Consumer arrears and electricity undertaking scope: collected pre-takeover dues remained company assets, requiring accounting to liquidators.

Under the Electricity Act and the U.P. amendment regime, arrears of electricity charges due from consumers before takeover were not treated as part of the "undertaking" purchased by the Board because the statutory scheme referred to physical and operational assets, not book debts. Those arrears therefore remained assets of the company in liquidation. After takeover, the Board's collection of those sums was treated as collection on behalf of the company, and it was required to account to the liquidators with interest. Set-off was unavailable because the amounts collected were not the Board's own debt.

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Issues: (i) Whether arrears of electricity charges due from consumers up to the date of takeover formed part of the "undertaking" purchased by the Board under the Electricity Act and the U.P. amendment regime. (ii) Whether the Board, having realised those arrears after takeover, was bound to account for and pay them to the company in liquidation and whether set-off was available.

Issue (i): Whether arrears of electricity charges due from consumers up to the date of takeover formed part of the "undertaking" purchased by the Board under the Electricity Act and the U.P. amendment regime.

Analysis: The expression "undertaking" in the Electricity Act, 1910 and the U.P. amendment provisions was construed from the statutory context. The relevant provisions referred to lands, buildings, works, materials, plants and delivery of the undertaking, but did not expressly include book debts. The Court held that the statutory scheme, read strictly, did not extend the term to arrears of electricity charges recoverable from consumers before takeover. The definition of "undertaking" in other enactments could not be imported to enlarge the scope of the Electricity Act.

Conclusion: The arrears of electricity charges were not included in the "undertaking" and remained book debts of the company in liquidation.

Issue (ii): Whether the Board, having realised those arrears after takeover, was bound to account for and pay them to the company in liquidation and whether set-off was available.

Analysis: Since the arrears were not part of the undertaking, the Board's collection of those sums was treated as collection on behalf of the company in liquidation, in the capacity of trustee or agent. The Court further held that the Board could not invoke set-off in respect of amounts collected from consumers which were never its own debt, and that the winding-up court had power under the Companies Act to direct delivery of the company's property to the liquidators.

Conclusion: The Board was liable to pay the collected arrears, with interest, to the liquidators, and set-off was not available.

Final Conclusion: The application succeeded in full, and the Board was directed to remit the collected consumer arrears to the joint liquidators with interest, treating the sums as assets of the company in liquidation.

Ratio Decidendi: In a winding-up, consumer arrears collected by a purchaser of an electricity undertaking do not automatically vest as part of the "undertaking" unless the governing statute clearly includes book debts; absent such inclusion, the collecting body must account to the company in liquidation as trustee or agent.

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