2021 (10) TMI 1456 - SC - Indian Laws

Electricity bill demand raised due to billing error doesn't constitute service deficiency under Consumer Protection Act

SC dismissed appeal challenging National Commission's order dismissing consumer complaint against electricity distribution company. Court held that ... Challenge to Order of the National Consumer Disputes Redressal Commission (National Commission), dismissing their consumer complaint on the ground that there was no deficiency in service on the part of the licensee (electricity distribution company) - Interpretation of Section 56 of the Electricity Act, 2003, particularly the meaning of 'first due' and the applicability of the limitation period for recovering dues. Demand for additional payment by the electricity distribution company constitutes a 'deficiency in service' under the Consumer Protection Act, 1986? - HELD THAT:- Despite holding that electricity charges would become first due only after the bill is issued to the consumer (para 6.9 of the SCC Report) and despite holding that Section 56(2) does not preclude the licensee from raising an additional or supplementary demand after the expiry of the period of limitation prescribed therein in the case of a mistake or bonafide error (Para 9.1 of the SCC Report), this Court came to the conclusion that what is barred Under Section 56(2) is only the disconnection of supply of electricity. In other words, it was held by this Court in the penultimate paragraph that the licensee may take recourse to any remedy available in law for the recovery of the additional demand, but is barred from taking recourse to disconnection of supply Under Section 56(2). The bar actually operates on two distinct rights of the licensee, namely, (i) the right to recover; and (ii) the right to disconnect. The bar with reference to the enforcement of the right to disconnect, is actually an exception to the law of limitation. Under the law of limitation, what is extinguished is the remedy and not the right. To be precise, what is extinguished by the law of limitation, is the remedy through a court of law and not a remedy available, if any, de hors through a court of law. However, Section 56(2) bars not merely the normal remedy of recovery but also bars the remedy of disconnection. This is why the second part of Section 56(2) is an exception to the law of limitation. It appears from the narration of facts in paragraph 2 of Rahamatullah Khan that this Court was persuaded to take the view that it did, on account of certain peculiar facts. The consumer in that case was billed under a particular tariff code for the period from July-2009 to September-2011. But after audit, it was discovered that a different tariff code should have been applied. Therefore, a show cause notice was issued on 18.03.2014 raising an additional demand for the period from July-2009 to September-2011. Then a bill was raised on 25.05.2015 for the aforesaid period. Therefore, the consumer successfully challenged the demand before the District Consumer Forum, but the Order of the District Forum was reversed by the State Commission on an appeal by the licensee. The National Commission on a revision filed by the consumer, set aside the order of the State Commission and restored the order of the District Forum. It was this Order of the National Commission that was under challenge before this Court in Rahamatullah Khan. Interpretation of Section 56 of the Electricity Act, 2003, particularly the meaning of 'first due' and the applicability of the limitation period for recovering dues - HELD THAT:- The bottom line of Sub-section (1) is the negligence of any person to pay any charge for electricity. Sub-section (1) starts with the words 'where any person neglects to pay any charge for electricity or any some other than a charge for electricity due from him' - Sub-section (2) uses the words 'no sum due from any consumer under this Section'. Therefore, the bar Under Sub-section (2) is relatable to the sum due Under Section 56. This naturally takes us to Sub-section (1) which deals specifically with the negligence on the part of a person to pay any charge for electricity or any sum other than a charge for electricity. What is covered by Section 56, Under Sub-section (1), is the negligence on the part of a person to pay for electricity and not anything else nor any negligence on the part of the licensee. The matter can be examined from another angle as well. Sub-section (1) of Section 56 as discussed above, deals with the disconnection of electric supply if any person 'neglects to pay any charge for electricity'. The question of neglect to pay would arise only after a demand is raised by the licensee. If the demand is not raised, there is no occasion for a consumer to neglect to pay any charge for electricity. Sub-section (2) of Section 56 has a non-obstante Clause with respect to what is contained in any other law, regarding the right to recover including the right to disconnect. Therefore, if the licensee has not raised any bill, there can be no negligence on the part of the consumer to pay the bill and consequently the period of limitation prescribed Under Sub-section (2) will not start running. So long as limitation has not started running, the bar for recovery and disconnection will not come into effect. Hence the decision in Rahamatullah Khan and Section 56(2) will not go to the rescue of the Appellant. Conclusion - i) The raising of an additional demand due to a billing error does not constitute a deficiency in service under the Consumer Protection Act, 1986. ii) Section 56(2) of the Electricity Act, 2003, bars both the recovery of dues and the disconnection of supply after the limitation period, but the period starts from the issuance of the bill. iii) The decision in Rahamatullah Khan is factually distinguishable and does not apply to the present case concerning deficiency in service. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:Whether the demand for additional payment by the electricity distribution company constitutes a 'deficiency in service' under the Consumer Protection Act, 1986.Interpretation of Section 56 of the Electricity Act, 2003, particularly the meaning of 'first due' and the applicability of the limitation period for recovering dues.Whether the electricity distribution company can recover dues after the limitation period specified in Section 56(2) of the Electricity Act, 2003, and whether disconnection of supply is permissible after this period.The applicability of precedents, especially the decision in Rahamatullah Khan, to the present case.ISSUE-WISE DETAILED ANALYSIS1. Deficiency in Service under Consumer Protection Act, 1986The legal framework under the Consumer Protection Act, 1986, defines 'deficiency' as any fault, imperfection, shortcoming, or inadequacy in the quality, nature, and manner of performance required by law or undertaken by a person in relation to any service. The Court interpreted that raising an additional demand due to a billing error does not constitute a deficiency in service. The National Commission's dismissal of the complaint on the grounds that it was a case of 'escaped assessment' rather than 'deficiency in service' was upheld. The Court reasoned that since the appellant did not dispute the correctness of the claim regarding the multiply factor error, there was no deficiency in service.2. Interpretation of Section 56 of the Electricity Act, 2003Section 56(2) states that no sum due from a consumer shall be recoverable after two years from the date it became first due unless shown continuously as recoverable. The Court examined the interpretation of 'first due' and concluded that it refers to the date when the bill is issued, not when the consumption occurred. The Court also noted that the limitation period commences from the date of discovery of the mistake, allowing for the recovery of dues even after the two-year period in cases of genuine error.The Court also addressed the distinction between the right to recover dues and the right to disconnect supply, emphasizing that Section 56(2) bars both actions after the limitation period. However, the Court clarified that the negligence on the part of the licensee does not trigger the limitation period under Section 56(1), which pertains to consumer negligence in payment.3. Applicability of PrecedentsThe Court considered the decision in Rahamatullah Khan, where it was held that the limitation period under Section 56(2) begins when the bill is issued, and the licensee may not disconnect supply after this period but can pursue other legal remedies for recovery. The Court distinguished the present case from Rahamatullah Khan, noting factual differences and emphasizing that the earlier decision did not address whether the additional demand constituted a deficiency in service.The Court also highlighted that the National Commission correctly identified the issue as one of 'escaped assessment' rather than 'deficiency in service,' aligning with the principles established in Rahamatullah Khan regarding the recovery of dues.SIGNIFICANT HOLDINGSThe Court made several significant holdings:The raising of an additional demand due to a billing error does not constitute a deficiency in service under the Consumer Protection Act, 1986.Section 56(2) of the Electricity Act, 2003, bars both the recovery of dues and the disconnection of supply after the limitation period, but the period starts from the issuance of the bill.Negligence by the licensee in billing does not fall under the purview of Section 56(1), which addresses consumer negligence in payment.The decision in Rahamatullah Khan is factually distinguishable and does not apply to the present case concerning deficiency in service.Final DeterminationsThe Court dismissed the appeal, upholding the National Commission's decision that there was no deficiency in service by the electricity distribution company. The appellant was given eight weeks to pay the remaining balance of the demand amount, with no order as to costs.