Court sets aside outstanding electricity dues claim, allows new connection without payment. Upholds Regulation 4.6.4.

The court allowed the writ petition, setting aside the claim for outstanding electricity dues from the petitioner and directing the electricity provider to provide a new connection without requiring payment of the alleged dues. The court upheld the validity of Regulation 4.6.4 of the Supply Code, emphasizing the need for a nexus to claim outstanding dues from a new consumer and clarifying that electricity dues do not automatically transfer with the property.

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Issues Involved:
1. Disconnection of electricity supply by DVC due to non-payment.
2. Initiation of Corporate Insolvency Resolution Process (CIRP) against the borrower.
3. Sale of the borrower's property through e-auction and the subsequent purchase by the petitioner.
4. Application for a new electricity connection by the petitioner and DVC's demand for outstanding dues.
5. NCLT and NCLAT proceedings regarding the maintainability and jurisdiction over the electricity dues.
6. Challenge to the vires of Regulation 4.6.4 of the West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2013.
7. Applicability of the Electricity Act, 2003, and the IBC to the outstanding electricity dues.
8. Allegations of discrimination and violation of constitutional rights under Article 14.

Detailed Analysis:

1. Disconnection of Electricity Supply:
The borrower was enjoying electricity from DVC, which issued a disconnection notice on August 28, 2018, due to non-payment and disconnected the supply in September 2018.

2. Initiation of CIRP:
On December 5, 2018, CIRP was initiated against the borrower. The NCLT recorded the failure of the resolution process and appointed a liquidator under Section 33(4) of the IBC on September 6, 2019. An application by the resolution professional for reconnection of electricity was turned down by the NCLT.

3. Sale of Borrower's Property:
On December 10, 2020, an order was passed to sell the borrower's property. The liquidator published an e-auction notice, excluding the liability of the auction purchaser for electricity dues through a corrigendum. The petitioner purchased the property in the e-auction, and a sale certificate was issued on July 8, 2021.

4. Application for New Electricity Connection:
The petitioner applied for a new electricity connection on June 29, 2021. DVC demanded outstanding dues left by the erstwhile owner as a pre-condition for providing the new connection.

5. NCLT and NCLAT Proceedings:
The petitioner's application under Section 60(5) of the IBC was dismissed by the NCLT on February 16, 2022, stating that the disconnection was not related to insolvency. The petitioner filed an appeal before the NCLAT, which is pending. The writ petition was filed challenging DVC's decision dated July 19, 2021.

6. Challenge to Vires of Regulation 4.6.4:
The petitioner challenged the vires of Regulation 4.6.4 of the Supply Code, arguing it was arbitrary and unreasonable. The petitioner contended that the IBC, being a self-contained code, should govern the recovery of dues, including electricity dues.

7. Applicability of Electricity Act and IBC:
The court examined the interplay between the Electricity Act, 2003, and the IBC. It was held that the auction purchaser, having no nexus with the defaulting consumer, could not be held liable for the outstanding dues under Regulation 3.4.2. The court emphasized that electricity dues do not pass with the property as a charge thereon.

8. Allegations of Discrimination and Violation of Constitutional Rights:
The petitioner argued that DVC's reliance on Regulation 4.6.4 was discriminatory and violated Article 14 of the Constitution. The court held that the regulation, if read harmoniously with Regulation 3.4.2 and the scheme of the Supply Code, was not violative of the Constitution.

Conclusion:
The court allowed the writ petition, setting aside DVC's claim for outstanding dues from the petitioner and directing DVC to provide a new electricity connection without insisting on payment of the alleged dues. The court also held that the vires of Regulation 4.6.4 were not unconstitutional when read in the context of the Supply Code and the Electricity Act. The court emphasized the distinct fields of operation of Regulations 3.4.2 and 4.6.4 and the necessity of proving a nexus for claiming outstanding dues from a new consumer.

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