Telangana State Southern Power Distribution Company Limited and Ors. Vs. Srigdhaa Beverages - (Supreme Court) (01 Jun 2020)

A condition for clearance of dues cannot be termed as unreasonable or arbitrary

MANU/SC/0463/2020

Electricity

The Respondent is an auction-purchaser of a unit owned by SB Beverages Private Limited, which failed to pay its dues, resulting in the auction by Syndicate Bank (Secured Creditor) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act'). The moot point of law, which arises for consideration, is whether the liability towards previous electricity dues of the last owner could be mulled on to the Respondent.

A writ petition was filed by the Respondent before the High Court seeking quashing of demands predicated on a reasoning that as a subsequent purchaser, the Respondent was not responsible for the dues of the earlier owner, and in that behalf relied upon the judgments of this Court in Isha Marbles v. Bihar State Electricity Board and Anr. and Southern Power Distribution Co. of Telangana Limited (through its CMD) and Ors. v. Gopal Agarwal and Ors. Reliance on these judgments persuaded the learned single Judge to issue directions quashing the demand of Appellant No. 1. The appeal filed before the Division Bench against this order was also dismissed.

Present Court can draw strength from the observations of this Court in Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd., where there was a similarity as in the present case, of a specific Clause dealing with electricity dues. It was observed that in such a scenario, if a transferee desires to enjoy the service connection, he shall pay the outstanding dues, if any, to the supplier of electricity and a reconnection or a new connection shall not be given to any premises where there are arrears on account of dues to the supplier unless they are so declared in advance.

As an auction purchaser bidding in an "as is where is, whatever there is and without recourse basis", the Respondent would have inspected the premises and made inquiries about the dues in all respects. The facts of the present case are more explicit in character as there is a specific mention of the quantification of dues of various accounts including electricity dues. The Respondent was, thus, clearly put to notice in this behalf.

The same view has been taken in Paschimanchal Vidyut Vitran Nigam Limited and Ors. v. DVS Steels and Alloys Private Limited and Ors. It has been further observed that if any statutory Rules govern the conditions relating to sanction of a connection or supply of electricity, the distributor can insist upon fulfillment of the requirements of such Rules and regulations so long as such Rules and regulations or the terms and conditions are not arbitrary and unreasonable. A condition for clearance of dues cannot per se be termed as unreasonable or arbitrary.

Electricity dues, where they are statutory in character under the Electricity Act and as per the terms & conditions of supply, cannot be waived in view of the provisions of the Act itself more specifically Section 56 of the Electricity Act, 2003 and cannot partake the character of dues of purely contractual nature.

The debate over connection or reconnection would not exist in cases like the present one where both aspects are covered as per Clause 8.4 of the General Terms & Conditions of Supply. The impugned orders cannot be sustained and are accordingly set aside while opining that Appellant No. 1 would be well within its right to demand the arrears due of the last owner, from the Respondent-purchaser. The appeal is accordingly allowed.

Relevant : Isha Marbles v. Bihar State Electricity Board and Anr. MANU/SC/0632/1995, Southern Power Distribution Co. of Telangana Limited (through its CMD) and Ors. v. Gopal Agarwal and Ors. MANU/SC/0906/2017, Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd., MANU/SC/4652/2006, Paschimanchal Vidyut Vitran Nigam Limited and Ors. v. DVS Steels and Alloys Private Limited and Ors.

Tags : DEMAND QUASHING LEGALITY