2006 (10) TMI 462 - SC - Indian Laws

SC Revokes HC Decision; Orders Rs. 25L Deposit for Power Supply Pending Reevaluation of Clause 21A Validity and Legal Framework.

Dakshin Haryana Bijli Vitran Nigam Ltd. Versus M/s. Paramount Polymers Pvt. Ltd.

The SC set aside the HC's judgments and remitted the writ petition for fresh consideration. It directed the first respondent to deposit Rs. 25 lakhs for ... Recovery of dues - Validity Of clause 21A of the terms and conditions of Supply could incorporated - Consumer defaulted in paying the consumption charges - consequent disconnection of supply - Advertisement for the undertaking - offered for sale on 'as is where is basis' - Possession given by the Financial Corporation - Seeking mandatory injunction directing the appellant- Company to give a fresh electric connection to the first respondent without insisting on the clearing of the dues of the prior owner of the premises - HELD THAT:- We are of the view that the decision in Isha Marbles [1995 (2) TMI 442 - SUPREME COURT] cannot be applied to strike down the condition imposed and the first respondent has to make out a case independent on the ratio of Isha Marbles (supra), though it can rely on its ratio if it is helpful, for attacking the insertion of such a condition for supply of electrical energy. This Court was essentially dealing with the construction of Section 24 of the Electricity Act in arriving at its conclusion. The question of correctness or otherwise of the decision in Isha Marbles (supra) therefore does not arise in this case especially in view of the fact that the High Court has not considered the question whether clause 21A of the terms and conditions incorporated is invalid for any reason. Thus, we think that the proper course to adopt is to set aside the judgments of the learned Single Judge and that of the Division Bench and remit the writ petition filed by the first respondent to the High Court for a fresh decision in accordance with law. The first respondent would be free to amend its writ petition including the prayers therein and in the case of such an amendment the appellant would be entitled to file an additional statement in opposition. The writ petition will be considered afresh by the High Court in the light of what we have stated above. It is seen that after the High Court allowed the writ petition, the connection was restored to the first respondent in obedience to the writ, even though subsequently, this Court stayed the operation of the judgment of the High Court by its order dated 5.7.2006. It is now brought to our notice that a fresh connection has been provided to the first respondent in the light of the direction in the judgment under appeal without collecting the arrears that were due from M/s L.L.C. Steel Pvt. Ltd. Strictly, in view of the fact that we have set aside the judgment of the High Court, the first respondent should lose the benefit of the fresh connection. But considering that the first respondent is an industrial undertaking and taking note of the plea that investments have been made by it to make the unit workable, we think that it will be appropriate to direct the first respondent to deposit a portion of the amount in arrears as a condition for continuance of the supply to it by the appellant on payment of regular monthly bills as per the terms and conditions between the parties. We, therefore, direct that if the first respondent pays to the appellant, without prejudice to its contentions in the writ petition, a sum of ₹ 25 lakhs (rupees twenty five lakhs) within a period of six weeks from today, the fresh connection given to the first respondent will not be disconnected by the appellant, until the writ petition is disposed of afresh by the High Court pursuant to this order of remand. In case the High Court accepts the challenge of the first respondent to clause 21A as inserted in the terms and conditions of supply, the appellant will refund the sum of ₹ 25 lakhs with six per cent interest thereon from the date of payment by the first respondent till the date of its return by the appellant. In case the writ petition is dismissed by the High Court, the appellant would be entitled, at the volition of the first respondent, to adjust the amount of ₹ 25 lakhs towards the dues claimed from the previous consumer, M/s L.L.C. Steel Pvt. Ltd. and maintain the fresh connection given to the first respondent on it fulfilling its obligations in terms of clause 21A and act on that basis. If the first respondent, does not desire to have a power connection based on clause 21A of the Terms and Conditions of Supply, the appellant will refund the sum of ₹ 25 lakhs to the first respondent without interest within two months of the judgment of the High Court and would disconnect the power connection now given. Of course, if the first respondent fails to deposit the sum of ₹ 25 lakhs within the time fixed by us, the appellant would be free to disconnect the power supply granted to the first respondent pursuant to the judgment of the High Court which we have set aside herein and take all steps that may be permissible in law for recovery of the amounts due. The appeal is allowed. The High Court is requested to expeditiously dispose of the writ petition afresh according to law and in the light of the observations contained herein. Issues Involved:1. Liability of the purchaser for arrears of electricity charges owed by the previous owner.2. Validity and applicability of Clause 21A in the Terms and Conditions of Supply introduced on 27.11.2001.3. The impact of the Haryana Government Electrical Undertakings (Dues Recovery) Act, 1970 on the recovery of electricity dues.4. The relevance and application of the Supreme Court decision in M/s Isha Marbles Vs. Bihar State Electricity Board.Issue-wise Detailed Analysis:1. Liability of the Purchaser for Arrears of Electricity Charges Owed by the Previous Owner:The appellant, a distributing company, refused to provide a fresh electricity connection to the first respondent, who purchased an undertaking from M/s L.L.C. Steels Pvt. Ltd., unless the arrears owed by the previous owner were cleared. The first respondent argued that they should not be held liable for the previous owner's dues, relying on the Supreme Court's decision in M/s Isha Marbles Vs. Bihar State Electricity Board, which held that an auction purchaser could not be called upon to clear past arrears as a condition precedent for a fresh connection.2. Validity and Applicability of Clause 21A in the Terms and Conditions of Supply Introduced on 27.11.2001:The appellant introduced Clause 21A, which mandated that no fresh connection would be provided to a purchaser unless the outstanding dues of the previous consumer were cleared. The High Court did not address the validity of this clause but held that it could not apply retrospectively to the first respondent, who purchased the undertaking before the clause's introduction. The Supreme Court, however, found that Clause 21A(c) applied to existing consumers with outstanding dues and that the relevant date for applying the clause was the date of the fresh connection application (1.1.2002), not the date of purchase.3. The Impact of the Haryana Government Electrical Undertakings (Dues Recovery) Act, 1970 on the Recovery of Electricity Dues:The Supreme Court noted that the High Court failed to consider the Haryana Government Electrical Undertakings (Dues Recovery) Act, 1970, which allows for the recovery of electricity dues as arrears of land revenue. This Act provides the appellant with statutory authority to recover dues from the premises, even from a transferee, thus supporting the validity of Clause 21A.4. The Relevance and Application of the Supreme Court Decision in M/s Isha Marbles Vs. Bihar State Electricity Board:The Supreme Court distinguished the present case from Isha Marbles, noting that the latter did not involve a statutory provision like Clause 21A. The Court emphasized that the decision in Isha Marbles could not be used to invalidate Clause 21A, which was introduced under the statutory authority of Section 49 of the Electricity (Supply) Act. The Court also observed that the correctness of Isha Marbles was under reconsideration by a larger bench.Conclusion and Directions:The Supreme Court set aside the High Court's judgments and remitted the writ petition for fresh consideration. It directed the first respondent to deposit Rs. 25 lakhs as a condition for the continuance of the electricity supply, pending the High Court's decision. The Court provided detailed instructions on the handling of this deposit based on the High Court's eventual ruling on the validity of Clause 21A. The appeal was allowed, and the High Court was requested to expedite the writ petition's disposal.