* THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE K.G.SHANKAR WRIT PETITION No.5616 of 1993 AND WRIT APPEAL No.1902 of 2001 %Dated:08.09.2011 Between: M/s.Sithani Textiles & Fabrics Pvt.Ltd., And others. …Petitioners and The A.P.State Electricity Board, And others. …Respondents ! Counsel for the Petitioners: Sri Duba VN Babu ^Counsel for the Respondents: Sri.O.Manohar Reddy <Gist: >Head Note: ?Citations: 1. (1995) 2 SCC 648. 2. W.A.Nos.37 and 1053 of 2001, dated 09.04.2010. THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE K.G.SHANKAR WRIT PETITION No.5616 of 1993 AND WRIT APPEAL No.1902 of 2001 Dated:08.09.2011 Between: M/s.Sithani Textiles & Fabrics Pvt.Ltd., And others. … Petition And The A.P.State Electricity Board, And others. ... Responde THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE K.G.SHANKAR WRIT PETITION No.5616 of 1993 AND WRIT APPEAL No.1902 of 2001 COMMON ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) The issue that falls for consideration in the appeal as well as the petition being the same, both are heard together. Hence, this common order the case of a High Tension (HT) consumer who has already paid service charges as per the terms and conditions of supply, whether the subsequ purchaser of the industry/business is again required to pay service line char to the Andhra Pradesh State Electricity Board (APSEB) (now Andhra Prad Transmission Corporation)? This is the short question that would fall consideration. The admitted facts in the writ appeal (we would refer the parties as in writ petition, being W.P.No.1725 of 1991, against which the writ appeal is fi are as follows. M/s.Tibrewala Steels Limited, Pathancheru, was a steel rolling unit. They were availing 120 KVA HT power supply from APSEB. unit became sick. The petitioner purchased the unit along with all the asse The petitioner applied for restoration of power supply. By proceedings da 13.05.1986 the first respondent directed the petitioner to execute agreement. The petitioner complied with the requirements and also p consumption deposit. The power supply was not restored. By communication dated 26.02.1991 the petitioner was asked to pay service charges in a sum of Rs.1,04,500/-. Aggrieved by the same, the petitioner f W.P.No.1725 of 1991 seeking a writ of mandamus declaring the action of respondents in requiring the petitioner to pay the service line charges as ille and arbitrary. APSEB opposed the writ petition, inter alia, contending tha the supply of electricity to the petitioner is a fresh connection, it is bound to the service line charges as per B.P.Ms.No.1160, dated 03.11.1989, which w subsequently modified by B.P.Ms.No.297, dated 26.12.1990. They a contended that as the unit was supplied 220 KVA, the petitioner is liable to the service line charges. Learned single Judge allowed the writ petition observing that if additio load is connected over and above 120 KVA it will be open to APSEB to co service line charges in accordance with the rules treating it as new unit, collection of service line charges which are already collected from Tibrew Steels Limited is unjustified. The writ petition was accordingly allowed. The petitioner in the writ petition, being W.P.No.5616 of 1993, purcha a sick unit M/s.Dakshin Fabrics (P) Limited in Majeedpar Village in the auc conducted by the Andhra Pradesh State Financial Corporation (APSFC) un Section 29 of the State Financial Corporations Act, 1951. After tak possession of the unit, the petitioner approached the Divisional Engin Kukatpally, for obtaining reconnection of HT power supply. The applica was processed and by memo dated 31.03.1993 the petitioner was advised SE to pay an amount of Rs.1,32,440/- towards non-refundable service charges. Aggrieved by the same, the writ petition was filed. When it was lis before the learned single Judge, it was directed to be posted along with the appeal. In the counter affidavit filed by the Divisional Engineer it is stated tha the HT agreement with M/s.Dakshin Fabrics (P) Limited was terminated, petitioner shall be treated as a new consumer; and that the amounts paid by previous consumer has to be adjusted towards the dues and for dismantling service line. The Divisional Engineer would further submit that as per cla 6.7 of the terms and conditions of supply, the petitioner is bound to pay service line charges. The Standing Counsel for the A.P.Transco would submit that a termination of the supply agreement with the previous consumer, under a n HT agreement power supply was restored to the purchaser, and therefor amounts to new connection. He also relies on the terms and condition supply and the decision of the Supreme Court in Isha Marbles v Bihar S Electricity Board[1]. Per contra, the Counsel for the consumers would submit that as per provisions of the Indian Electricity Act, 1910 (Electricity Act), the Electr (Supply) Act, 1948 (Electricity Supply Act), and the terms and condition supply of electricity (terms and conditions), the licensee APSEB/A.P.Transco is authorized to collect service line charges at the tim giving a fresh connection, and therefore, when the consumers subseque purchased and started sick units, any levy of service line charges is illegal. also relies on B.P.Ms.No.1160, dated 03.11.1989, and B.P.Ms.No.297, da 26.12.1990. In the light of these submissions, the point that would arise consideration is whether the requirement to pay service line charges by consumers as pre-condition for releasing power supply is justified. The following assumptions are not seriously disputed. A per licensed to supply electrical energy under Section 3(1) of the Electricity Act alone engage in the business of generating, transmitting or supplying electr energy. APSEB by reason of Sections 5 and 26 of the Electricity Supply Ac deemed to be a licensee. Section 49 of the Electricity Supply Act empowers Electricity Board, inter alia, to fix the tariffs and provide for terms and conditi of supply to Low Tension/High Tension consumers. While fixing the tarif laying down terms and conditions, the Electricity Board has to comply with provisions of the Electricity Act and Electricity Supply Act and rules m thereunder. Section 26 of the Electricity Supply Act reads as under. 26.Board to have powers and obligations of licensee under Act 9 of 1910:- Subject to the provisions of this Act, the Board shall, in respect of the whole State, have all the powers and obligations of a licensee under the Indian Electricity Act, 1910 (9 of 1910), and this Act shall be deemed to be the licence of the Board for the purposes of that Act. Provided that nothing in Sections 3 to 11, sub-sections (2) and (3) of Section 21 and Section 22, sub-section (2) of Section 22-A and Sections 23 and 27 of that Act or in Clauses I to V, Clause VII and Clauses IX to XII of the Schedule to that Act relating to the duties and obligations of a licensee shall apply to the Board. Provided further that the provisions of Clause VI of the Schedule to that Act shall apply to the Board in respect of that area where distribution mains have been laid by the Board and the supply of energy through any of them has commenced. A plain reading of the above would show that the Electricity Board s have all powers and obligations of a licensee under the Electricity Act, and Electricity Supply Act shall be deemed to be the licence for the purpose Electricity Act. This, however (as per the first proviso), is subject to condi that Sections 3 to 11, 21(2) and (3), 22, 22-A(2), 23 and 27 or in Clauses I to Clause VII and Clauses IX to XII of the Schedule to the Electricity Act relatin the duties and obligations of a licensee shall not apply to a State Electr Board. As per the second proviso Clause VI of the Schedule applies in resp of that area where the distribution mains have been laid by the Board and supply of energy through any of them has commenced. Clause VI of the Schedule to the Electricity Act which has b specifically made applicable to the Electricity Board, to the extent relev reads as under. VI. Requisition for supply to owners or occupiers in vicinity:- (1) Where after distributing mains have been laid down under the provisions of clause IV or clause V and the supply of energy through those mains or any of 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, without one month from the making of the requisition or within such longer period as the Electrical Inspector may allow, supply, and, save in so far as he is prevented from doing so by cyclones, floods, storms or other occurrences beyond his control, continue to supply, energy in accordance with the requisition. Provided, first, that the licensee shall not be bound to comply with any such requisition unless and until the person making it – (a) within fourteen days after the service on him by the licensee of a notice in writing in this behalf, tenders to the licensee a written contract, in a form approved by the State Government duly executed and with sufficient security, binding himself to take a supply of energy for not less than two years to such amount as will assure to the licensee at the current rates charged by him, an annual revenue not exceeding fifteen per centum of the cost of the service line required to comply with the requisition; and (b) if required by the licensee so to do, pays to the licensee the cost of so much of any service-line as may be laid down or placed for the purposes of the supply upon the property in respect of which the requisition is made, and of so much of any service-line as it may be necessary for the said purposes to lay down or place beyond on hundred feet from the licensee’s distributing main although not on that property; (Proviso 2 and 3 are omitted as not necessary for our purposes.) Provided, fourthly, that, if any requisition is made for supply of energy and the licensee can prove, to the satisfaction of an Electrical Inspector, (a) that the nearest distributing main is already loaded up to its full current carrying capacity, or (b) that, in case of a larger amount of current being transmitted by it, the loss of pressure will seriously affect the efficiency of the supply to other consumers in the vicinity. the licensee may refuse to accede to the requisition for such reasonable period not exceeding six months, as such Inspector may think sufficient for the purpose of amending the distributing main or laying down or placing a further distributing main. (2) Any service-line laid for the purpose of supply in pursuance of requisition under sub-clause (1) shall, notwithstanding that a portion of it may have been paid for by the person making the requisition, be maintained by the licensee who shall also have the right to use it for the supply of energy to any other person… Section 3(1) of the Electricity Act empowers the State Government to g license to any person to supply energy in any specified area and also lay do or place electricity supply lines for the conveyance and transmission of ener Subsection (2) thereof stipulates that the provisions in Section 3(2)(a) to would apply to every license. Clause (f) further states that the provisions contained in the Schedule shal deemed to be incorporated in every license issued under Section 3(1) of Electricity Act for conveyance and transmission of energy. Section 2(i) of Electricity Act defines “main” as any electric supply line through which ene is, or is intended to be supplied to the public. “Distribution main” is define Section 2(e) of the Electricity Act as to mean, the portion of any main with wh a service line is connected, and as per Section 2(l), “service line” means electric supply line through which energy is, or is intended to be supplied single consumer either from a distributing main or from a distributing main group of consumers on the same premises or adjoining premises. With background, we may now consider the effect of clause VI of the Schedule the issue involved in these cases. The Schedule contains the provisions which are deemed to incorporated in every license granted under Section 3 of the Electricity A These provisions create obligation on the licensee in relation to developm and infrastructure, furnishing security for execution of works, provide for aud accounts, development of transmission network like supply lines distribution mains. Clause VI, the relevant provision of which is extracted above, contains five clauses. These deal with the obligations of a licensee to supply ene whenever a requisition is made by the owner or occupier of any prem situated within the area of supply which, i.e., as per Section 2(b) of Electricity Act means, the area within which alone a licensee is for the t being authorized by his licence to supply energy. The following necessities, to be fulfilled by a prospective consume availing power supply as incorporated in Clause VI have been summarize Shiva Gopal’s Law Relating to Electricity, 6th Edition. These have been quo with approval by the Supreme Court in Isha Marbles, as follows. (1) A prospective consumer shall make and sign a requisition in the form prescribed by the rules (Annexure VII to the Rules) for a connection of his premises for the supply of energy. (2) The licensee shall then serve on the prospective consumer a notice requesting him in writing to tender to him a written contract (in such form as the State Government may have approved). (3) The prospective consumer shall within 14 days of the receipt of such notice tender the contract duly executed by him with sufficient security, binding himself thereunder to take a supply of energy for not less than two years to such amount as will secure to the licensee at the current rates charged by him in annual revenue not exceeding fifteen per centum of the cost of the service line required to comply with the requisition. (4) In addition to the security, the licensee may also require the prospective consumer to pay to him the cost of so much of any service line as may be laid down or placed for the purposes of the supply upon the premises required to be connected, and of so much of any service line as may be laid down or placed for the purposes of the supply upon the premises required to be connected, and of so much of any service line as it may be necessary for the said purposes to lay down or place beyond one hundred feet from the licensee’s distributing main, although not on that premises. (5) If the prospective consumer fails to tender the written contract duly executed, fails to give sufficient security and fails to give the cost demanded within the said period of 14 days, the licensee shall be under no obligation to make the connection. (6) But if these formalities have been complied with the licensee shall be bound to make the supply within one month or such extended time as the Electrical Inspector may allow, the period to be counted from the date of receipt by the licensee of the requisition. (7) And after the connection has been made the licensee shall be bound to continue the supply unless he is prevented from doing so by cyclone, floods, storms or other occurrences beyond his control. The various provisions referred to above do not require a per requisitioning power supply to pay service line charges whenever powe disconnected and reconnected. These provisions also do not authorise licensee to demand security from the consumer to take supply for not less t two years to such amount not exceeding 15%. The law does not empower licensee to demand more security than what is contemplated or demand m service line charges. The exercise of power by the Board under Section 4 the Electricity Supply Act in fixing the tariffs, prescribing various charges a condition to make supply available shall have to be within the permissible li as referred to supra. The APSEB, as noticed supra, constituted under Sectio of the Electricity Supply Act is deemed to be licensee under Section 26 shall also be, inter alia, bound by the obligations cast on them under vari provisions of the Electricity Act and the Schedule. There is no dispute that APSEB issued B.P.Ms.No.1160 for collectio service line charges. These guidelines/rates were modified in B.P.Ms.No.2 dated 26.12.1990. The two Board proceedings were issued in exercise powers under Section 49 read with Section 79(f) of the Electricity Supply A Therefore, they are statutory in nature, and as they deal with levying charges supply of electricity as per the conditions of license granted under the Electr Act, they need to be interpreted strictly. The two Board proceedings nowh lay down that the cost of service line can be collected twice. The Board un Clause VI(1) can collect the cost of the service line only once at the time release of power supply. Irrespective of the change of ownership of business premises, unless there is a demand for increased energy supply service line is dismantled for technical reasons, the collection of cost of serv line repeatedly is not permissible. In Isha Marbles somewhat similar question arose before the Supre Court. The facts therein in brief may be noticed. The Electricity Board g power supply. The consumer who availed power supply had mortgaged assets to the State Financial Corporation. When there was a default, mortgaged assets were put to sale in open auction. The appellant purcha the assets and got possession. By that time the Electricity Board disconnected the power supply. When the appellant sought restoration power supply he was asked to discharge all the liabilities of previ consumer. When the same was challenged, the High Court dismissed the petition, aggrieved by which, Isha Marbles went in appeal. The same w heard along with other appeals. After referring to Section 3(2)(f), Clause V the Schedule, other provisions of the Electricity Act and the Electricity Sup Act, the Supreme Court held that, “though the purchasers asked for electr connection as a new connection it cannot be regarded as a new connection is only a reconnection since the premises had already been supplied electrical energy. Such a supply had been disconnected owing to the defau the consumer. That consumer had bound himself to the Board to play the du He also agreed to abide by the condition as stipulated in the Act and the Ru including the payment of dues.” Therefore, the Electricity Board could reso Section 24 of the Electricity Act and disconnect the power supply and/or fi suit for recovery of the dues. But, it could not collect the past arrears from auction purchaser. The relevant observations are as under. …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 erst while consumer with the Board. The Board cannot seek the enforcement of contractual liability against the third party… …But, the law, as it stands, is inadequate to enforce the liability of the previous contracting party against the auction- purchaser who is a third party and is in no way connected with the previous owner/occupier. It may not be correct to state, if we hold as we have done above, it would permit dishonest consumers transferring their units from one hand to another, from time to time, infinitum without the payment of the dues to the extent of lakhs and lakhs of rupees and each one of them can easily say that he is not liable for the liability of the predecessor in interest… The Standing Counsel placed reliance on the Division Bench judgm dated 09.04.2010 in W.A.Nos.37 and 1053 of 2001 (The K.C.P.L (Ramakrishna Cements) v The Andhra Pradesh State Electricity Boa We have perused the judgment. It is a case of the Electricity Board demand service line charges after the consumer requisitioned for additional load of 3 KVA over and above the existing demand of 8000 KVA. The demand w justified placing reliance on B.P.Ms.No.1160, dated 03.11.1989. In the case hand, learned single Judge also gave liberty to the Electricity Board to levy collect service line charges in case a requisition is made by the responden additional load. As found, the Board failed to place any material before Court in support of their contention that additional load was connected over above 120 KVA. The Writ Appeal, therefore, fails, and the Writ Petition m succeed. Accordingly, the writ appeal is dismissed, and the writ petition is allow holding that it will not be necessary for the petitioners to pay the service charges in the event of not requisitioning additional load. The amount pai any, during the pendency of these proceedings shall be refunded or adjust There shall be no order as to costs. _____________ (V.V.S.RAO ________________ (K.G.SHANKAR .09.2011 Note: LR copy to be marked. B/o. vs [1] (1995) 2 SCC 648