Buyer not liable for old power bills - SC

In the year 2007, pursuant to the order of  the  Company  Judge,  High Court of Orissa, in  Companies  Act  Case  No.  25  of  2005,  the  Official Liquidator, made an advertisement for sale of movable and immovable  assets and properties of the Factory Unit of M/s Konark Paper & Industries  Limited which was in liquidation on “as is where is and whatever there is” basis. The sale was confirmed in favour of respondent No.1  –  M/s  Raghunath Paper Mills Pvt. Ltd., being the highest bidder, and the possession  of  the Unit was handed over on  28.03.2008.   Since  there  was  no  power  supply, respondent No.1 made an application to the Chief  Executive  Officer, North Eastern Electricity Supply  Company  of  Orissa  Limited  (in  short  “  the NESCO”) for restoration of the same.  Respondent  No.  1  also  executed  an agreement dated 27.03.2009 with the NESCO for supply of  construction  power in the Unit.  There being no reply from the side of  the  NESCO,  respondent No.1, vide letter dated 26.08.2009, again requested for permanent supply  of power.  By letter dated 21.05.2010, the NESCO directed  respondent  No.1  to pay  the  arrears  of  electricity  dues  amounting to Rs. 79,02,262/- outstanding against the premises in question. 

Being aggrieved, respondent No.1 filed a petition being Writ  Petition (C) No. 9807 of 2010 before the High Court of Orissa  praying  for  quashing of the demand letter dated 21.05.2010 issued by the NESCO with  a  direction to provide permanent supply of power.

Learned single Judge, by order  dated  05.08.2010,  after  considering various provisions of law  governing  the  issue  in  question  allowed  the petition and directed the NESCO  to  provide  electricity  to  the  Unit  of respondent No.1 within a period of 7 days from the date of his judgment. Dissatisfied with the  decision  of  the  learned  single  Judge,  the appellants filed Writ Appeal No. 237 of 2010 before the  Division  Bench  of the High Court.  The Division Bench, by order dated 04.11.2010,  finding  no illegality in the order of the learned single Judge,  dismissed  the  appeal filed by the appellants. Aggrieved by the said decision, the  appellants  have  preferred  this appeal by way of special leave petition before this Court.

The relevant  provisions  of   the   Orissa Electricity  Regulatory  Commission  Distribution  (Conditions  of  Supply), Code, 2004 (in short ‘the  Electricity  Supply  Code’). Sub-clause 10 of Regulation 13 of the Electricity Supply Code is as follows:-

(10) Transfer of service connection:-

     a) Subject to the Regulation 8, the  transfer  of  service  connection shall be effected within 15  days  from  the  date  of  receipt  of complete application.

     b) The service connection from the name of a person  to  the  name  of another consumer shall not be transferred unless the arrear charges pending against the previous occupier are cleared.

   Provided that this shall not be applicable  when  the  ownership  of  the premises is transferred under  the  provisions  of  the  State  Financial Corporation Act.

The court decided that the reading of the  above  sub-clause  makes  it  clear that the said provision is not applicable to  respondent  No.  1.  We  have already quoted that respondent No. 1, after purchase of the said Unit in  an auction sale conducted by the Official Liquidator on “as is  where  is”  and “whatever there is” basis has applied for a  fresh  service  connection  for supply of energy (emphasis supplied).  In other words, respondent No. 1  has not applied for  transfer  of  service  connection  from  the  name  of  the

erstwhile company to its name.  To make it clear, respondent No.  1  applied for a fresh connection for its Unit  after  purchasing  the  same  from  the Official Liquidator.  It  is  also  not  in  dispute  that  the  arrears  of electricity dues were levied against the premises in question, on the  other hand, it was levied against the erstwhile company. From the above factual details in the case on hand and  in  the  light of sub-clause 10(b) of Regulation 13 of  the  Electricity  Supply  Code,  we hold that the said clause applies to  a  request  for  transfer  of  service connection but not to  a  fresh  connection.   The  interpretation  of  this clause by learned single Judge as well as by the Division Bench was  correct being reasonable, just and fair.. Similarly, Section 43  of  the  Electricity  Act,  2003  speaks  about supply of electricity on request which is as under:-

      “43. Duty to supply on request.- (1) Save  as  otherwise  provided  in this Act, every distribution licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to  such       premises, within one month after receipt of the application  requiring  such supply:

      x x x

      x x x

      Explanation:--For the  purposes  of  this  sub-section,  “application”   means the application complete in  all  respects  in  the  appropriate form, as required by the distribution licensee, along  with  documents       showing payment of necessary charges and other compliances:

      x x x

      x x x”

Section 43 of the Electricity Act, 2003 casts a duty on  every  distributing licencee, in the case on hand, the appellant, to supply electricity  on  the application made by the owner or occupier of any  premises  within  1  month after receipt of the  application.No  doubt,  it  should  be  only  after fulfilling the conditions such as  installation  of  machinery,  deposit  of security etc.

In the  light  of  the  above  discussion,...........we hold  that the request was not  for  the  transfer  from  the  previous  owner  to  the purchaser, on the other hand, it was a request for a  fresh  connection  for the Unit of respondent No. 1 herein.  We are in entire  agreement  with  the decision arrived at by learned single Judge  as  affirmed  by  the  Division Bench of the High Court.