2024 (11) TMI 113 - SC - Indian Laws

Section 56(2) Electricity Act 2003 limitation period does not apply to demands under 1910 Act

SC held that section 56(2) of the Electricity Act 2003 does not apply to demands raised under the 1910 Act. The two-year limitation period under the 2003 ... Recovery of sums payable under the Indian Electricity Act, 1910 - whether section 56(2) of the 2003 Act has any application to a demand raised by the appellants on the first respondent for recovery of sums payable under the 1910 Act? - HELD THAT:- In KUSUMAM HOTELS (P) LTD. VERSUS KERALA STATE ELECTRICITY BOARD AND ORS. [2008 (5) TMI 723 - SUPREME COURT], this Court, while examining the issue of retrospective discontinuance of tariff concessions for the tourism industry, held that the liability accruing to the licensee being statutory in nature would continue to survive even after the enforcement of the 2003 Act. As settled by this Court, section 185(5) of the 2003 Act read with section 6 of the 1897 Act would lead to the inescapable conclusion that the limitation period of two (2) years prescribed for recovery of dues under section 56 of the 2003 Act would apply to liabilities arising under the 2003 Act, and not prior to the enforcement thereof. Thus, the Division Bench manifestly erred in holding that the liability incurred by the first respondent prior to the enforcement of the 2003 Act would still be barred by the provisions of section 56(2) thereof. Whether the demand, if it be treated as one under the 1910 Act, is sustainable having regard to the long delay? - HELD THAT:- Section 24 did not refer to any period of limitation as in section 56(2) of the 2003 Act. If the licensee were to opt for institution of a suit, it cannot be contended with any degree of conviction that since section 24 does not prescribe a period of limitation or does not refer to the Limitation Act, 1963 a suit can be instituted at any time as per the convenience of the licensee. Electrical energy is a saleable commodity or goods, which we find usually to be sold on credit. That is, the licensee first supplies the energy and a bill is raised by the licensee specifying the date by which the charges are to be paid, whereafter it is the liability of the consumer to pay it. On neglect to pay, the consequences in section 24(1) are attracted. Although section 24 of the 1910 Act prescribes no period of limitation, it does allow the licensee to discontinue supply of energy upon a consumer neglecting to pay charges that are demanded by raising a bill, irrespective of the fact that a suit for recovery of unpaid charges would be barred if not instituted within three (3) years of the liability accruing. There appears to be no limitation as regards the period within which notice under section 24(1) has to be issued, evincing the intention of the licensee to disconnect supply for nonpayment of claimed dues. However, if in case, despite the consumer not paying the charges demanded and the notice thereunder is not issued within a reasonable period or at any time within which a suit for recovery could be instituted, whether the right of the licensee to claim the unpaid charges would lapse will have to be decided by the court before whom the lis is brought upon consideration of the defence that is raised and the explanation for the delay. However, since the appellants accepted the order of the learned Single Judge dated 16th July, 2009 and issued a fresh demand for a reduced amount and which has since been recovered by encashing the bank guarantee, no order is made for changing the position flowing from the said order. The impugned judgment and order of the High Court allowing the intracourt appeal being unsustainable in law has to be and is, accordingly, set aside with the result that the civil appeal stands allowed. Issues Involved:1. Application of Section 56(2) of the Electricity Act, 2003 to demands for recovery of sums payable under the Indian Electricity Act, 1910.2. Validity of the demand raised by the appellants in light of the delay.Detailed Analysis:1. Application of Section 56(2) of the Electricity Act, 2003:The primary legal issue was whether Section 56(2) of the Electricity Act, 2003, which prescribes a two-year limitation period for recovering dues, applies to demands for sums payable under the Indian Electricity Act, 1910. The High Court had quashed the second show cause notice based on Section 56(2), stating that the appellants could not recover dues for the period between June 1996 and May 2000, as the notice was issued beyond the two-year limitation period after the 2003 Act came into force.The Supreme Court, however, clarified that liabilities incurred prior to the enforcement of the 2003 Act are not subject to the limitation period under Section 56(2). This was supported by precedents such as Kusumam Hotels (P) Ltd. v. Kerala SEB and K.C. Ninan v. Kerala SEB, which held that the liability under previous enactments continues and is not barred by the limitation period introduced by the 2003 Act. Therefore, the Division Bench erred in applying Section 56(2) retrospectively to liabilities that arose before the 2003 Act.2. Validity of the Demand in Light of Delay:The second issue was whether the demand raised by the appellants was valid despite the delay. The appellants had issued a second show cause notice in 2009 for dues from 1996 to 2000. The High Court had found this delay unreasonable and quashed the notice. However, the Supreme Court examined the sequence of events and previous judicial orders, which had already established the first respondent's liability to pay the minimum guarantee charges.The Court noted that the first respondent had not challenged the interim orders of 2000 and 2001, which had upheld the first show cause notice and required payment of minimum guarantee charges. The first respondent's failure to contest these orders or make payments as required resulted in the issue being settled, thereby estopping the respondent from challenging the demand again.The Supreme Court emphasized that the principle of issue estoppel applied, preventing the first respondent from re-litigating the same issue. The Court concluded that the second writ petition was not maintainable, as the liability had been judicially crystallized by earlier orders, which had attained finality.Conclusion:The Supreme Court set aside the High Court's judgment allowing the intra-court appeal, thereby upholding the appellants' demand. The Court concluded that the liability for minimum guarantee charges had been established by previous judicial orders, and the first respondent was estopped from contesting it again. The appeal was allowed, and the parties were directed to bear their own costs.