Marbles Vs. Bihar State Electricity Board  INSC 112 (3 February 1995)
S. (J) Mohan, S. (J) Sawant, P.B. Paripoornan, K.S.(J)
1995 SCC (2) 648 JT 1995 (2) 626 1995 SCALE (1)721
these appeals can be dealt with by a common judgment since the issue that
arises for our consideration is one and the same, namely, whether the auction
purchaser is liable to meet the liability of old consumer or electricity to the
premises which is purchased by him in the auction sale from Bihar State
Financial Corporation (hereinafter referred to as the Corporation) under
Section 29 (1) of the Bihar State Financial Corporation Act, 1951 (hereinafter
referred to as the Corporation Act)? Civil Appeal No. 1418 of 1995 (Arising out
of SLP No. 617 of 1992 (M/s.Isha Marbles:
this case, the appellant is a purchaser of the mortgated &wets of M/s.
Patel Industries. Daltonganj in an open auction sale held by the Corporation
Act. The appellant has paid a substantial sum towards the said transaction and
thereafter got the possession of the industry on 31.1.1991. However, the
electrical connection of the premises was disconnected when the appellant got
possession of the said unit. The appellant was called upon to the discharge all
the liabilities of the previous consumer. This was challenged in C.W.J.C. No.
1536 of 1991 before the High Court of Patna, Ranchi Bench, Ranchi. The stand taken by the writ
petitioner before the High Court was, there is a transfer of a unit; it had not
been supplied with electricity; hence, it had no occasion to consume
electricity: and as transferee it is not liable for energy consumed before such
transfer. The writ petition was dismissed by a Division Bench of the High Court
holding that the Bihar State Electricity Board (hereinafter referred to as the
'Board') would be entitled to take action in accordance with law.
Aggrieved by the impugned judgment the appellant has come in appeal before this
Appeal No 1420 of 1995 (Arising out of SLP No. 16227 of 1992: Bihar State
Electricity Board & Ors vs M/s Waxpol Industries Ltd & Anr.
this case, the facts arc slightly different. The Bihar Financial Corporation
sanctioned loan to Ws. Neo Chemicals & Metal Products (P) Ltd.for setting
up a unit for manufactured of Graphite Beneficiation. The said unit occupied
Plot Nos. 1818 and 1820 at P.O. village Boot, District Ranchi, Bihar. For non-payment of electricity bills the
electricity was disconnected. They were outstanding to the tune of
Rs.2,35,924.78/- against such electricity consumption charges. The Corporation
had advanced a sum of Rs. 3,40,000 to M/s Neo Chemicals. To secure this loan,
the properties of the company had en hypotecated/mortgaged. In order to 630 realise
this sum the properties were sought to be sold under Section 29 of the
Corporation Act. The sale was through an advertisment. The Waxpol Industries,
the respondent, filed its tender. That was the highest. Therefore, the
properties were sold in favour of the respondent for a con- sideration of
Industries applied for electricity connection to the Board. After the purchase,
in that application, Column No. 6 required Waxpol Industries to state whether
it would undertake to clear the previous dues. As against this, it was stated
"does not apply". Therefore, on 3.1.86, the Board informed waxpol
Industries that it was unable to restore electricity as its dues had not been
paid either by the con- sumer or by the subsequent occupant of
the said premises.
Aggrieved by this, the respondent herein preferred C.W.J.C. No. 25 of 1980. By
the impugned judgment, the writ petition was allowed on the ground that the
present occupants arc free from any encumberance or liability towards the
payment of outstanding electricity dues: Neo Chemicals and waxpol Industries
are two distinct companies and of such two Legal entitles. In view of the
judgment in Ram Krishna Choudhary v. Bihar State Electricity Board and others
(C.W.J.C.No.204 of 1984 disposed of on 15th October, 1990 unless there is a
clause that the auction purchaser shall not only have the assets but also the
liability including the liability of the Electricity Board, the latter cannot
take the stand that unless the dues of the erstwhile are cleared, no electric
connection will be given to the auction purchaser.
case C.A. No., 1419 of 1995 (Arising out of S.L.P. (C) No. 18244 of 1993:
Chairman Bihar State Electricity Board and others vs. Suman Packaging Private
Limited) is identical to the case in Civil Appeal No. 1420 of 1995 (arising out
of SLP(C) No. 16227 of 1992: Waxpol Industries). The respondent purchased the
unit of M/s. Sanjay Packaging Industries in an auction sale held under Section
29 of the Corporation Act for a sum of Rs. 8 lacs.
said Sanjay Packaging Industries had committed default in payment of
electricity dues amounting to Rs.87,137.34/-.
9.6.1992, the respondent (auction purchaser) applied for electricity
connection. The appellant-Board called upon the respondent to clear off the
dues of Sanjay Packaging Industries. Therefore, the respondent filed C.W.J.C.
No.5358 of 1992 for a writ of mandamus to the Board to supply electricity. The
case of the respondent as petitioner before the High Court was when the matter
was brought to the notice of the Corporation it wrote to the Board to the
effect that the writ petitioner was not liable for any dues of the erstwhile
owner and application might be favourably considered. Further, the Board had
issued a circular on 19.1.72 that in a case of genuine purchase if the old
consumer had committed default and the purchaser has no connection with the old
consumer it would neither be legal nor proper to insist on the realisation of
the arrears due for giving re-connection. The High Court took the view that
remedy under Section 24 of the Electricity Act could be to file a suit to
recover the dues from a consumer. That Section merely enables the disconnection
of electricity it arrears are not paid by the consumer. Therefore, Section 24 cannot
apply in a case where, a transferee who had no connection with the 631 original
consumer and purchases the property bona fide and in good faith.
The Board is under statutory obligation to supply electrical energy to any pawn
whenever a requisition is made subject to the fulfilment of conditions under
Clause VI of Schedule 1 of the Electricity Act. It is in this background the
circular of the Board dated 19.1.72 has to be con- sidered.
The Board is a 'State within the meaning of Article 12 of the Constitution.
Therefore, its action must pass the test of fairness and reasonableness. A
purchaser like the writ petitioner was not expected to make an enquary from the
Board so as to know whether may dues were outstanding to the card from the
previous consumer: nor is it possible for auction purchaser to find out the
personal liability of the debtor. The Division Bench went on to hold that the
previous decisions on the High Court in Isha Marbles v. Bihar State Electricity Board and another in C.W.J.C. No. 1538 of 1991
and Dani Mordhwaj Cold Storage Pvt. Ltd. v. Bihar State Electricity Board and
others in C.W.J.C. No.6437 of 1992 must be held to be per incuriam because
those decisions had not considered the important legal aspects.
Besides, the writ petitioner was a bona fide purchaser under a statutory sale.
The agreement entered into between, the consumer and the Board contained
personal bond as between the parties to the agreement. In any event, the Board
cannot take advantage of its own wrong in allowing the arrears to get
accumulated without either resorting to Section 24 or by calling upon the
consumer to furnish additional security. In this view, the writ petition came
to be allowed and a writ of mandamus was issued to the Board to provide electricity
connection on the terms and conditions laid down in class of Schedule to the
C.A. No. 1422 of 1995 (arising out of
SLP (C) No. 10253: Bihar State Electricity Board vs. Abhay Kumar and others):
identical circumstances, following the earlier decision in C.W.J.C. No. 5358 of
1992 (suman packaging Private Limited) the High Court allowed the writ petition
in this case.
Similar is the case in Civil Appeal No. 1421 of 1994 (arising out of SLP (c)
No. 11806 of 1994.
Mr. Gopal Subramaniam, learned counsel for the appellant urges the following:
appellant is a bona fide purchaser of the assess of the mortgaged assets of Ws.
Patel Industries in an auction sale. Such an auction was held under the
Corporation Act by the respondent-Corporation. The appellant is neither the
transferee nor the successor to the previous owner of the premises. It is an
independent buyer under the Bihar Public Demands Recovery (Amendment) Act,
1982. The dues towards the consumption of electricity could be recovered only
if the appellant was a consumer. He cannot be held to be a consumer since,
factually, the appellant is yet to be given electricity connection.
electricity dues by the previous industry is a contractual liability be- 632 tween
the industry and the respondent Board. It is not statutory in nature since
electricity is consumed by consumer on the basis of a written contract as
prescribed in Form EB-70 approved by Section 26 of the Indian Electricity Act.
1910 (hereinafter referred to as the 'Electricity Act').
24 of the Electricity Act has no application since that presupposes an
electricity connection which connection the appellant is yet to be given.
Therefore, the appellant cannot be held liable for any default committed by the
previous consumer. In support of this submission reli- ance is placed on Sauriyar
Luka. v. Kerala Electricity Board AIR 1959 Kerala 199. In that case, the test
applied was whether the applicant seeking electricity connection is a legal
representative of the defaulter. Further, the payment of arrears due form the
defaulting consumer cannot be insisted for the supply of electricity to the
premises used by the erstwhile consumer.
in National Textile Corporation (M.P.) Ltd., Bhopal v. MP. Electricity Board
AIR 1980 M.P. 32 it was held that any liability of a former owner of National
Textile Undertaking prior to the appointed day cannot be fastened on the
successors by mere inference.
Civil Appeal No. 1420 of 1995 (arising out of SLP (C) No. 16227 of 1992 and
Civil Appeal No. 1422 of 1995 (arising out of SLP (C) No. 10253 of 1994 the
written submissions filed by Mr. Muralidhar, learned advocate on behalf on the
respondent No. 1, Abhay Kumar inter alia run as under:
24 of the Electricity Act could be invoked only as against the person to whom
energy has been supplied. Under Section 2(C) of the Electricity Act
"consumer" means "any person who is supplied with energy"
Therefore, the liability to pay electricity dues is obviously fastened only to
Neither under the scheme of the Electricity Act nor the Electricity (Supply)
Act 1948 (hereinafter referred to as the 'Supply Act') is there any concept of
the premises of the consumer being liable for the electricity dues de hors the
consumer, whose premises it is.
doubt, by reason of the amendment made on 28th April. 1982 to the Bihar and Orissa
Public Demands Recovery Act, 1914 electricity dues are recovered by bringing
the property of the consumer concerned to sale in certificate proceedings. Such
a provision cannot be invoked against a subsequent bona fide auction purchaser
of the assets.
Court had held in Bihar State Electricity Board v. Green Rubber Industries 1990
1 SCC 731 that the relationship between the Board and consumer is purely
so far as this respondent had not consumed electricity, it was merely seeking
re-connection and there being no statutory dues towards consumption charges,
the Board cannot insist upon the respondent to pay the arrears owing by the
erstwhile consumer, is a condition precedent to provide electricity connection.
On the contrary, there is an obligation under Section 3(2) (f) and Section 22
of the Electricity Act read with Clause VI of the Scheme 1 thereof to supply
electricity. The 633 said Clause VI Schedule 1 contains conditions under which
supply can be discontinued. These conditions do not stipulate that the supply
will be discontinued if the arrears of the electricity owing by an erstwhile
consumer in the premises are not paid first. Such a pre-condition is illegal
and ultra vires both the Acts. In Sanjay Dhinora & Anr. vs. M.P Faculty
Board, Jabalpur 1990 M.P. LJ 48 the High Court laid
stress on a specific clause viz. 22A.
such a specific provision, it will not be possible to foist any such obligation
to pay dues on a subsequent bona fide purchaser of assets like the present
auction notice issued by the Corporation or even the subsequent transfer by it,
did not mention anything about the outstanding electricity dues. Neo Chemicals
and Waxpol Industries arc two different entities. Therefore, the liability of
the previous consumer cannot be fastened to this respondent.
Kumar's case (SLP (C) No. 12253 of 1994 the further point which is raised is,
the Board has initiated certain proceedings against the erstwhile owner of the
assets, namely, Allied Paper and Chemical Industries Pvt. Limited under the Bihar and Orissa Public Demands Recovery Act, 1994. By an
order dated 2.7.94 the Certificate Officer dismissed the case of the Board. The
Board has filed an ap- peal before the Collector. The said appeal is pending.
the Board is now estopped from demanding that Respondent No. 1 should pay to
the Board the dues owing to it by Allied Papers and Chemical Industries Private
Mr. Pramod Swarup, learned counsel for the Board urges as under:
Board, after giving notice under Section 24 of the Electricity Act to the
previous consumer for not receiving payment towards electricity bills in
respect of the premises, had disconnected/cut off the supply to the premises. 'Mat
premises was sold in auction by the Corporation to the appellant in Isha
Marbles case (SLP (C) No.617 of 1992) and the respondents in other cases.
Section 24 confers a statutory right to the Board to cut off the supply and for
that purpose cut or disconnect any electricity supply line or other works being
the property of the licensee (the Board) through which energy may be supplied and
may discontinue the supply and surcharge or other sum together with any
expenses incurred by him in cutting off and reconnecting the Supply are paid.
This right is without prejudice to the right of the Board to file a suit.
Therefore, the Board need not necessary file a suit. When the Board has
exercised its statutory right un- der Section 24 it cannot be forced to
reconnect supply, unless the entire charges due in respect of the building arc
paid off to the Board.
The Corporation has not given any notice to the Board.
auction purchasers could have easily ascertained the. availability of the
electricity to the premises.
The bona fides of the purchaser could have no relevance to the issue. Nor
again, the circular of the Board could be relied on to find a cause for
reconnection When the Division Bench decided the case of Suman Packaging
Private Limited (C.W.J.C. No.5358 of 1992) it chose to 634 differ from the
ruling in Isha Marbles's case (C.W.J.C.No. 1536 of 1991). It should have
referred the matter to a full bench since by the law of precedent previous
ruling of the Division Bench was building on it.
connection was already given to the premises in question in each of the cases.
Therefore, no new connec- tion could be given under Section 24 of the Act
unless the previous arrears had been cleared off. The transferee by purchasing
the unit in the auction sale held under Section 29 of the Corporation Act
cannot be said to have discharged the liabilities of the transferor who was in
arrears of electricity due under the Act. For not making payment for
electricity, connection had been cut -off in the premises.
not correct to urge that the contractual liability between the Board and the
previous consumer is sought to be enforced against the third party like the
Board is exercising a statutory right under Section 24 of the Electricity Act.
If the contentions of the Appellant is Isha Marbles (SLP (C) No. 617 of 1992,
and the respondents in other cases were to be accepted, as rightly pointed out
by the High Court in Isha Marbles (C.W.J.C. No. 1536 of 1991) the previous
consumer could always avoid payment of his arrears by transfering the unit in favour
of the third party. The proper test is to see whether the arrears are due in
relation to the premises to which electricity was supplied.
order to determine the question as to the liability of the auction purchaser
(the subsequent transferee) to discharge the arrears of consumption charges in
respect of electricity supplied to that premises (the subject - matter of
transfer) we, will have to refer to the important provisions of the Indian
Electricity Act, 1910 and the Elec- tricity (Supply) Act, 1948.
The law relating to electricity is principally contained in these two Acts:
The Electricity Act: This provides for grant of license in relation to supply
and electricity and the purchase of the undertakings. It also provides for
supply of electricity including the protective clauses.
The supply Act: It provides for constitution of State Electricity Boards, the
powers and duties of such Boards.
Section 2 of the Electricity Act in clause (C) defines a "consumer"
means by person who is supplied with energy by a licenses or the Government or
by any other person engaged in the business of supplying energy to the public
under this Act or any other law for the time being in force, and includes any
person whose premises are for time being connected for the purpose of receiving
energy with the works of a licensee.
Government or such other person, as the case may be:
Undoubtedly, this is an inclusive definition. It consists of two parts:
The person who is supplied with energy,, and (ii)It includes within it any
person whose premises are connected for the purpose of receiving energy with
the works of a licensee.
34.Rule 2A(f) defines an "occupier" as under:
" occupier" means the owner or per- son in occupation of the premises
where energy is used or proposed to be used."
Section 22 of the Electricity Act runs:
on licensee to supply energy:- Where energy is supplied by a licensee every
person within the area of supply shall except in so far as is otherwise
provided by the term and conditions of the licensee entitled on application, to
a supply on the same as those on which any other person in the same area is
entitled in similar circumstances to a corresponding supply.
that no person shall be entitled to demand, or to continue to receive, from a
licensee a supply of energy for any premises having a separate supply unless he
has agreed with the licensee to pay to him such minimum annual sum as will give
him a reasonable return on the capital expenditure, and will cover other
standing charges incurred by him in order to meet the possible maximum demand
for those premises, the sum payable to be determined in case of difference or
dispute by arbitration."
Section 26 of the supply Act provides that subject to the provisions of this
Act, the Board shall, in respect of the whole State, have all the powers and
obligation of a licensee under the electricity Act.
The requisition for supply to owners or occupiers is contained in Clause VI of
Schedule to the Electricity Act.
Requisition for supply to owners or occupiers in vicinity:- (Where, (after
distributing mains have been laid down under the provisions of Clause VI or
Clause V and the supply of energy through those mains or any of them has
commenced) a requisition is made by the owner or occupier of any premises
situate within (the area of supply) requiting the licensee to supply energy for
such premises, the licensee shall, within one month from the making of the
requisition, (or within such longer period as the Electrical Inspector may
allow), supply, and, save in so far as he is prevented from doing so by
cyclones, floods, storms of other occurrences beyond his control, continue to
supply, energy in accordance with the requisition." (Emphasis supplied) (The
rest of Clause VI of the Schedule is omitted as not necessary for our
Section 3(2) (f) of the electricity Act reads:
provisions contained in the Schedule shall be deemed to be incorporated with,
and to form part of, every licensee granted under this part, save in so far as
they are expressly added to, varied or expected by the license, and shall
subject to any such additions, variations or exceptions which the State
Government is hereby empowered to make, apply to the undertaking authorised by
Requisition VI the form prescribed by the Rules in contained in Annexure
"A" to the Rules.
The Inter-connection between 636 Section 22 of the Electricity Act and Sec- tion
26 of the Supply Act came to be dealt with by this Court in State of UP. and others v. Hindustan Aluminium Corporation and
others 1979 (3) SCC 229 at paragraphs 19 to 21 at pages 239-240:
(h) of Section 2 of the Act defines a "Licensee" to mean any person
licensed under Part 11 to supply energy.
26 of the Act of 1948 provides. Inter alia, that subject to the provisions of
that Act, the Electricity Board shall in respect of the whole states, have all
the powers and obligations of a lincensee under the Indian Electricity Act,
1910 and the Act of J948 'shall be deemed to be the licence of the Board"
for purposes of the Act (of 1910).
first proviso to the section excludes the application of some sections,
including Section 22 of the Act, and the second proviso states that the provisions
of Clause VI of the Scheduled to the Act shall apply to the Board in respect of
that area only where distribution mains have been laid by the Board and the
supply of energy through any of them has commenced.
therefore, the UPSEB is a licensee under the Act it will be sufficient, for
purpose of the controversy before us, to say that Section 22 of the Act is not
applicable to it, and Clause VI of the Schedule is applicable to it subject to
the restriction contained in the second proviso Section 26 of the Act of 1948.
So even though the Board is a licensee, the obligation under Section 22 of the
Act to supply energy to every person within the area of its supply is not
fastened on it.
provisions of the Schedule to the Act are deemed to be incorporated in, and to
form part of, every licence granted under Part II. Clause VI of that Schedule
states that where after distributing mains have been laid down and the supply
of energy through them has commenced, a requisition is made by the owner or
occupier of any premises situate within the area of supply requiring the
licensee to supply energy for such premises, the licensee shall make the supply
and shall continue to do so in accordance with the requisition. But, as has
been pointed out, the second proviso to Section 26 of the Act of 1948 places a
restriction on that obligation for it says that the provisions of Clause VI
shall apply to the Board in respect of that area only "where distribution
mains have been laid by the Board and the supply of energy through any of them
to the manner for getting electricity supply for premises the following
requirements have to be fulfilled.
are succintly stated in Shiva Gopal's law relating to Electricity Sixth Edition
at page 359.
(1) A prospective
consumer shall make an sign a requisition in the form prescribed by the rules
(Annexure VII to the Rules) for a connection of his premises for the supply of
The licensee shall then serve on the prospective consumer a notice requesting
him in writing to tender to him a written contract (in such form as the State
Government may have approved).
The prospective consumer shall within 14 days of the receipt of such notice
tender the contract duly executed by with sufficient security, binding him self
thereunder to take a supply of energy for not less than two years to such
amount as will secure to the licensee at the cur rent rates charged by bun in
annual revenue not exceeding fifteen per centum of the cost of the service line
required to comply with the requisition.
addition to the security, the 637 licensee may also require the prospective
consumer to pay to him the cost of so much of any service line as may be laid
down or placed for the purposes of the supply upon the premises required to be
connected, and of so much of any service line as may be laid down or placed for
the purpose of the supply upon the premises required to be connected and or so
much of any services line as it may be necessary for the said purposes to -lay
down or place beyond one hundred feet from the licensee's distributing main,
although not on that premises.
the prospective consumer fails to tender the written contract duly executed,
fails to give sufficient security and fails to give the cost demanded within
the said period of 14 days, the licensee shall be under no obligation to make
But if these formalities have been complied with the licensee shall be bound to
make the supply within one month or such extended time as the.Electrical
Inspector may allow, the period to the counted from the date of receipt by the
licensee of the requisition.
And after the connection has been made the licensee shall be bound to continue
the supply unless he is prevented from doing so by cyclone, floods, storms or
other occurrences beyond his control.
Next comes the important Section under the Electricity Act, namely, Section 24.
Section 24(1) provides where a consumer neglects to pay any charge for energy
of any sum other than charge for energy-the licensee, after the requisite
noticed shall be entitled to stop supply of electrical energy. Of course, this
power of disconnection Is subject to sub-section (2) of the said Section. Thus,
Section 24 relieves the licensee of its obligation under section 22 to supply
energy if the consumer has not paid to the charges for electricity supplied or
where the consumer neglects to pay the name.
Now, we will set out, by means of the following tabulated statement, as to what
the factual position is:
Sl. SLP No. Parties filed Date of Datewhen Date of appli- No. against discon-
sale/ cation for nection parchase re-connection to the took previous consumer
617/92 M/s.Isha Judg No conn- 6-1-90 4-3-91 Marbles ment ection vs. dt. at the
BSEB 5-9-91 time of in CWJC delivery No1536/91 of possession
16227/92 BSEB dt. 14-7-84 7/8.5.85 after 638 Waxpol in CWJC
BSWB dt. 17.7.91 29.11.91 9.6.92 Suman in CWJC Pack- No.5358/92 Aging P.Ltd.
10253/94 BSWB dt. no conne- 5.1.93 5.10.93 vs. 4.2.94 ction Abhay in CWJC Kumar
11806/94 BSEB dt. -do- 5.4.91 23.11.91 vs. 29.7.93 North in CWJC East
No.7299/92 fert- lisers P.Ltd.
indisputable facts are:
previous units had the benefit of electricity supply.
previous units/owners had borrowed from the corporation.
secure those loans they had mortgaged/hypothecated the properties.
electricity arrears in relation to those premises had fallen due since they had
neglected to pay
exercise of power under Section 24 of the Electricity Act the electricity
supply was disconnected.
recovery of the loans the mortgaged/hypothecated Properties were brought to
sale under Section 28 of the Corporation Act.
The appellant in Isha Marble (SLP(C) No. 617 of 1992) and the respondents in
other civil appeals became the auction purchases. They applied for supply of
electricity for the same premises to which already electricity was supplied and
disconnected for the non-clearance of the dues on account of such supply.
may, by way of a sample, quote the relevent portions of the requisition term
filled in by Isha Marbles (SLP (C) 617 of 1992:
No. E.B-70 BIHAR STATE ELECTRICITY BOARD REQUISITION FORM THE ASSISTANT
ELECTRICAL ENGINEER, ELECTRIC SUPPLY SUB-DIVISION DOLTONGANJ, RURAL NO.1 Sir,
639 I/We hereby require you to supply energy for the premises owned/occupied by
me/us and situated within the area supply of the Bihar State Electricity Board.
further require you to supply me/us with the necessary meter/meters on hire in
terms of Section 26 of the Indian Electricity Act, 191 0. I/We agree to give
YOU such security as may be required for the period of the meter/meters,
whenever called upon to do so.
xxx xxx Particulars of the premises where supply is required.
No. with name of the premises, if any 93/ Plot No.2727 Ward No.x Khara No.2 Mohalla/-Village
Bhimgarhi P.O. Dottonganj P.S. Dottonganj. Sub Divn. Doltanganj Distt. Palanpur
(Strike out the words not applicable).
xxx xxx (4) whether the applicant undertakes to clear the past liability on the
previous connection in these premises No.
xxx xxx I/We further hereby as agreed to pay every sum that may be come due
from me us for the energy, or other charges of the Board to the officer
authorized by the Board to receive it and in the event of nonpayment of the
said sum, it shall be recoverable from menus as public demand under the Bihar
and Orissa Public Demands Recovery Act. 1914.
is important to note that though the purchaser asked for electricity connection
as a new connection it cannot be regarded as a new connection. It is only a re-
connection since the premises had already been supplied with electrical energy.
Such a supply had been disconnected owing to the default of the consumer. That
consumer had bound himself to the Board to pay the dues. He also agreed to
abide by the condition as stipulated in the Act and the Rules including the
payment of dues.
Under Section 79 Clause (i) read with Section of the Supply Act it is open to
the Board to make Regulations to stipulate the terms and. conditions of supply
of electrical energy. One such stipulation is that the consumption charges must
be paid. In Ferro Alloys Corporation Ltd. v. A.P. State Electricity Board and
another 1993 Supp (4) SCC 136 at page 171 (to which one of Us was a party) it
was held thus.
Under the regulations framed by the Board In exercise of powers of section 49
read with Section 79 (j) the consumer is only entitled and the Board has an
obligation to supply energy to the consumer upon such terms and conditions as
laid down in the regulations. If therefore the regulations prescribed a
security deposit that will have to be complied wit, it also requires to be
noticed under Clause VI of the Schedule to the Electricity Act that the
requisition for supply of energy by the Board is to be made under proviso (a)after
a written contract is duly executed with sufficient security.
then are the remedies of the Board, should the consumer fail to pay?
Undoubtedly, resort could be had to Section 24 of the Electricity Act. The
provisions of this Section come into play when;
consumer neglects to pay any charge for energy due from him to a licensee, or
640 (b)the consumer neglects to pay sums other than a charge for energy due
from him to the licensee.
these circumstances, the licensee may after giving the consumer a written
notice of not less than seven clear days cut off the supply and continue to
keep the supply cut off till the consumer shall have paid the sum or sums due.
want to make it clear that resorting Section 24 is not the only remedy
available. The general remedy to file a suit will always be available to the
Besides, in the case of Bihar State Electricity Board, by reason of an
amendment of Bihar and Orissa Public Demands and Recovery Act, 1914 (46 of
1982) electricity dues could be recovered by bringing the property of the
consumer concerned to sale in certificate proceedings. This is because Rule 15
of Schedule I specifically mentions that any money payable to the;
Bihar State Electricity Board in respect of which the person liable to pay the
same as agreed by a written instrument that it shall be recoverable as public
all the present cases the supply of electricity to a particular premises which
had the benefit of enjoying electricity had been disconnected under Section 24
of the Electricity Act. The auction purchasers want reconnection.
Board says no; unless and until the consumption charges in relation to that
property which came to be incurred during the ownership of the previous
incumbent are cleared off. Is the stand of the Board correct? The High Court,
in the main judgment in Suman Packaging (C.W.J.C. No. 5358 of 1972) gives the
following reasons for answering the question against the Board:
24 stipulates discontinuance of supply of electrical energy to the consumer in
respect of a sum due from him. We are afraid the High Court had not read
Section 24 in conjunction with other statutory provisions though they had been
noted, namely, Section 26 of the Supply Act;
22 of the Electricity Act and Clause VI of Schedule of the Electricity Act.
They clearly postulate the obliga- tion to supply energy for such premises. At
the risk of repetition we hold the premises had enjoyed the benefit of
electricity. The owner of the premises or even the occupier of the premises, as
stated under Rule 2(af) of the Indian Electricity Rules, becomes liable to pay
the consumption charges together with other dues, in other words, the liability
is in respect of the dues of electricity which came to be supplied pursuant to
the contract with the former owner. The discharge of such Liability will be on
such owner or occupier.
From the above it is clear, the High Court has chosen to construe Section 24 of
the Electricity Act correctly.
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
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.
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 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.
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.
is a case of sale under Section 29 of the Corporation Act. Of course, what the
Corporation seeks to recover are the loans advanced by enforcement of a
sale cannot affect the right of the Board to rev\cover the dues as and when
such dues arose, is a point to be put against it.
Turning to the instruction issued by the Chairman of the Board and a Circular
dated 19.1.72 on which the High Court had relied, in our considered view, is
again to be weighed against the Electricity Board.
view of the above, we hold that the decision in the Souriyar Luka (supra) on
which reliance is placed by Mr. Gopal Subramaniam is correct. The ruling of
National Textile Corporation (M.P.) Ltd., Bhopal (supra) rested on the interpretation. of the provisions of Sick Textile
Under- takings (Nationalisation) Act (57 of 1974). That is not relevant, The
question with which we are concerned did not directly arise in Bihar State
Electricity Board, Patna and others v. M/s. Green Rubber Industries and others
1990 (1) SCC 73 1. We do not think it is necessary for us to refer to Rant
Chandra Prasad Sharma and others v. State of Vihar and another AIR 1967 SC 349
since that case related to co-owner.
we have discussed above pears to be the law gatherable from the various
provisions which we have detailed out above. It is impossible to impose on the
purchasers a liability which was not incurred by them.
doubt, from the tabulated statement above set out, the auction purchasers came
to purchase the property after disconnection but they cannot be 'consumer or
occupier' within the meaning of the above provisions till a contract is entered
are clearly of the opinion that there is great reason and justice in holding as
above. Electricity is public property. Law, in its majesty, behighly protects
public property and behoves everyone to 642 respect public property. But, the
law, as it stands, is inadequate to enforce the liability of the previous
contracting party against the auction purchaser who is a third party and is in
no way connected with the previous owner/occupier. It may not be correct to
state, if we hold as we have done above, it would permit dishonest consumers transferring
their units from one hand to another, from time to time, infinitum without the
payment of the dues to the extent of lacs and lacs of rupees and each one of
them can easily say that he is not liable for the liability of the predecessor
in interest. No doubt, dishonest consumers cannot be allowed to play truant
with the public property but inadequacy of the law can hardly be a substitute
for overzealousness. The relevant portions of the details of Directorship of Waxpol
Industries and Promoters of Neo Chemical and Metal Products Pvt. Ltd. from 1.
1.83 as on date of purchase of mortgaged assets by Waxpol and thereafter (filed
as Annexure 'D' to the counter affidavit on behalf of Waxpol Industries) are
of promoters Names of Directors of M/s. Neo Chemicals of Waxpol Industries
Gupta w/o 1. R.P. Gupta R.P. Gupta
Garg w/o 2.Parmanand Garg Parmanand Garg
S. Natarajan w/o 3. G. Natarajan G. Natarajan 63. Factually, it appears that
there is no new entity.
in this case M/s Neo Chemical and Metal Products Pvt. Ltd. would be liable for
the past arrears.
view of the foregoing, we upheld the judgment of the High Court in Waxpol
Industries (CWJC No. 25 of 1986).
in view of the peculiar facts, the judgments of the High Court in Suman
Packaging (CWJC No. 5358/92), Abhay Kumar (CWJC No. 11330/93) and North East
Fertilizers Pvt. Ltd. (CWJC No. 7299 of 1992) are also upheld.
regards M/s. Isha Marbles (CWJC No. 1536 of 1991) we set aside the judgment of
the High Court.
Civil Appeal No. 1418 of 1995 (arising out of SLP(C) No. 617 of 1992 (Isha
Marbles) is allowed accordingly with costs. Civil Appeal Nos. 1420, 1419, 1422
& 1421 of 1995 (arising out of SLP (C) Nos. 16227/92 - Waxpol Industries
Pvt. Ltd., SLP (C) No. 18224 of 1993 - Suman Packaging Pvt. Ltd., SLP(C) No.
10253 of 1994 - Abhay Kumar and SLP(C) No. II 806 of 1994 - North East
Fertilizers Pvt. Ltd. respectively) are dismissed with costs.