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TaxTMI 
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TaxTMI 
1995 (2) TMI 442
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.....1.1991. However, the electrical connection of the premises was disconnected when the appellant got possession of the said unit. The appellant was called upon to the discharge all the liabilities of the previous consumer. This was challenged in C.W.J.C. No. 1536 of 1991 before the High Court of Patna, Ranchi Bench, Ranchi. The stand taken by the writ petitioner before the High Court was, there is a transfer of a unit; it had not been supplied with electricity; hence, it had no occasion to consume electricity: and as transferee it is not liable for energy consumed before such transfer. The writ petition was dismissed by a Division Bench of the High Court holding that the Bihar State Electricity Board (hereinafter referred to as the 'Board') would be entitled to take action in accordance with law. 4. Aggrieved by the impugned judgment the appellant has come in appeal before this Court. Civil Appeal No 1420 of 1995 (Arising out of SLP No. 16227 of 1992: Bihar State Electricity Board & Ors vs M/s Waxpol Industries Ltd & Anr. 5. In this case, the facts arc slightly different. The Bihar Financial Corporation sanctioned loan to Ws. Neo Chemicals & Metal Products (P) Ltd.for set....
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....pol Industries). The respondent purchased the unit of M/s. Sanjay Packaging Industries in an auction sale held under Section 29 of the Corporation Act for a sum of ₹ 8 lacs. The said Sanjay Packaging Industries had committed default in payment of electricity dues amounting to ₹ 87,137.34/-. 9. On 9.6.1992, the respondent (auction purchaser) applied for electricity connection. The appellant-Board called upon the respondent to clear off the dues of Sanjay Packaging Industries. Therefore, the respondent filed C.W.J.C. No.5358 of 1992 for a writ of mandamus to the Board to supply electricity. The case of the respondent as petitioner before the High Court was when the matter was brought to the notice of the Corporation it wrote to the Board to the effect that the writ petitioner was not liable for any dues of the erstwhile owner and application might be favourably considered. Further, the Board had issued a circular on 19.1.72 that in a case of genuine purchase if the old consumer had committed default and the purchaser has no connection with the old consumer it would neither be legal nor proper to insist on the realisation of the arrears due for giving re-connection. The H....
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....he High Court allowed the writ petition in this case. 13. Similar is the case in Civil Appeal No. 1421 of 1994 (arising out of SLP (c) No. 11806 of 1994. 14. Mr. Gopal Subramaniam, learned counsel for the appellant urges the following: The appellant is a bona fide purchaser of the assess of the mortgaged assets of Ws. Patel Industries in an auction sale. Such an auction was held under the Corporation Act by the respondent-Corporation. The appellant is neither the transferee nor the successor to the previous owner of the premises. It is an independent buyer under the Bihar Public Demands Recovery (Amendment) Act, 1982. The dues towards the consumption of electricity could be recovered only if the appellant was a consumer. He cannot be held to be a consumer since, factually, the appellant is yet to be given electricity connection. 15.The electricity dues by the previous industry is a contractual liability be- tween the industry and the respondent Board. It is not statutory in nature since electricity is consumed by consumer on the basis of a written contract as prescribed in Form EB-70 approved by Section 26 of the Indian Electricity Act. 1910 (hereinafter referred to as the ....
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....s respondent had not consumed electricity, it was merely seeking re-connection and there being no statutory dues towards consumption charges, the Board cannot insist upon the respondent to pay the arrears owing by the erstwhile consumer, is a condition precedent to provide electricity connection. On the contrary, there is an obligation under Section 3(2) (f) and Section 22 of the Electricity Act read with Clause VI of the Scheme 1 thereof to supply electricity. The said Clause VI Schedule 1 contains conditions under which supply can be discontinued. These conditions do not stipulate that the supply will be discontinued if the arrears of the electricity owing by an erstwhile consumer in the premises are not paid first. Such a pre-condition is illegal and ultra vires both the Acts. In Sanjay Dhinora & Anr. vs. M.P Faculty Board, Jabalpur 1990 M.P. LJ 48 the High Court laid stress on a specific clause viz. 22A. Without such a specific provision, it will not be possible to foist any such obligation to pay dues on a subsequent bona fide purchaser of assets like the present respondent. 23.The auction notice issued by the Corporation or even the subsequent transfer by it, did not mention....
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....aging Private Limited (C.W.J.C. No.5358 of 1992) it chose to differ from the ruling in Isha Marbles's case (C.W.J.C.No. 1536 of 1991). It should have referred the matter to a full bench since by the law of precedent previous ruling of the Division Bench was building on it. 29.Electrical connection was already given to the premises in question in each of the cases. Therefore, no new connec- tion could be given under Section 24 of the Act unless the previous arrears had been cleared off. The transferee by purchasing the unit in the auction sale held under Section 29 of the Corporation Act cannot be said to have discharged the liabilities of the transferor who was in arrears of electricity due under the Act. For not making payment for electricity, connection had been cut -off in the premises. It is not correct to urge that the contractual liability between the Board and the previous consumer is sought to be enforced against the third party like the auction purchaser. The Board is exercising a statutory right under Section 24 of the Electricity Act. If the contentions of the Appellant is Isha Marbles (SLP (C) No. 617 of 1992, and the respondents in other cases were to be accepted,....
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....n the same as those on which any other person in the same area is entitled in similar circumstances to a corresponding supply. Provided that no person shall be entitled to demand, or to continue to receive, from a licensee a supply of energy for any premises having a separate supply unless he has agreed with the licensee to pay to him such minimum annual sum as will give him a reasonable return on the capital expenditure, and will cover other standing charges incurred by him in order to meet the possible maximum demand for those premises, the sum payable to be determined in case of difference or dispute by arbitration." 36. Section 26 of the supply Act provides that subject to the provisions of this Act, the Board shall, in respect of the whole State, have all the powers and obligation of a licensee under the electricity Act. 37. The requisition for supply to owners or occupiers is contained in Clause VI of Schedule to the Electricity Act. That reads: VI. Requisition for supply to owners or occupiers in vicinity:- (Where, (after distributing mains have been laid down under the provisions of Clause VI or Clause V and the supply of energy through those mains or any of them ....
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....t, for purpose of the controversy before us, to say that Section 22 of the Act is not applicable to it, and Clause VI of the Schedule is applicable to it subject to the restriction contained in the second proviso Section 26 of the Act of 1948. So even though the Board is a licensee, the obligation under Section 22 of the Act to supply energy to every person within the area of its supply is not fastened on it. The provisions of the Schedule to the Act are deemed to be incorporated in, and to form part of, every licence granted under Part II. Clause VI of that Schedule states that where after distributing mains have been laid down and the supply of energy through them has commenced, a requisition is made by the owner or occupier of any premises situate within the area of supply requiring the licensee to supply energy for such premises, the licensee shall make the supply and shall continue to do so in accordance with the requisition. But, as has been pointed out, the second proviso to Section 26 of the Act of 1948 places a restriction on that obligation for it says that the provisions of Clause VI shall apply to the Board in respect of that area only "where distribution mains ha....
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....rrences beyond his control. 42. Next comes the important Section under the Electricity Act, namely, Section 24. 43. Section 24(1) provides where a consumer neglects to pay any charge for energy of any sum other than charge for energy-the licensee, after the requisite noticed shall be entitled to stop supply of electrical energy. Of course, this power of disconnection Is subject to sub-section (2) of the said Section. Thus, Section 24 relieves the licensee of its obligation under section 22 to supply energy if the consumer has not paid to the charges for electricity supplied or where the consumer neglects to pay the name. 44. Now, we will set out, by means of the following tabulated statement, as to what the factual position is: Sl. SLP No. Parties filed Date of Datewhen Date of appli-No. against discon- sale/ cation for nection parchase re-connection to the took previous consumer 1. 617/92 M/s.Isha Marbles vs BSEB Judg ment No connection dt. at the 5-9-91 time of - 6-1-90 4-3-91 in CWJC delivery No1536/91 of possession 2. 16227/92 BSEB Vs Waxpol Indus. dt. 14-7-84 7/8.5.85 after28.7.92 possession in CWJC No.25/86 3. 18224/93 BSWB Vs. Suman PackAging P.Ltd dt. ....
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.... charges of the Board to the officer authorized by the Board to receive it and in the event of nonpayment of the said sum, it shall be recoverable from menus as public demand under the Bihar and Orissa Public Demands Recovery Act. 1914. (Emphasis supplied) 48. It is important to note that though the purchaser asked for electricity connection as a new connection it cannot be regarded as a new connection. It is only a re- connection since the premises had already been supplied with electrical energy. Such a supply had been disconnected owing to the default of the consumer. That consumer had bound himself to the Board to pay the dues. He also agreed to abide by the condition as stipulated in the Act and the Rules including the payment of dues. 49. Under Section 79 Clause (i) read with Section of the Supply Act it is open to the Board to make Regulations to stipulate the terms and. conditions of supply of electrical energy. One such stipulation is that the consumption charges must be paid. In Ferro Alloys Corporation Ltd. v. A.P. State Electricity Board and another 1993 Supp (4) SCC 136 at page 171 (to which one of Us was a party) it was held thus. "..... Under the regulations ....
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....d of the Board correct? The High Court, in the main judgment in Suman Packaging (C.W.J.C. No. 5358 of 1972) gives the following reasons for answering the question against the Board: 1.Section 24 stipulates discontinuance of supply of electrical energy to the consumer in respect of a sum due from him. We are afraid the High Court had not read Section 24 in conjunction with other statutory provisions though they had been noted, namely, Section 26 of the Supply Act; Section 22 of the Electricity Act and Clause VI of Schedule of the Electricity Act. They clearly postulate the obliga- tion to supply energy for such premises. At the risk of repetition we hold the premises had enjoyed the benefit of electricity. The owner of the premises or even the occupier of the premises, as stated under Rule 2(af) of the Indian Electricity Rules, becomes liable to pay the consumption charges together with other dues, in other words, the liability is in respect of the dues of electricity which came to be supplied pursuant to the contract with the former owner. The discharge of such Liability will be on such owner or occupier. 55. From the above it is clear, the High Court has chosen to construe Secti....
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.... takings (Nationalisation) Act (57 of 1974). That is not relevant, The question with which we are concerned did not directly arise in Bihar State Electricity Board, Patna and others v. M/s. Green Rubber Industries and others 1990 (1) SCC 73 1. We do not think it is necessary for us to refer to Rant Chandra Prasad Sharma and others v. State of Vihar and another AIR 1967 SC 349 since that case related to co-owner. 60.What we have discussed above pears to be the law gatherable from the various provisions which we have detailed out above. It is impossible to impose on the purchasers a liability which was not incurred by them. 61. No doubt, from the tabulated statement above set out, the auction purchasers came to purchase the property after disconnection but they cannot be 'consumer or occupier' within the meaning of the above provisions till a contract is entered into. 62. We are clearly of the opinion that there is great reason and justice in holding as above. Electricity is public property. Law, in its majesty, behighly protects public property and behoves everyone to respect public property. But, the law, as it stands, is inadequate to enforce the liability of the previo....