhatt in SCA No.19007 of
2018 and Ms. Nisha Oza learned counsel appearing
for M/s.Wadia Gandhi & Co for the petitioner in SCA
No.1224 of 2019 requests the Court that the interim
relief granted earlier may be continued. Ms.Bhaya,
learned counsel appearing for the respondent -
Electricity Company has vehemently opposed to the
extension of interim relief.
Interim relief granted earlier in SCA No.19007 of
2018 is extended upto 17.04.2023.
(BIREN VAISHNAV, J)
ANKIT SHAH
