2010 (1) TMI 956 - HC - Companies Law

Court Dismisses Application Due to Lack of Jurisdiction & Failure to Meet Connection Conditions

Agarwal Mittal Concast (P.) Ltd. Versus Official Liquidator of Jalan Forgings Ltd. (in Liquidation)

The court dismissed the application, citing lack of jurisdiction to adjudicate the dispute and the applicant's failure to meet conditions for a new ... Winding up - applicant has prayed for not liable to pay the outstanding electricity dues of the company in liquidation, for the pre-liquidation period in respect of composite lot, a direction to the respondents to take all necessary steps to provide fresh electricity connection in respect of the land in question without insisting to pay the outstanding electricity dues of the pre-liquidation period of the company in liquidation and also prayed for direction to the respondents to provide temporary electricity connection at the site of M/s. Jalan Forgings Ltd. (in liquidation), at the land described hereinabove, without insisting to pay the outstanding electricity dues of the pre-liquidation period of the company in liquidation Held that:- Though this court has jurisdiction to decide the claims by or against the company in liquidation as per the provisions of section 446(2) read with the other relevant provisions of the Act, inasmuch as in the present proceedings, there is no claim by or against the company involved and as the electricity company is not claiming any sum from the liquidator or the company, but is claiming from the applicant, as an intending consumer of power, certain sums payable as a precondition to process application to avail power supply, the right to make such demand is legal in view of the condition contained in the conditions of supply of power and is even otherwise, without its existence, such condition in the statutory conditions of supply is recognised by the apex court. The true scope and ambit of the powers under section 446(2) and other relevant provisions does not render any assistance to the applicant in view of the fact that this court has no jurisdiction to entertain the matter and grant reliefs as prayed for. Thus the applicant is not entitled to either temporary or permanent power supply and hence, at this stage, the applicant does not deserve any relief from this court. Issues Involved:1. Clarification/Modification of previous court orders.2. Liability for pre-liquidation electricity dues.3. Jurisdiction of the company court.4. Validity and applicability of condition 2(j) of the conditions of supply.5. Practical difficulties in providing electricity connection.Issue-Wise Detailed Analysis:1. Clarification/Modification of Previous Court Orders:The applicant sought clarification/modification of the orders dated March 18, 2008, and November 21, 2008, regarding the payment of outstanding electricity dues for the pre-liquidation period. The applicant argued that as per clause 15 of the terms and conditions of sale, they were not liable for such dues. The court found that the terms and conditions of the sale were clear and unambiguous, requiring no further clarification.2. Liability for Pre-Liquidation Electricity Dues:The applicant contended that they were not liable for the pre-liquidation electricity dues of the company in liquidation. They cited clause 15 of the sale terms and various judicial precedents to support their claim. The court, however, held that the electricity company was justified in demanding the payment of these dues as a precondition for granting a new electricity connection. The court referenced the decision in Paschimanchal Vidyut Vitran Nigam Ltd. v. DVS Steels & Alloys (P.) Ltd., where the Supreme Court upheld the legality of such demands.3. Jurisdiction of the Company Court:The applicant argued that the company court had jurisdiction to decide the matter under section 446(2) of the Companies Act, 1956. The court disagreed, stating that the dispute was a civil matter between the applicant and the electricity company, arising after the sale was completed. The court noted that its jurisdiction was limited to matters specified in the Companies Act and that this dispute did not fall within those parameters. The court cited various judicial precedents to support its position, including decisions from the Kerala, Delhi, and Andhra Pradesh High Courts.4. Validity and Applicability of Condition 2(j) of the Conditions of Supply:The electricity company invoked condition 2(j), which mandates that new occupants clear the previous occupant's dues before a new connection is granted. The applicant challenged the validity of this condition, arguing that it was not saved under the Electricity Act, 2003. The court held that condition 2(j) was valid and applicable, referencing the Division Bench's decision in L.P.A. No. 691 of 2003, which upheld the condition's legality. The court also noted that the condition was consistent with the Electricity Act, 2003, and the Supply Code issued by the Gujarat Electricity Regulatory Commission (GERC).5. Practical Difficulties in Providing Electricity Connection:The court considered the practical difficulties in providing a new electricity connection, including the need for significant infrastructure upgrades and the associated costs. The electricity company detailed the technical and financial requirements for granting the connection, which included laying new cables and upgrading existing lines. The court concluded that the applicant had not met these requirements and therefore was not entitled to the connection at that stage.Conclusion:The court dismissed the application, holding that it lacked jurisdiction to adjudicate the dispute and that the applicant had failed to meet the necessary conditions for a new electricity connection. The court affirmed the validity of condition 2(j) and emphasized that the applicant must clear the outstanding dues before their request for a new connection could be processed.