Madras High Court
S.N.Thangavel vs The Superintending Engineer on 21 March, 2023
W.P.No.27023 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 21.03.2023
CORAM
THE HONOURABLE MR.JUSTICE M.DHANDAPANI
W.P.No.27023 of 2018
S.N.Thangavel ... Petitioner
Vs.
The Superintending Engineer
Salem Electricity Distribution Circle,
Salem – 636 014. ... Respondent
Prayer:
Petition filed under Article 226 of the Constitution of India to issue
a Writ of Certiorari to call for the records relating to the impugned
letter of the respondent dated 31.10.2017, made in
Letter.No.SE/SEDC/AOR/HT/A-4/F.HTSC.186/D.322/17, to quash the
same.
For Petitioner : Mr.Arul Murugan
For Respondent : Mr.J.Ravindran
Additional Advocate General
Assisted By
1)Mr.I.Syed Sibghadulla
2)M/s.R.Rebecca Vasanthini Percy
ORDER
The petitioner has filed this writ petition seeking issuance of
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W.P.No.27023 of 2018
Writ of Certiorari to call for the records relating to the impugned letter
of the respondent dated 31.10.2017, made in Letter.No.SE/SEDC/
AOR/HT/A-4/F.HTSC.186/D.322/17, to quash the same.
2.The case of the petitioner is that the petitioner is the owner of
the property measuring 2.38 acres together with a shed bearing
present patta no.56 in re-survey no.73/2 situated at Naduvaneri
Village, Sankari Taluk, Salem District and he purchased the same
through proceedings of the Debt Recovery Tribunal, Coimbatore vide
sale certificate registered as document no.5437 of 2010 on the file of
S.R.O., Magudanchavadi for a valuable sale consideration of
Rs.27,41,000/-.
3.The further case of the petitioner is that the property originally
belonged to M/s.Veerappan Steels (P) Limited and the petitioner came
to know that the electricity service connection was disconnected by the
respondent for non payment of current consumption charges and the
accounts of the service was closed on 16.08.2004 duly adjusting the
security deposit and meter caution deposit and the petitioner was not
informed at any point of time about the liability of M/s.Veerappan
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Steels (P) Limited. However, after a lapse of seven years from the
date of purchase of the property, the respondent has issued the
impugned letter directing the petitioner to pay a sum of
Rs.3,00,97,729/- for the default in payment of charges by the said
M/s.Veerappan Steels (P) Limited. Hence, this writ petition.
4.The learned counsel appearing for the petitioner submitted
that the electricity board disconnected the electricity service
connection obtained by M/s.Veerappan Steels (P) Limited for non
payment of current consumption charges and the accounts of the
service was closed on 16.08.2004. The petitioner purchased the
property through Debt Recovery Tribunal, Coimbatore vide sale
certificate registered as document no.5437 of 2010 and after a lapse
of seven years from the date of purchase of the property, the
impugned order has been passed, which is un-sustainable one.
5.In support of his contentions, the learned counsel appearing
for the petitioner relied upon the following decisions:
(i)(1995) 2 Supreme Court Cases 648 [Isha Marbles Vs.
Bihar State Electricity Board and another], the relevant portion of
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which reads as follows:
“56.From the above it is clear, 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 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.
57.The form of requisition relating to the
contract is in Annexure VIII prescribed under
Clause VI of the Schedule to the Electricity Act.
They cannot make the auction purchaser liable.
In the case of Isha Marbles we have already
extracted the relevant clause wherein the
consumer was asked to state his willingness to
clear off the arrears to which the answer was
in the negative. Therefore, the High Court has
rightly held that the auction purchaser,
namely, "the writ petitioner before us is ready
and willing to enter into a now contract that
the auction purchaser does not intend to obtain
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the continuance of supply of electrical energy
on the basis of the old agreement". It Is true
that it was the same premises to which
reconnection is to be given. Otherwise, with
the change of every ownership new
connections have to be issued does not appear
to be the correct line of approach as such a
situation is brought about by the inaction of
the Electricity Board in not recovering the
arrears as and when they fall due or not
providing itself by adequate deposits.”
(ii)(2012) 13 Supreme Court Cases 479 [Special Officer,
Commerce, North Eastern Electricity Supply Company of Orissa
(NESCO) and another Vs. Raghunath Paper Mills Private
Limited and another], the relevant portion of which reads as follows:
“11.Now, let us consider the relevant
provisions of the Orissa Electricity Regulatory
Commission Distribution (Conditions of Supply),
Code, 2004 (in short ‘the Electricity Supply
Code’). Sub-clause 10 of Regulation 13 of the
Electricity Supply Code is as follows:-
“(10) Transfer of service connection:-
(a)Subject to the Regulation 8, the
transfer of service connection shall be effected
within 15 days from the date of receipt of
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complete application.
(b)The service connection from the name
of a person to the name of another consumer
shall not be transferred unless the arrear
charges pending against the previous occupier
are cleared:
Provided that this shall not be applicable
when the ownership of the premises is
transferred under the provisions of the State
Financial Corporation Act.”
It is the case of the appellant that as per the
above provision, viz., sub-clause 10(b) of
Regulation 13 of the Electricity Supply Code,
unless respondent No. 1 pays the arrears of
electricity dues against the erstwhile company,
electricity supply cannot be restored to its Unit.
We are of the view that the reading of the
above sub-clause makes it clear that the said
provision is not applicable to respondent No. 1.
We have already quoted that respondent No.
1, after purchase of the said Unit in an auction
sale conducted by the Official Liquidator on “as
is where is” and “whatever there is” basis has
applied for a fresh service connection for
supply of energy (emphasis supplied). In other
words, respondent No. 1 has not applied for
transfer of service connection from the name
of the erstwhile company to its name. To make
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it clear, respondent No. 1 applied for a fresh
connection for its Unit after purchasing the
same from the Official Liquidator. It is also not
in dispute that the arrears of electricity dues
were levied against the premises in question,
on the other hand, it was levied against the
erstwhile company.
17.The learned counsel for the appellant
heavily relied on para 12 of the very same
judgment which reads as under: (Paschimanchal
Vidyut Case)
“12. 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
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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 long
as such rules and regulations or the terms and
conditions are not arbitrary and unreasonable,
courts will not interfere with them.”
20.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: (Hanuman Rice Mills
case)
“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
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W.P.No.27023 of 2018
to demand from the purchaser of a property
claiming reconnection 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.”
(iii)(2018) 12 Supreme Court Cases 644 [Southern Power
Distribution Company of Telangana Limited Through its CMD
and others Vs. Gopal Agarwal and others], the relevant portion of
which reads as follows:
“6.We have heard the learned counsel
appearing for the parties and we are of the
opinion that there is no reason to interfere
with the judgment of the High Court. The High
Court relied upon the judgment in Isha
Marbles(supra) to grant relief to the First
Respondent. It was held in the said judgment
that an auction purchaser cannot be called
upon to clear the past arrears. It was also held
that a power connection to an auction
purchaser cannot be withheld for the dues of
the past owner. The High Court also referred
to a judgment in Ahmedabad Electricity
Company Limited(supra) wherein the ratio of
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the judgment in Isha Marbles case was
reiterated, particularly with reference to a
fresh connection for supply of electricity. In
NESCO v. Raghunath Paper Mills (P) Ltd.,
(2012) 13 SCC 479, the purchaser in an
auction sale conducted by the official liquidator
on “as is where is” and “whatever there is”
basis was found not liable for payment of the
electricity arrears. In the said case an
advertisement was issued by the official
liquidator for sale of moveable and
immoveable property of M/s Konark Paper and
Industries Limited on “as is where is” and
whatever there is” basis. The auction
purchaser applied for a fresh electricity
connection to its unit which was denied on the
ground of non payment of arrears by the past
owner. After considering the judgments in
Ahmedabad Electricity Company (supra) and
Isha Marbles (supra), this Court held that the
request of the auction purchaser for a fresh
connection could not have been rejected.”
(iv)AIR 2019 Chh 200 [Agrawal Structure Mills (Pv5.) Ltd.,
Through Director Anil Kumal Agrawal vs. Chhattisgarh State
Power Distribution Company Limited through Superintending
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Engineer and others], the relevant portion of which reads as follows:
“25.The ratio when we apply to this case
would show that neither the advertisement nor
the sale certificate describes that any
encumbrance exist over the property when
purchased. As against this the sale certificate
shows that property was sold as is where is
basis and was shown that it was without any
encumbrances and the auction purchaser the
petitioner purchased the property on the basis
of that premise and advertisement made by
bank.
26.The purchase was made under the
provisions of Securitisation and Reconstruction
of Financial Assets and Enforcement of Security
Interest Act, 2002. Sale certificate has been
issued in favour of the petitioner under Rule
9(6) of the Security Interest (Enforcement)
Rules, 2002 which do not show the property
carries a charge for payment of electricity
charges. As has been held by this court in WPC
No.2700/2017 in between M/s Maheshwari
Steels Vs. Chhattisgarh State Power
Distribution Company Limited & Ors. decided
on 25/01/2018, that if the objection like nature
are allowed then in such case the auction sale
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made under the SARFAESI Act would never
become final and remain unconcluded and in
view of the provisions contained in Section 35
of the SARFAESI Act which has an overriding
effect over any law for the time being in force,
the auction sale having been made in
accordance with the SARFAESI Act and the
Rules of 2002 it would prevail over clause 4.19
of the Electricity Supply Code.”
(v)The decision of the Madurai Bench of this Court made in
W.P.(MD) No.1777 of 2017 dated 07.07.2022 [S.Venkatraman
Vs. The Tamil Nadu Generation & Distribution Corporation
Limited], the relevant portion of which reads as follows:
“7.Prima facie, the decision of the
Hon'ble Supreme Court in Telangana State
Southern Power Distribution Company Limited
Vs. M/s.Srigdhaa Beverages (Civil Appeal
No.1815 of 2020) and the decision reported in
2016-1-L.W.114 (Kadhariya Oriental Nursery
and Primary School Vs. The Tamil Nadu
Generation and Distribution Corporation
Limited, Madurai Electricity Distribution Circle)
would support the stand taken by the learned
standing counsel.
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8.But as rightly pointed out by the
learned counsel appearing for the petitioner,
this provision was inserted in the supply code
only with effect from 18.03.2011. The liability
in this case arose way back in the year 2000
ie., even before the Electricity Act, 2003 came
into force.
9.Therefore, the issue that has arisen in
this case will have to be considered only with
reference to the position that obtained under
the earlier Act and not the new Act. The issue
is no longer res integra. The Hon'ble Supreme
Court in the decision reported in (2012) 13
SCC 479 (Special Officer Vs. Raghunath Paper
Mills Private Limited) had authoritatively held
that the subsequent purchaser cannot be
fastened with the liability incurred by his
vendor. In fact, In Special Officer Vs.
Raghunath Paper Mills Private Limited (2012)
13 SCC 479, the Hon'ble Supreme Court
followed the decision of the three Judges
Bench of the Hon'ble Supreme Court in Isha
Marbles Vs. Bihar SEB (1995) 2 SCC 648.
Therefore, the impugned demand laid on the
writ petitioner is patently illegal and without
jurisdiction. It stands quashed. It is stated that
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the petitioner had remitted a sum of
Rs.50,000/- by way of complying with the
interim order passed by this Court. The said
amount shall be adjusted against the
petitioner's future liability.”
6.Per contra, the learned Additional Advocate General appearing
for the respondent submitted that admittedly M/s.Veerappan Steels (P)
Limited obtained electricity service connection for the subject property
and for non payment of current consumption charges, the electricity
service connection was disconnected by the respondent on
16.02.2004. The electricity board sent notices to the erstwhile owner
for clearance of arrears, however, the erstwhile owner did not come
forward to settle the arrears and most of the notices returned with
remark 'party shifted'.
7.The learned Additional Advocate General appearing for the
respondent further submitted that as per Regulation 17(9) (a) of the
Electricity Supply Code specified by TNERC, the liabilities of the
erstwhile owner can be claimed from the purchaser of the premises.
In the present case, the petitioner has purchased the property.
Though the petitioner has not applied for electricity service connection,
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he has to pay for the the liabilities of the erstwhile owner.
8.In support of his contentions, the learned Additional Advocate
General appearing for the respondent relied upon the following
decisions:
(i)(2006) 13 Supreme Court Cases 101 [Dakshin Haryana
Bijli Vitran Nigam Ltd., Vs. Paramount Polymers (P) Ltd.], the
relevant portion of which reads as follows:
“15.We must observe that the decision in
Isha Marbles is 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
Hyderabad Vanaspati Ltd. Vs. Andhra Pradesh
State Electricity Board and others [(1998) 2
S.C.R. 620] has held that the Terms and
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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 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.”
(ii)(2020) 6 Supreme Court Cases 404 [Telangana State
Southern Power Distribution Company Limited and another vs.
Srigdhaa Beverages], the relevant portion of which reads as follows:
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“16.1.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.
16.2.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 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).”
9.Heard the arguments advanced on either side and perused the
materials available on record.
10.The facts in the present case is not in dispute. Admittedly,
one M/s.Veerappan Steels (P) Limited was the owner of the subject
property and they obtained electricity service connection. However,
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the said concern fell into the debt trap and to realise the debts, action
was taken before the Debts Recovery Tribunal and the property was
brought for auction in which the petitioner had purchased the property.
The said fact is not in dispute. However, when the concern fell into
debt, there was pending current consumption charges, which were not
cleared. Non-clearance of the current consumption charges resulted in
the disconnection of electricity service connection by the respondent
on 16.02.2004 and the accounts of the service was closed on
16.08.2004.
11. As aforesaid, it is not in dispute that the petitioner purchased
the property through proceedings of the Debt Recovery Tribunal,
Coimbatore and the sale certificate was registered as document
no.5437 of 2010 on the file of S.R.O., Magudanchavadi for a valuable
sale consideration of Rs.27,41,000/-. However, after a lapse of seven
years, the impugned letter has been issued by the respondent calling
upon the petitioner to pay a sum of Rs.3,00,97,729/- for the default in
payment of charges by the said M/s.Veerappan Steels (P) Limited.
12.In the counter affidavit filed on behalf of the respondent, it is
stated that after closure of accounts an amount of Rs.89,31,101/- is
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pending collection from M/s.Veerappan Steels (P) Limited. There is no
material available on record to show that any action has been taken by
the respondents to collect the amounts due from M/s.Veerappan
Steels. Without resorting to any such procedure, the accounts of the
said concern was closed and electricity connection was disconnected as
early as in the year 2004. The petitioner has purchased the property
only in the year 2010. Thereafter, the impugned letter has come to be
issued by the respondent asking the petitioner to pay a sum of
Rs.3,00,97,729/- being the default in payment of charges by the said
M/s.Veerappan Steels (P) Limited.
13.To enforce the collection, the aid of Regulation 17(9) (a) of
the Electricity Supply Code specified by TNERC, is sought to be taken
by the respondents which provides that the liabilities of the erstwhile
owner can be claimed from the purchaser of the premises. However,
what is relevant to be noted here is the fact that Regulation 17(9) (a)
is applicable only to a person who makes application to effect fresh
service connection. In the present case, the petitioner has purchased
the property through auction purchase, which premises was already
provided with electricity supply. Though the petitioner has purchased
the property, the petitioner has not applied for fresh electricity service
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connection. Hence, Regulation 17(9) (a) is not applicable to the
petitioner.
14.The decisions relied upon by the learned Additional Advocate
General appearing for the respondent does not apply to the present
case on hand for the reason that the vendor who alienated the
property has to give three months notice to the electricity board before
alienating the property.
15.In Isha Marbles case the Supreme Court has held that
where the premises comes to be owned or occupied by a person, who
had purchased the said property in an auction purchase and,
thereafter, seeks supply of electrical energy, the said person cannot be
called upon to clear the past arrears as a condition precedent to effect
supply. The present case on hand is also similar and in such
circumstances, the Board cannot seek the enforcement of the
contractual liability against the petitioner, who is a third party.
Further, it is also to be noted that there is no charge over the property
and further change of every ownership does not entail effecting new
connection and the inaction of the Board in recovering the arrears,
which fell due, cannot be fastened on the auction purchaser, who has
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no contractual obligation with the Board. Therefore, the order of the
respondents calling upon the petitioner to pay the dues of
M/s.Veerappan Steels, is perverse and illegal and the same cannot be
sustained.
16.For the reasons aforesaid, this writ petition stands allowed.
The impugned letter of the respondent dated 31.10.2017 is set aside.
No costs.
21.03.2023
pri
Speaking Order/ Non Speaking Order
Index: Yes/ No
Internet: Yes/ No
To
The Superintending Engineer
Salem Electricity Distribution Circle,
Salem – 636 014.
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W.P.No.27023 of 2018
M.DHANDAPANI,J.
pri
W.P.No.27023 of 2018
21.03.2023
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