Electricity dues and auction sales: valid supply conditions may bind transferees, while Section 56(2) limits disconnection only.

Electricity supply under Section 43 is not absolute; where a different owner or occupier applies after disconnection, the request is a fresh connection, not reconnection. Valid supply conditions or supply codes may require a subsequent owner to clear antecedent electricity dues before supply is granted, and authorised subordinate legislation may create a statutory charge, but not general law alone. Section 56(2) limits only the disconnection remedy for default and does not bar civil recovery or recovery under valid supply conditions. An "as is where is" auction sale may put the purchaser on notice of outstanding electricity dues where the terms disclose or imply that liability.

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Issues: (i) Whether the duty to supply electricity under Section 43 of the Electricity Act, 2003 is absolute and whether an application by an auction purchaser seeking supply to the same premises is a fresh connection or a reconnection; (ii) whether the statutory conditions of supply or supply codes could validly require a subsequent owner to clear the electricity arrears of the previous owner and whether such arrears could be treated as a charge on the premises; (iii) whether Section 56(2) of the Electricity Act, 2003 bars recovery of electricity dues through civil remedies or under valid supply conditions; and (iv) whether a sale on an "as is where is" basis puts the auction purchaser on notice of outstanding electricity dues.

Issue (i): Whether the duty to supply electricity under Section 43 of the Electricity Act, 2003 is absolute and whether an application by an auction purchaser seeking supply to the same premises is a fresh connection or a reconnection?

Analysis: The obligation to supply electricity under Section 43 is subject to the Act, the requirement of a completed application, payment of necessary charges, security, and other lawful compliances. The provision is directed to the owner or occupier who applies for supply, and the Act treats electricity supply as being to the consumer, while identifying the premises only as the situs for supply. On that basis, when a different owner or occupier applies after a prior connection has been disconnected, the request is not a reconnection but a fresh connection. Reconnection arises only where the same consumer seeks supply again for the same premises.

Conclusion: The duty to supply is not absolute, and an auction purchaser's request is generally a fresh connection, not a reconnection.

Issue (ii): Whether the statutory conditions of supply or supply codes could validly require a subsequent owner to clear the electricity arrears of the previous owner and whether such arrears could be treated as a charge on the premises?

Analysis: Under the 1948 regime, conditions of supply framed under the statutory power of the Electricity Board had statutory force, and under the 2003 Act the State Commission's power under Section 50 and the rule-making power under Section 181 are wide enough to frame supply codes governing recovery of electricity charges and related matters. Such conditions may validly require clearance of the previous consumer's dues before a new connection is granted, provided they are consistent with the parent Act and reasonable in relation to its objects. However, in the absence of an express statutory provision, electricity arrears do not automatically constitute a charge on the premises in general law. A statutory charge can be created by valid subordinate legislation where the parent statute permits it, and where the terms of sale and statutory conditions make the purchaser aware of the liability, the dues can be recovered from the transferee within the permissible framework.

Conclusion: Valid supply conditions can fasten liability on the subsequent owner, and a statutory charge may be created by authorised subordinate legislation, but not by general law in the absence of such authority.

Issue (iii): Whether Section 56(2) of the Electricity Act, 2003 bars recovery of electricity dues through civil remedies or under valid supply conditions?

Analysis: Section 56 deals with disconnection for default and the two-year limitation in sub-section (2) restricts the coercive remedy of disconnection under that section. The statutory text preserves the right to recover dues by suit, and the limitation attached to Section 56 does not extinguish the underlying right to recover through other lawful modes. Accordingly, valid civil recovery proceedings and recovery under statutory conditions of supply are not barred by Section 56(2), although the remedy of disconnection is subject to that limitation.

Conclusion: Section 56(2) limits the disconnection remedy under Section 56, but does not bar civil recovery or recovery under valid statutory supply conditions.

Issue (iv): Whether a sale on "as is where is" basis puts the auction purchaser on notice of outstanding electricity dues?

Analysis: A sale on an "as is where is" basis is not confined to the physical condition of the property; it extends to the title, encumbrances, liabilities, and known statutory dues attached to the property, unless the auction terms provide otherwise. In a public auction, the purchaser is expected to undertake due diligence, and where the terms expressly or by necessary implication disclose outstanding electricity dues, the purchaser is on notice of the liability. The doctrine of caveat emptor therefore operates with full force in such sales.

Conclusion: Yes. An "as is where is" sale places the purchaser on notice of pending electricity dues where the auction terms so indicate or where due diligence would reveal them.

Final Conclusion: The batch of appeals was resolved by upholding the validity and applicability of statutory supply conditions in appropriate cases, while recognising that the effect of those conditions depends on the governing regime and the facts of each auction sale. The Court also confined Section 56(2) to the disconnection remedy and, in the interests of equity, directed waiver of accrued interest from the date of the auction purchasers' applications for supply.

Ratio Decidendi: Electricity supply may be regulated by valid statutory conditions requiring a subsequent owner to clear antecedent dues, and such dues may be recovered from the transferee where authorised by law or by a statutory supply code, while Section 56(2) limits only the disconnection remedy and does not extinguish other lawful modes of recovery.

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