Orissa High Court

The Executive Engineer vs M/S. Krebs International Ltd. And on 10 March, 2023

                                                                                                     AFR


                   IN THE HIGH COURT OF ORISSA AT CUTTACK.

                                     W.P.(C) No.24947 of 2021

           An application under Article 226 and 227 of the Constitution of India.

                  The Executive Engineer,
                  Electrical (TPNODL), Baripada
                  Electrical Division Baripada,
                  Mayurbhanj                    ......                         Petitioner

                                         -Versus-
                  M/s. Krebs International Ltd. and
                  Another                       ......                      Opposite Parties

                  -------------------------------------------------------------------------------
                          For Petitioner                 :      Mr. S.C. Dash, Advocate

                         For Opposite Party No.1 :              Mr. L.K. Moharana,
                                                                Advocate
                  --------------------------------------------------------------------------------


                          CORAM :
                          HONOURABLE MR. JUSTICE S.TALAPATRA
                          HONOURABLE MISS. JUSTICE SAVITRI RATHO

                                             JUDGMENT

10th March, 2023

S.Talapatra, J. By means of this writ petition, the Petitioner has challenged

the order dated 31.03.2021 delivered in Consumer Representation Case

No.OM(II)(N)-11 of 2021 by the Ombudsman-II Odisha Electricity

Regulatory Commission, Bhubaneswar whereby the Ombudsman-II

directed the Opposite Party No.1 to make payment of the sum of Rs.10

lakhs to the writ petitioner as the final settlement amount against the

arrears and to collect No Due Certificate. The Petitioner No.1 was

directed to receive the said sum as the final settlement against the arrears

of the Opposite Party No.1 and to provide new electricity connection to

the Opposite Party No.1 as per rules.

2. The Petitioner has contended that such direction, as referred

above is illegal, arbitrary, contrary to law and without jurisdiction as the

claim is barred by limitation. Hence, the said direction is liable to be set

aside.

3. The Petitioner represents the licensee (TPNODL) for retail

sale and supply of electricity to all categories of consumers within their

area of supply i.e. Northen Zone of Odisha. The Opposite Party No.1

was a consumer and due to non-payment of outstanding of

Rs.19,86,164/-, power supply to the Industrial Unit of the Opposite Party

No.1 was disconnected. The Opposite Party No.1 made request for One

Time Settlement (OTS) or providing them the scheme of instalments for

payment of the said outstanding. It has been asserted by the Petitioner

that in tune with the letter No.4827 dated 28.06.2002, issued by the

Deputy General Manager (T), NESCO, the consumer was intimated that

one-time payment of Rs.10 lakhs through the demand draft had been

allowed by the Managing Director, NESCO and after payment, clearance

certificate should be issued. After receipt of the said letter, the consumer

remained silent and did not make payment in terms thereof. After long

lapse of time, on 28.02.2009, the consumer (the Opposite Party No.1)

made a request for resumption of supply of electricity. In response

thereof, the consumer was asked by a communication dated 10.09.2009

(Annexure-2 to the writ petition) to clear the arrears. The Opposite Party

No.1 being aggrieved by the said demand as condition-precedent for

resumption of supply of electricity to the premises, approached this court

by filing a writ petition being W.P.(C) No.20670 of 2009. The said writ

petition was disposed of by the judgment dated 28.06.2013 observing

that an alternative remedy is available for the consumer [the writ

petitioner] before the Grievance Redressal Forum constituted under

Section 42 (5) of the Electricity Act, 2003 and as such, the consumer

may approach the GRF by filing an application within two weeks from

the date of the said judgment. The GRF was directed to dispose of such

application as expeditiously as possible, preferably within a period of six

weeks from the date of filing of the said application. The said judgment

dated 28.06.2013 was challenged by the Opposite Party No.1 by filing a

writ appeal being W.A. No.350 of 2013 questioning the correctness of

the said judgment. But subsequently, the said writ appeal was withdrawn

by the Opposite Party No.1 and thus, the judgment dated 28.06.2013

reached its finality. The Opposite Party No.1 filed the Complaint Case

No.409 of 2020 before the G.R.F., Balasore and that was dismissed by

the order dated 31.12.2020 (Annexure-5 to the writ petition). In order to

challenge the said order of dismissal dated 31.12.2020 passed by the

G.R.F., Balasore, the Opposite Party No.1 filed a Representation Case

before the Ombudsman-II of Electricity, Bhubaneswar being

Representation Case No.11 of 2021. But the said Representation Case

was barred by limitation as the same was instituted after the prescribed

period of limitation i.e. 30 days. The Ombudsman-II, after considering

the claim and the objection, passed the final order on 31.03.2021,

allowing the Opposite Party No.1 to pay a sum of Rs.10 lakhs and to get

No Due Certificate. As noted earlier, the Petitioner was directed to

resume the supply of electricity to the Unit of the Opposite Party No.1

on receipt of the said payment. According to the Petitioner, the order of

the Ombudsman-II (Annexure-6 to the writ petition) is illegal being

contrary to law and arbitrary for being devoid of reasons. According to

the Petitioner, the Ombudsman has exceeded its authority and

jurisdiction.

4. Mr. S.C. Dash, learned counsel appearing for the Petitioner

has submitted that the Ombudsman has failed to appreciate that no

negotiation for payment of the dues had taken place. No specific

settlement proposal was made by the Opposite Party No.1, M/s. Krebs

International Ltd. The prospective applicant has no right and authority to

seek enforcement or to demand for restoration of the supply of electricity

after such long lapse of time. In this regard, Mr. Dash, learned counsel

has referred to the judgment passed by this Court in W.P.(C) No.20670

of 2009 titled as M/s. Krebs International Ltd. vs. Executive Engineer

(Electrical), Baripada Electrical Division and another, where this Court

had occasion to observe as follows:

"A counter affidavit has been filed by the opposite parties-NESCO stating therein that the Apex Court in the

case reported in AIR 2009 SC 647 has held that if the Distributor (Licensee) is approached for fresh electricity connection, it can stipulate the terms subject to which electricity can be supplied to clear the arrear dues of the previous owner/occupier/consumer in respect of the same premises. It is stated that the aforesaid decision has been relied on by this Court in the case of Panchanan Sandhibigrah Vrs. General Manager, NESCO reported in 109 (2010) CLT 808."

Mr. Dash, learned counsel has further contended that for

avoiding the payment of the outstanding, the Opposite Party No.1 had

made an application for One Time Settlement. His proposal was

immediately responded to, but, he did not take any action for payment of

the settled amount, to the serious detriment of the Petitioner. According

to Mr. Dash, learned counsel, the said order determinging the

outstanding at Rs.10 lakhs, is absolutely beyond the jurisdiction of the

Ombudsman. According to Mr. Dash, learned counsel, by interfering

with the judgment dated 31.12.2020 passed by the GRF, Balasore in

Complaint Case No.409 of 2020, the Ombudsman has committed a

serious illegality, in as much as the GRF had observed that, while

approaching this Court for waiver of the arrear dues, the Petitioner had

admitted the arrear lying against the previous consumer is amounting to

Rs.19,86,164/-. Hence, the claim of the Opposite Party No.1 that the

Petitioner did not give the statement of the final dues cannot be

sustained. The Opposite Party No.1 has liability to pay the outstanding

of the previous owner in order to get the fresh electricity connection.

5. At this juncture, we would like to make a reference to the

Regulation-17(ii) of the OERC Distribution (Conditions of Supply)

Code, 2019. The said Regulation provides that "where applicant has

purchased a new property and power connection is lying disconnected, it

shall be the duty of the applicant to verify that the previous owner has

paid all dues to the Licensee/supplier and has obtained "no dues

certificate" from the Licensee/supplier. In case "no dues certificate" is

not obtained by the previous owner, the applicant before change in the

ownership of property may approach the Engineer of the

Licensee/supplier for a "no dues certificate". The Engineer shall

acknowledge receipt of such request and shall either intimate in writing

outstanding dues, if any, on the premises or issue "no dues certificate"

within one month from the date of application. In case, the

Licensee/supplier does not intimate outstanding dues or issue "no dues

certificate" within specified time, new connection on the premises shall

not be denied on ground of outstanding dues of previous consumer. In

such an event, the licensee/supplier shall have to recover his dues from

previous consumer as per provisions of law."

6. It has been clearly observed by the GRF in their judgment

dated 31.12.2020 that outstanding dues was communicated to the

Opposite Party No.1 by the letter No.FC/CO/831/8749 dated 04.09.2016.

Even thereafter the outstanding was not paid off. As such, the liability

stands with the Opposite Party No.1, not upon the previous owner in

terms of Regulation-17(ii) of the OERC Distribution (Conditions of

Supply) Code, 2019.

7. The Opposite Party No.1 filed his counter affidavit on

08.08.2022 and contended that there is no infirmity in the judgment

dated 31.03.2021 in as much as the Deputy General Manager (T),

NESCO by their letter dated 28.06.2002 had informed that the proposal

for One Time Settlement of Rs.10 lakhs had been approved by the

Managing Director of NESCO and the same may be treated as demand

for the final settlement. The said incidence of settlement has also been

noted by this Court while passing the judgment dated 28.06.2013 in

W.P.(C) No.20670 of 2009. It has been further asserted that, Regulation

4(8) of the Orissa Electricity Regulatory Commission (Grievances

Redressal Forum and Ombudsman) Regulations, 2004 as the Regulation

confers the general powers of superintendence and control to the Orissa

Electricity Regulatory Commission (OERC) over the forums and the

forums shall duly comply with such directions as the Commission may

issue from time to time. The definition of "Commission" and "Forum"

are provided in the said Orissa Electricity Regulatory Commission

(Grievances Redressal Forum and Ombudsman) Regulations, 2004. It

has been also stated that Regulation 8 (3) of the Orissa Electricity

Regulatory Commission (Conduct of Business) Regulation, 2004,

provides that "all matters which the Commission is required under the

Central Act and the State Act to undertake and discharge through

hearings shall be done through hearing in the manner specified under

the said Act and in these Regulations". It has been also stated that under

Regulation 8(6) of the Orissa Electricity Regulatory Commission

(Conduct of Business) Regulation, 2004, the "Commission may hold

consultations with the parties or any one or more of them before

deciding on the initiation of a proceeding in any matter". Those

contentions are remote to the present controversy as by the Regulation,

the higher forum of adjudication has been created. It has been stated in

Paragraph-14 of the said counter affidavit, that the Opposite Party No.1-

M/s. Krebs & CIE (India) Ltd. had established a factory at Kalama in

Mayurbhanj for manufacturing Basic Chrome Sulphate and its by-

products. The said company was declared as sick in the year 1990 by

BIFR. In the month of November, 1996, the said company was closed

down. BIFR directed the company to settle the dues of its creditors and

accordingly, the company entered into settlement with its creditors and

started liquidating loans of IPICOL, OSFC and SBI. By letter dated

15.11.1996, the said company requested the Executive Engineer,

GRIDCO to disconnect the power supply to the factory with immediate

effect. Accordingly, on 19.11.1996, the power supply was disconnected.

It has been admitted that on 19.03.2002, M/s. Krebs & CIE (India) Pvt.

Ltd. by their letter dated 19.03.2002 had requested NESCO for one time

settlement for their arrear electricity dues. Pursuant to that request,

NESCO acceded to such request by their letter dated 28.06.2002,

intimated the consumer that they have approved the One Time

Settlement (OTS) by payment of Rs.10 lakhs. The said amount was

declared to be treated as demand for the final settlement. In this regard,

there is no dispute that on 19.07.2001, M/s. Krebs & CIE (India) Pvt.

Ltd. had entered into a memorandum of understanding for selling of its

unit including assets and liabilities but excluding the liabilities with the

Banks, Financial Institutions, Government and liabilities on account of

the workers. The Opposite Party No.1 approached the NESCO vide its

letter dated 28.02.2009 for a fresh electricity connection and starting the

production after the required renovation. By the letter dated 10.09.2009,

the Opposite Party No.1 communicated that unless the dues to the extent

of Rs.19,86,164/- is paid off, fresh electricity connection could not be

considered. It has been contended that the said letter dated 28.06.2002

has not been withdrawn by the authority and as such, the arrear due

should be deemed at Rs.10 lakhs and the subsequent demand of

Rs.19,86,164.00 is arbitrary and unacceptable. In Paragraph 21 of the

counter affidavit, the Opposite Party No.1 has stated that the Opposite

Party No.1 has already deposited the sum of Rs.10 lakhs on 11.05.2021

pursuant to the order of the Ombudsman and the Petitioner has accepted

the said amount vide Receipt No.659931.

8. Mr. L.K. Maharana, learned counsel appearing for the

Opposite Party No.1 has after placing the relevant facts, as noted above,

has stated that since the previous owner, namely, M/s. Krebs CIE (India)

Ltd. had applied for One Time Settlement (OTS) and the Petitioner

offered the One Time Settlement but the benefit of that settlement could

not be availed by the Opposite Party No.1, as the payment was not made.

According to Mr. Maharana, learned counsel, the demand of

Rs.19,86,164/- was made to the Opposite Party No.1 as the condition-

precedent to supply the electricity to the Unit of the Opposite Party No.1

is unsustainable. According to him, the GRF did not apply its mind to

that aspect of One Time Settlement at Rs.10 lakhs. Once the settlement

is made and not withdrawn, the liability thereunder is only to be

discharged by the successor-owner of the premises.

9. On appreciation of the rival contentions what surfaces for

our determination are, (i) whether the said One Time Settlement as

communicated by the letter dated 28.06.2002 will be binding on the

Petitioner when the ownership of the premises is changed and the new

owner did not apply for paying all the outstanding for the electricity?

10. The letter dated 28.06.2002 has been placed before us by

the Petitioner as Annexure-1 to the writ petition. For purpose of

reference, the entire letter is extracted hereunder:

"NORTHEASTERN ELECTRICITY COMPANY OF ORISS LIMITED OFFICE OF THE MANAGING DIRECTOR JANUGANJ, BALASORE

No.4827 Dated:28.06.2002

To

The Director, M/s. Krebs & Cie (India) Limited., 6-B, Pretoria Street, Calcutta-71

Sub: Payment of outstanding Electricity dues Ref: your letter dated 19th March, 2002

Sir,

On your request mentioned in the letter under reference, Managing Director, NESCO is pleased to allow you to make one time payment of Rs.10 lakhs (Rupees Ten Lakhs).

The payment may please be made through Demand Draft drawn in favour of Managing Director, NESCO, Balasore against Con No.15959(L). On receipt of the payment necessary clearance will be issued. Please make it convenient to meet the M.D., NESCO for a discussion to settle your old account.

By Order of M.D., NESCO Deputy General Manager (T) NESCO

No.4828 Dated/28.06.2002

Copy to S.E., Balasore/Executive Engineer, BED, Baripada for favour of his information and necessary action.

Deputy General Manager (T)"

NESCO

It is apparent that there is no time stipulation in the said letter for

payment of the sum as approved by way of One Time Settlement.

Regulation-17(i) of the OERC Distribution (Conditions of Supply) Code,

2019 provides that in case "No Due Certificate" is not obtained by the

previous owner, the applicant before the change in the ownership of

property, may approach the Engineer of the Licensee/supplier for "No

Due Certificate". The Engineer shall acknowledge the receipt of such

request and intimate in writing the outstanding dues, if any, in respect of

the premises or issue "No Due Certificate" within one month from the

date of the application. In case the Licensee/supplier does not intimate

the outstanding dues or issue "No Due Certificate" within the specified

time, new connection on the premises shall not be denied on the ground

of outstanding dues of previous consumer. It has been admitted by the

Opposite Party No.1 that the payment of the outstanding dues on account

of consumption of electricity had not been made. The purchaser has not

taken any objection in this regard in as much as knowledge of which, has

been admitted by the Opposite Party No.1. Thus, for non-

communication, no liability can be shifted to the previous owner i.e.

M/s. Krebs & CIE (India) Pvt. Ltd. In view of the acquisition

memorandum, the entire liability falls on the Opposite Party No.1. The

finding of the Ombudsman that the Deputy General Manager (T),

NESCO vide his Letter No.4827 dated 28.06.2002, Annexure-1 to the

writ petition, had intimated the Director M/s. Krebs & CIE (India) Pvt.

Ltd. has not been questioned. It was communicated by the letter dated

19.03.2002 thus:

"On your request, mentioned in the letter under

reference, Managing Director, NESCO is pleased to

allow you to make one time payment of Rs.10 lakhs. The

payment may pleased be made through demand draft in

favour of the Managing Director, NESCO , Balasore

against Con No.15959(L)."

It was also communicated that on receipt of the payment,

necessary clearance should be issued. But for a long time, admittedly,

the settled amount was not paid. When the Opposite Party No.1 had

requested for electricity supply to his Unit, the Petitioner restored the

original claim of Rs.19,86,146/- The sheet-anchor of the present

controversy is the said demand. Fundamentally, it is an issue of payment

of the arrear electricity bills which stood at Rs.19,86,146/-. When the

fresh demand was communicated by the letter dated 10.09.2009,

Annexure-2 to the writ petition, no additional amount was charged on

the Opposite Party No.1.

11. Once the liability has been determined by means of One

Time Settlement and without any prescribed date of payment, whether