* THE HON’BLE SRI JUSTICE V.ESWARAIAH <+ WRIT PETITION No.1335 of 2001 % WEDNESDAY, THE THIRTEENTH DAY OF AUGUST, TWO THOUSAND AND EIGHT. # Dr.J.Ramachandra Rao ….Petitioner Versus $ A.P.Eastern Power Distribution Company Limited, Rep. By the Superintending Engineer, Operation Circle, Eluru and another …..Respondents. ! Counsel for the petitioner : Mr.MOVVA CHANDRASHEKAR RAO ^ Counsel for the respondents : Mr.O.MANOHAR REDDY (SC FOR AP TRANSCO) < Gist : > Head Note: ? Cases Referred: 1. (2001) 5 Supreme Court Cases 22 2. AIR 1959 Allahabad 540 (V 46 C 144) 3. AIR 1962 Supreme Court 970 (V 49 C 131) 4. (1995) 2 Supreme Court Cases 648 5. AIR 1980 Andhra Pradesh 12 6. AIR 2002 Andhra Pradesh 337 7. AIR 1999 Allahabad 371 IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE THIRTEENTH DAY OF AUGUST TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE V.ESWARAIAH WRIT PETITION No.1335 of 2001 Between: Dr.J.Ramachandra Rao, S/o. Sayanarayana, Sri Balaji Nursing Home, Tanuku, D.No. 27-117, N.S.C.Road, West Godavari District. ..... PETITIONER AND 1 A.P.Eastern Power Distribution Company Limited, Rep. by the Superintending Engineer, Operation Circle, Eluru. 2 Assistant Divisional Engineer, Operation Circle, Tanuku, West Godavari District. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue an appropriate writ, order or direction especially in the nature of Writ of Mandamus declaring the impugned notice of the 1st Respondent in his Lr.No.SE/O/ELR/SAO/HT/D.No.506/2K dated 12-12-2000 as illegal, arbitrary, unjust without jurisdiction and null and void and pass Counsel for the Petitioner:MR.MOVVA.CHANDRASHEKAR RAO Counsel for the Respondent No.: O.MANOHAR REDDY(SC FOR APTRANSCO) The Court made the following: Form-NIC-OGS/WP{KRD} THE HON'BLE SRI JUSTICE V.ESWARAIAH WRIT PETITION No.1335 of 2001 ORDER: The petitioner Mr.J.Ramachandrarao questions the orders of the Superintending Engineer, Operation Circle, APEPDC Limited, Eluru dated 12.12.2000, requesting the petitioner to arrange the payment of arrears of Rs.82,697-59 ps alleging that the said dues are payable by the petitioner Managing Director of M/s.Delta Oils and Fats Limited during the period when the petitioner was Managing Director of the said company upto 12.08.1991. It is further stated that no intimation about the change of the petitioner as Managing Director was received by the respondents till 20.10.2000 and Managing Director alone is responsible for the deeds and acts committed by the Company as all the decisions are being taken by him. In so far as identification purpose only, the name of the Company has been given. The arrears belong to the tenure of the petitioner as Managing Director and hence he is liable to discharge his liabilities. The 1st respondent earlier issued letter No.SE/O/ELR/SAO/HT/D.No.383/2000, dated 03.10.2000 informing the petitioner that M/s.Delta Oils and Fats Limited, Prathipadu was disconnected on 22.06.1991 and the agreement with the electricity department was terminated with effect from 21.09.1991 and an amount of Rs.82,697- 59 ps is still outstanding against the said HT service ELR021 to the respondent company which was the then A.P.State Electricity Board. Accordingly, the petitioner was informed that as per the records and particulars collected from the field shows that the petitioner signed the agreement and test report as Managing Director and hence the petitioner is responsible for clearance of the dues. Accordingly, he was requested to arrange the payment of arrears. The petitioner questioned the said letter dated 03.10.2000 in W.P.No.19355 of 2000 on the file of this Court and this Court by order dated 13.10.2000 disposed of the said writ petition, permitting the petitioner to make a representation to the respondents taking all the defences available to him, and the respondents are directed to treat the said letter dated 03.10.2000 as show cause notice and consider the representation of the petitioner and pass appropriate orders thereon and till passing of appropriate orders, personal service connection of the petitioner bearing Service Connection No.1954 and another service connection SE No.59 shall not be disconnected, provided that if the petitioner is not having any dues and arrears payable in respect of the said service connections. Pursuant to the said order, the petitioner made a representation before the respondents and after considering the said representation, the respondents passed the impugned order dated 12.12.2000. It is the case of the petitioner that the petitioner is not a consumer in respect of the electricity supplied to M/s.Delta Oils and Fats Limited, Prathipadu within the meaning of the consumer as defined under Sec.2(c) of the Indian Electricity Act, 1910 (hereinafter referred to as “the Act”) and Condition No.2.5 of the terms and conditions of supply in B.P.Ms.No.690, dated 17.09.1975. According to the said provisions, the “consumer” means any person who is supplied with electrical energy by the Board and includes any person whose premises are for the time being connected for the purpose of receiving energy with the works of the electricity board. It is stated that the petitioner entered into HT Agreement with the 1st respondent for supply of electricity to M/s.Delta Oils and Fats Limited, Prathipadu only in his fiduciary capacity as Managing Director of the Company during the relevant period and not in his personal capacity. M/s.Delta Oils and Fats Limited, Prathipadu is a public limited company, incorporated under Sec.34 of the Indian Companies Act, which is a body corporate capacity of exercising all the functions of an incorporated company and having a perpetual succession and common seal. A company is a person, which can enforce its property rights under Article-226 of the Constitution of India. A company is liable for breach of contract and for tort. It can sue or be sued in its name. The petitioner entered into HT Agreement on behalf of the said company only in his fiduciary capacity as Managing Director of the said company. The petitioner is not a consumer in respect of the service connection of the said company and he is not personally liable for the arrears of the said company. It is stated that the petitioner was removed as managing Director of the company by a resolution of the Directors of the said company on 12.08.1991 and one Sudharani who is an officer of the A.P.Civil Supplies Corporation Office was elected as Managing Director and till now the officers of the said A.P.Civil Supplies Corporation have been continuing in the office. It is stated that the arrears are payable by the company alone, but not by the person who executed the agreement in his fiduciary capacity. Therefore, the action of the respondents in proceeding against the petitioner demanding him to pay the said electricity arrears of the company is illegal and arbitrary. It is further stated that the petitioner is having two individual service connections in the name of hospital and in his individual capacity. Under Condition No.42.3(a) of the said terms and conditions of supply of electricity, if any consumer defaults in payment of charges for supply of electricity, the Board may, without prejudice to its other rights cause to be disconnected by or any of the other services of the consumer, though such services be disconnected and are governed by separate agreements and though no default occurred in respect thereof. It is stated that the petitioner is not the consumer in respect of the service connection supplied to M/s.Delta Oils and Fats Limited and therefore. If any default committed by M/s.Delta Oils and Fats Limited, the respondents should proceed against the company but not against the petitioner and the service connections of the petitioner cannot be disconnected. It is further stated that the unit of M/s.Delta Oils and Fats Limited was seized by the A.P.Financial Corporation on 21.01.1993 under Sec.29 of A.P.State Financial Corporation Act and the unit was sold and it realized the dues, and hence the respondents are entitled to proceed against the properties of the said company, but not entitled to proceed against the petitioner. A counter has been filed stating that the service connection of the M/s.Delta Oils and Fats Limited was disconnected on 22.06.1991 for the default of payment of arrears. The consumer filed suit in O.S.114/90 on the file of the Subordinate Court, Tadepalligudem and after dismissal of the said suit, the petitioner in the capacity of Managing Director of the Company vide his letter dated 19.07.1991 requested the 1st respondent to grant permission for payment of arrears of CC charges and mal- practice charges in instalments, and accordingly, the 1st respondent vide letter dated 31.07.1991 requested the consumer to arrange payment of arrears of Rs.1,85,851- 90 ps and the same was acknowledged by the petitioner as Managing Director on 02.08.1991. Thus, it is stated that the petitioner is aware of the arrears due and payable to the respondents. With regard to contention of the petitioner that he is not a consumer and he is not due and payable arrears of Rs.82,697-59 ps and therefore, the said arrears cannot be collected under the Revenue Recovery Act from the personal property of the petitioner, it is stated that the petitioner executed HT agreement on behalf of M/s.Delta Oils and Fats Limited as Managing Director, agreeing to abide all the terms and conditions of the agreement, and therefore, the petitioner alone is liable to pay the arrears within the purview of the Board Rules and agreement conditions of the supply of Electricity (Supply) Act, 1948. The petitioner was the Managing Director of M/s.Delta Oils and Fats Limited upto 12.08.1991, and therefore, the petitioner is liable to pay the arrears upto the said period. It is stated that the Managing Director is liable for all the profits and debts of the Company and he being Managing Director of the Company, the petitioner is liable to pay the arrears of the Company. It is stated that as per the Revenue Recovery Act, terms and conditions of the Supply and provisions of the Act and as per the agreement executed by the petitioner as Managing Director, the petitioner became liable to pay the arrears. I have considered the rival contentions. Sri M.Chandrasekhara Rao, learned senior counsel, appearing for the petitioner submits that as per the definition of “consumer” under Sec.2(c) of the Indian Electricity Act, 1910 and condition No.2.5 of the Terms and Conditions of Supply and Condition No.42.3 of the revised terms and conditions of Supply of Electricity in B.P.Ms.No.690, dated 17.09.1975, in the instant case, the company alone is consumer and therefore, the arrears of the Company cannot be collected from the petitioner, though he was the Managing Director. The relevant definitions are extracted hereunder for the sake of convenience: Under Sec.2(c) of the Indian Electricity Act, 1910, “Consumer” means any person who is supplied with energy by a licenses or the Government or by any other person engaged in the business of supplying energy to the public under this Act or any other law for the time being in force, and includes any person whose premises are for the time being connected for the purpose of receiving energy with the works of licensee, the Government or such other person, as the case may be. As per Condition No.2.5 of the Revised Terms and Conditions of Supply of Electricity in B.P.Ms.No.690, dated 17.09.1975; ”Consumer” means any person who is supplied with electrical energy by the Board and includes any person whose premises are for the time being connected for the purpose of receiving electrical energy with the works of the Board and shall also include an intending consumer or a consumer who has been disconnected.” As per Condition No.42.3 of the Revised Terms and Conditions of Supply of Electricity in B.P.Ms.No.690, dated 17.09.1975; “Where any consumer defaults in payment of:- a. Charges for the supply of electricity and/or b. Minimum charges where supply is under disconnection and/or c. Unconnected minimum charges due in respect of a service for which supply is sanctioned and made ready but not at availed, and/or d. Any other sums payable to the Board under the contract of supply or the tariff and terms and conditions of supply notified by the Board, under Section 49 of the Electricity Supply Act, the Board may, without prejudice to its other rights cause to be disconnected all or any of the other services of the consumer though such services be distinct and are governed by separate agreements and though no default occurred in respect thereof.” It is stated that as per the definition of “consumer”, the person who is supplied with energy was the company, but not the petitioner and the electricity was supplied to the premises of the company but not to the personal premises of the petitioner and hence the company alone is the consumer and the person. It is stated that though the person is not defined in the Electricity Act and terms and conditions, but the definition “person” under Sec.3(22) of the Andhra Pradesh General Clauses Act, 1891 is defined as follows: “Person” – “Person”, shall include any company or association of individuals, whether incorporated or not; Sec.2 (43) of the Andhra Pradesh (Telangana Area) General Clauses Act, 1308 F., defines the “Person” as follows: “Person” the word “person” shall include any company or association or body of persons, whether incorporated or not; Thus, it is stated that the consumer in the instant case is the M/s.Delta Oils and Fats Limited, being a body corporate person. It is further submitted that admittedly, company being corporate person represented by the petitioner as Managing Director, entered into the agreement. Sec.34 of the Companies Act, 1956 defines as under: Effect of registration. 1. On the registration of the memorandum of a company, the Registrar shall certify under his hand that the company is incorporated and, in the case of a limited company, that the company is limited. 2. From the date of incorporation mentioned in the certificate of incorporation, such of the subscribers of the memorandum and other persons, as may from time to time be members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in this Act. The learned counsel appearing for the petitioner relied on the following judgments of the Apex Court in support of his contention that the petitioner is not the consumer and the company is the consumer and it is liable to pay the arrears: The Supreme Court in the case of Union Bank of India v. Khader International Construction while upholding the judgment of the Madras High Court, held that the “person” though not defined in the Code of Civil Procedure and consequently the word “person” is defined as including any company or association or body of individuals whether incorporated or not, in the General Clauses Act (10 of 1897) and it would apply unless there is something repugnant to the subject or context, and accordingly, held that the word “person” has to be given its meaning in the context in which it is used. It refers to a person who is capable of filing a suit and this being a benevolent provision, it is to be given an extended meaning. Therefore, the public limited company, which is otherwise entitled to maintain a suit as a legal person, can very well maintain an application under Or.33 Rule-1 CPC. The word “person” mentioned in Or.33 includes not only a natural person, but also other juridical persons also. The Full Bench of Allahabad High Court in the case of Kundan Sugar Mills v. I.S.Syndicate while rejecting the contention that word “person” is not defined in the Code of Civil Procedure, and the company cannot institute a suit as in forma pauperis in person, held that word “person” is defined in General Clauses Act, which includes a company and therefore, the company can also take advantage of Or.33 to file a suit as well as cross objections as in forma pauperis, as a person. The Supreme Court also held in the case of I.T.Commr. v. S.V.Angidi Chettiar that the expression “person” as defined in the Indian Income Tax Act in Sec.2(a) as including “a Hindu undivided family and a local authority”, is not an exhaustive definition and recourse is permissible to the General Clause Act in Sec.3(42) that a “person” includes “any company or association or body of individuals whether incorporated or not”. The definition “company” is also a person. The Supreme Court in the case of Isha Marbles v Bihar State Electricity Board while considering the contentions as to whether the auction purchaser is liable to meet the liability of old consumer of electricity to the premises which is purchased by a subsequent purchaser in the auction sale, held that Sec.24 of the Indian Electricity Act, 1910 can be invoked only as against the person to whom energy has been supplied. Under Sec.2(c) of the Act “consumer” means “any person who is supplied with energy”. Therefore, the liability to pay electricity dues is obviously fastened only to the consumer to whom it was supplied and to whose premises it was supplied. Neither under the scheme of the Electricity Act nor Electricity (Supply) Act, 1948 is there any concept of the premises of the consumer being liable for the electricity dues dehors the consumer, whose premises it is. It is stated that there is no charge over the property. Where that premises comes to be owned or occupied by the auction purchaser, when such purchaser seeks supply of electric energy, he cannot be called upon to clear the past arrears as a condition precedent to supply. What matters is the contract entered into by the erstwhile consumer with the Board. The Board cannot seek enforcement of contractual liability against the third party. The Division Bench of this Court in the case of T.Chenchaiah v. A.P.E.Board held that even though the petitioner was a partner of the firm, the consumer was the firm and not the petitioner. The petitioner was consumer only in respect of his personal and private service connection. Simply because he was a partner of the firm, which was a consumer in relation to the other service, he cannot be called consumer in respect of the service standing in the name of the firm. The Board recognized the firm as the consumer, and not any individual partner or the managing partner. The petitioner as the managing partner entered into the contract on behalf of the firm. He merely represented the firm in entering into the contract. By no stretch of imagination could he be called the firm itself. That does not detract from his legal liability to pay the dues of the firm, but he does not become the firm itself. When he is not the firm, he cannot be considered the consumer in respect of the connection, which the firm had. Consequently, when the firm committed default and fell into arrears, to recover them, the Board cannot disconnect the private and personal service connection of the petitioner. Following the above judgment of the Division Bench of this Court, this court in the case of G.Laxminarayana v. State of A.P. held that the service connection of the individual partner or Managing Director cannot be disconnected for the arrears of the firm and the company as the case may be. The learned counsel appearing for the respondents relied on a judgment of the Division Bench of the Allahabad High Court in the case of Harshavardhan Mittal v. U.P.State Electricity Board wherein while considering the definition of “consumer” under Sec.2(c) of the Act, the Division Bench observed that the agreement was entered by the petitioner therein is in his individual capacity, but not representing the company. Therefore, the Division Bench of Allahabad High Court considered that the petitioner therein was the consumer, but not the company. But in the instant case, the petitioner entered into the agreement on behalf of the company representing as Managing Director in his fiduciary capacity and the consumer is the company, but not the petitioner. Once an agreement has been entered into, whether he continues as Managing Director or retires from service, the liability still continues on the consumer. In the instant case the petitioner was discontinued as Managing Director. Since the petitioner being not the person or consumer within the meaning of consumer as the energy was not given to the petitioner in his individual capacity, but it is given to the person through the petitioner representing on behalf of the company, and hence the company is liable to pay the arrears. The undisputed facts are that the petitioner is only the Managing Director of M/s.Delta Oils and Fats Limited and he entered into the agreement on behalf of the company alone and hence the company alone was the consumer. M/s.Delta Oils and Fats Limited being juridical person who is supplied with the energy, the company alone is the consumer and the person, and if that be so, I am of the opinion that under Sec.24 of the Indian Electricity Act, the Electricity Board is entitled to disconnect the service connection of the Company alone, as the Company being the consumer and the person to whom the energy was supplied. I am also of the opinion that as the petitioner being not the person as he is not the company, therefore, the arrears of the company cannot be collected from the petitioner, treating him as person and consumer under Sec.2(c) of the Indian Electricity Act, 1910 or the condition No.2.5 of the Electricity Supply conditions. Having regard to the facts of the case, I am of the opinion that the respondents can proceed against the company, which is the person in the instant case to whom the electricity was supplied, but not against the petitioner merely because he entered into the agreement representing the company as Managing Director of the Company and in view of the aforesaid judgments of the Apex Court and this Court relied on by the learned counsel appearing for the petitioner, the petitioner cannot be treated as a consumer and the company alone is the person in this case. For the aforesaid reasons, I am of the opinion that the impugned order is unsustainable and liable to be set aside and it is accordingly, set aside. The Writ Petition is, accordingly, allowed. No order as to costs. _____________________ V.ESWARAIAH,J Dated: 13.08.2008 Dsr Note: LR copy to be marked B/o Dsr .... REGISTRAR // TRUE COPY // SECTION OFFICER To 1 A.P.Eastern Power Distribution Company Limited, Rep. by the Superintending Engineer, Operation Circle, Eluru. 2 Assistant Divisional Engineer, Operation Circle, Tanuku, West Godavari District. 3 2. 2CCs to 4. 2CD copies