IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.9742 of 2009 WITH CWJC No.4637 of 2008 M/S Iceberg Industries Ltd., a company incorporated under the provisions of Companies Act, 1956 having its registered Office at C-654, New Friends Colony, New Delhi-110065 and Office at 271, White House, New Patliputra Colony, Patna- 13, through its General Manager and Authorized Signatory, Kaushal Kishore Tiwary, son Shri U.C. Tiwary resident of 271, White House, New Patliputra Colony, P.S.-Patliputra, District-Patna. -Petitioner. VERSUS 1. The Bihar State Electricity Board through its Chairman, Vidyut Bhavan, Bailey Road, Patna. 2. The Bihar State Regulatory Commission, through its Secretary, Vidyut Bhavan- II, Bailey Road, Patna. 3. The General Manager-cum-Chief Engineer, Central Electric Supply Area, Serpentine Road, Patna. 4. The Electrical Superintending Engineer, Patna Electric Supply Circle, Patna. 5. The Electrical Executive Engineer (Commercial & Revenue), Electric Supply Circle, Patna. -Respondents. . WITH CWJC No.7314 of 2008 1. Bihar State Electricity Board through its Secretary, Vidyut Bhawan, Bailey Road, Patna. 2. The Secretary, Bihar State Electricity Board, Vidyut Bhawan, Bailey Road, Patna. 3. The Chief Engineer-cum- General Manager, Central Area Electricity Board, Sarpentine Road, Patna. 4. Electrical Superintending Engineer, Patna Electric Supple Circle, R-Block, Patna. 5. Electrical Executive Engineer (Revenue), Patna Electric Supply Circle, R-Block, Patna. -Petitioners. VERSUS 1. M/s Iceberg Industries Ltd., a company incorporated under the provisions of Companies Act, 1956 having its registered office at C-654, New Friends Colony, New Delhi-110065 and Office at 271, White House, New Patliputra Colony, Patna-800013, through its General Manager and Authorized Signatory, P.K. Sharma son of Late Khusilal Chand, resident of 271, White House, New Patliputra Colony, P.S.-Patliputra, Town & District-Patna. 2. The Bihar State Regulatory Commission, through its Secretary, Vidyut Bhawan- II, Bailey Road, Patna. 3. The Consumer Grievance Redressal Forum, Vidyut Bhawan-II, Bailey Road, Patna, through its President/Chairperson. 4. The State of Bihar through Energy Secretary, III Secretariat, Near old Secretariat, Patna. -Respondents. - 2 - ----------- For the Petitioner : Mr. Suraj Samdarshi, Adv. Mr. Satyabir Bharti, Adv. For the Respondent-Board: Mr. Y.V. Giri, Sr. Adv. Mr. Vinay Kirti Singh, Adv. Mr. Anand Kumar Ojha, Adv. ---------- 07 29.04.2010 As pleadings are complete, with consent of parties, the three writ applications are taken up for final disposal at this stage itself. The necessity for taking up the three writ applications together is because of intermingling facts. On facts, there appears to be virtually no dispute. Petitioner M/s Iceberg Industries Limited is a company incorporated under the provisions of the Companies Act and, intended to set up a brewery, sought for a high tension electric connection from the respondent-Bihar State Electricity Board (hereinafter referred to as the Board). In 2005, an agreement was entered into between the Company and the Board as a H.T. consumer with a contract demand of 1000 KVA under HTS-II category. The electric connection was energized on 06.05.2005. Subsequent thereto, monthly energy bills were raised by the Board and paid by the petitioner Company. On 17.04.2006, an annual minimum guarantee bill dated 17.04.2006 was served on the petitioner for the period 2005- 06 for an amount of Rs.27,11,812/- (Annexure-1) to C.W.J.C. No.4637 of 2008. Petitioner made request to the authorities of the respondent-Board that being a new unit and due to adverse financial condition he be permitted to pay the dues in ten equal - 3 - monthly instalments, subject to interest for delayed payment being charged. It may be noticed here that there were no other dues outstanding against the petitioner. It is not in dispute that these applications were duly received by the authorities in the Board, but they were not responded. Instalments were prayed for as part payments of bill, is not to be accepted without permission of payment in instalments. Thus, petitioner in order to avoid disconnection either had to arrange for payment of the entire bill at one go or face disconnection, even though, he could and/or was ready to pay the same in instalments upon liability to pay delayed payment surcharge. As noted above, authorities of the Board did not respond at all, they neither accepted nor refused petitioner‟s request. On 29.08.2006, petitioner was served with a disconnection notice in terms of Section 56 of the Electricity Act, 2003 dated 23.08.2006 in respect of the outstanding A.M.G. bill of Rs.33,38,572/-. Thereafter, the petitioner was served with bill dated 01.09.2006, which was for the month of August, 2006 (Annexure-3). In this bill, the outstanding A.M.G. bill, as referred to earlier, along with delayed payment surcharge was included and the total bill was of Rs.37,00,923/- with current monthly bill of only about Rs.3,70,455/-. In this bill the due date of payment was shown as 20.09.2006. This date is important. Thus seen, petitioner was well within his right to pay, if he could pay the entire bill by 20th September, 2006. Though, as per bill dated 01.09.2006, the due date for payment was 20th - 4 - September, 2006 for the total billed amount of Rs.37,00,923/- but still notwithstanding the aforesaid on 06.09.2006, the petitioner‟s electric connection was disconnected allegedly for not paying the amount as per notice dated 23.08.2006. This was notwithstanding petitioner‟s application, as noted above, made earlier for permission to pay the A.M.G. bill in monthly instalments, subject to payment of delayed payment surcharge, which remain un- responded to by the Board. At this stage, I may note that having effected the disconnection and after great persuasion, the Board did respond and consequently on 11.04.2007, having remained disconnected for almost 7 months, petitioner was asked to enter into an agreement of payment in instalments. This agreement was entered into on 11.04.2007 (Anneure-5). It is not in dispute that instalments, as per the said agreement, were duly paid as and when it became due under agreement. The first issue is disconnection related dispute. Petitioner submits that he did not disregard or neglect his liability to pay. He asked for instalments for payment because part payment was not acceptable without permission. It submits that it is not the stand of the Board that part payment or payment in instalments could not be granted, rather, facts as noted above, would show that, in fact, instalment payment was granted but only after disconnecting the supply. Petitioner further submits that there was no conscious disregard to the discharge of liability and - 5 - merely because the authorities of the Board took their sweet time to decide the matter, he cannot be punished with disconnection in terms of Section 56 of the Act, as there was no neglect to pay. On the other hand, Mr. Vinay Kirti Singh, learned counsel for the Board on this issue relies on a judgment of this Court in the case of M/s Jayanti Industries Vs. Bihar State Electricity Board & Ors. since reported in 2002(4) PLJR 400 for submitting that once a notice is issued then action could be taken at any time subsequent thereto based on the said notice. Court will discuss this issue when discussing the position in law. Once petitioner entered into an agreement on 11.04.2007 and, his line was reenergized, consequent upon payment of first instalment, he received yet another rude shock. On 04.05.2007, he received a bill for Rs.70,23,149/-. This was a bill for the period of disconnection, when admittedly Board had not supplied nor petitioner had consumed any electricity, which period was of about 7 months. Petitioner immediately protested, on being asked to pay for the disconnected period, such heavy charges, but once again petitioner was served with a disconnection notice dated 22.05.2007 for total outstanding dues including a fresh demand of A.M.G. dues for the second year i.e. 2006-07. The petitioner feeling aggrieved by the successive threats and bills including bills for over Rs.70,00,000/- for disconnection period, moved the Consumer Redressal Forum (hereinafter referred to as the Forum) under Section 42(5) of the - 6 - Electricity Act. By interim order dated 06.06.2007, the Forum passed an interim order staying disconnection of electricity on 06.06.2007. Ultimately on 12.02.2008, the Forum held the disconnection as effected on 08.09.2006 to be legal but held the charge for the period December 2006 to March 2007 (disconnection period) to be incorrect and directed withdrawal of the same. The petitioner being aggrieved by the decision of the Forum, in absence of Ombudsman, having been appointed by the State Regulatory Commission, filed a writ petition before this Court on 13.03.2008, which is C.W.J.C. No.4367 of 2008, wherein the correctness of the judgment of the Forum is challenged. Notwithstanding these facts and pendency of the writ petition, petitioner‟s electric supply was again disconnected on 02.04.2008, for alleged dues of about Rs.1.33 crores. This included an amount of about Rs.88 lacs, which had been held by the Forum to be not payable. Thus seen, even for an amount held to be not payable by the Forum, the Board pressed its payment and disconnected the supply of electricity of the petitioner for the third time. On 15.05.2008, this Court in C.W.J.C. No.4637 of 2008 directed that on petitioner depositing Rs.35 lacs, the Board would reenergize the supply of electricity to the petitioner, subject to the result of the writ petition. This amount of Rs.35 lacs was to be paid by first depositing of Rs.20 lacs and balance 15 lacs within 10 days - 7 - thereafter and upon payment of Rs.20 lacs initially the line had to be restored. Ultimately, the line was restored on 05.06.2008. The bills that were served thereafter allegedly had a lot of discrepancies. It got inflated because of delayed payment surcharge had been added. This delayed payment surcharge was being added in respect of that part of the bill, which had already been struck down by the Forum, which was itself Rs.88 lacs. The bill also included the bill for two months disconnected period from the last disconnection, which was effected on 02.04.2008. This was again challenged before the Forum under the Act. Upon disconnection notice having been received on 12.06.2009 and, the Forum stayed the action of the Board, but in utter disregard to the order of the Forum established by the Board itself under Section 42(5) of the Act, on 07.08.2009, once again for the fourth time the electric connection of the petitioner company was disconnected. This forced the petitioner to file the writ petition being C.W.J.C. No.9742 of 2009. By virtue of interim order dated 15.10.2009 and 19.12.2009, as passed in C.W.J.C. No.9742 of 2009, petitioner was directed to pay in all Rs.80 lacs for his line to be restored whereupon it was also directed that petitioner would continue paying monthly electric charges alone and any other charges would remain in abeyance. Having paid the said amount of Rs.80 lacs on 01.12.2009, the electric connection of the petitioner was restored. So far as C.W.J.C. No.7314 of 2008, as preferred by the - 8 - Board is concerned, it is primarily directed against the order dated 12.02.2008 of the Forum established by the Board itself under Section 42(5) of the Act, by which order, as noticed above, the Forum had held the initial disconnection to be legal but held the billing for the disconnected period to be wrong and had directed for the bills withdrawal. Let it be noted that till date the orders of the Forum have not been complied with by the Board and the Board is maintaining those amounts in the bills and is charging delayed payment surcharge every month over those amounts to the extent it remains un-liquidated. It is under these circumstances, these three writ petitions have been taken up together for final disposal. Upon hearing the parties, the issues that arise are, first, whether the first disconnection, as effected by the Board on 08.09.2006, is legal and correct. Second, whether the Board is justified in raising the bills for the disconnection periods. The answer to these issues would also resolve the question about correctness or otherwise of the order of the Forum. The first thing I may note here is that the Forum is established by the Board in terms of Section 42(5) of the Electricity Act. Once the Forum decides any issue, as against the Board then, in my view, there is no option or no discretion in the Board to disregard that which they have done with impunity in the present case. The orders of the Forum on both occasions were defied with impunity by the Board itself leading to two - 9 - disconnections. Mr. Vinay Kirti Singh, learned counsel for the Board submits that as the Board considered those orders not to be in accordance with law, they were neither bound by it nor they were expected to comply with it. Against the first, they chose to file a writ petition, ignoring the order of the Forum, having disconnected the line of the petitioner in defiance of the order. All I can say is, the Court is afraid of consequences against from the argument on behalf of the Board. To the understanding of this Court, the rule of law is that, however, an erroneous order of the statutory authority may be, it has to be respected, till it is reversed or varied in any manner by an authority of competent jurisdiction. But certainly, it cannot be ignored with impunity as has been done otherwise the Rule of Law will collapse and become Rule of Jungle, an unacceptable position. So far as the second order of the Forum is concerned, the Board disregards it with impunity and does not even bother to challenge the same. The consumer is forced to come to this Court. This defiant attitude of the Board is neither understandable nor explainable nor is it legal or valid. It needs to be deprecated and is deprecated accordingly. It is held and directed that so long as the order of the Forum, which has statutory authority under Section 42(5) of the Act operates, Board cannot ignore the same or even delay its implementation otherwise rule of law would collapse. More so, when Board is monopolistic licensee in matters of supply - 10 - of electrical energy and is a State within the meaning of Article-12 of the Constitution of India. Now, I come to the main issues. The first issue is, whether the Board had rightly exercised the power of disconnection on 06.09.2006 (08.09.2006 as stated by the Board), when it first disconnected the supply of electricity of the petitioner. In my view, there are two aspects of the matter. There are two relevant facts, as noted above, which have to be kept in mind in resolving this issue. The first is that upon A.M.G. bill being served for the period 2005-06 for an amount of about Rs.27 lacs, petitioner had made representation. The representation had been made for permission to pay the same with interest for delayed payment in instalments as part payment was not being accepted. This was not responded to by the Board till after disconnection when permission to pay in instalments as asked before disconnection was granted. The second fact is that petitioner was served with a bill dated 01.09.2006 which included arrears A.M.G. bill and other monthly charges totalling to about Rs.37 lacs and this bill itself showed the due date for payments as 20th September 2006 (Annexure-3), but for an amount which was contained in this bill itself of which the due date was fixed as 20th September 2006, as notice of disconnection has been issued earlier by the Board for issuance of the said bill dated 01.09.2006 long before 20th September 2006, on 06th September, 2006 (08th September 2006 as per Board) the line was disconnected prematurely. - 11 - Having heard the argument and considered the matter, in my view, the disconnection was ex facie illegal and cannot be sustained. The Forum erred in holding otherwise. One has to refer to Section 56 of the Electricity Act, 2003 in this regards which in clear terms provides where any persons neglects to pay any charge for electricity or any sum other than a charge for electricity due from him to a licensee without prejudice to the right of the licensee to recover surcharge or other sum by suit the licensee has a right to cut off the electric supply. The Board would argue that the we should read the provisions, as anyone who fails to pay charges of electricity, the Board would disconnect the electricity. I regret my inability to agree because the statutory language is just the opposite. It is not merely failure to pay the right to disconnect electric supply would arise. The legislature has advisedly use the expression neglects to pay. If what the Board urges is to be accepted then the word “neglect” is of no consequence. It should have been “failed to pay”. That is not there and, therefore, the Court has to give meaning to phrase “neglects to pay any charge”. In my view, it is too late in the day to debate as to what this expression would mean. One of the earliest judgments in this regards is a Division Bench judgment of the Bombay High Court in the case of Corporation of the City of Nagpur through Chief Executive Officer of the Corporation of Nagpur Vs. The Nagpur Electric Light and Power Company Ltd. Nagpur since reported in AIR - 12 - 1958 Bombay 498 wherein considering pari materia provision of Section 24 of the Electricity Act, 1910, their Lordships held that if there is a bona fide dispute between the parties, as to what was payable, the failure to pay cannot amount to neglect to pay within the meaning of Section 24 and, therefore, action under Section 24 cannot be taken. In my view, the expression “neglects” signifies a conscious disregard to legal obligation, being careless in the matter but not otherwise. I may refer to two decisions of the Apex Court in relation to interpretation of the expression “neglects to pay” though, both these decisions are in relation to different statutes. First the case of Amalgamated Commercial Traders (P.) Ltd. Vs. A.C.K. Krishnaswami and another since reported in 1965 Volume XXV Company Cases 456. That was case in relation to Section 434 of the Companies Act in relation to winding up on neglect to pay debts. There the Apex Court held “If a debt is bona fide disputed, as we hold it was, there cannot be “neglect to pay” within Section 434(1)(a) of the Companies Act. If there is no neglect, the deeming provision does not come into play and the ground of winding up, namely, that the company is unable to pay its debts is not substantiated.” Then, I refer to decision in the case of Laxmikant Revchand Bhojwani and another Vs. Pratap Singh Mohan Singh Pardeshi, deceased through his heirs and legal representatives since reported in (1995)6 SCC 576 wherein the expression - 13 - “neglect to make payment” once again came to be interpreted in relation to Bombay Rent Act. The Apex Court in paragraph-7 held thus:- “………The High Court, however, fell into patent error in reaching the conclusion that the actual payment having not been received by the landlady within the said period there was neglect on the part of the tenants to make payment. The sine qua non for eviction of a tenant under Section 12(3)(a) is “the neglect to make payment” and not the actual making of the „payment‟. When a money order or a demand draft is sent to the landlord, during the specified period, it cannot be said that the tenant has “neglected to make payment”. The expression „neglect‟ means “to fail to give due care, attention, or time to. To fail through thoughtlessness or carelessness. To ignore or disregard…………” Thus seen, in these decisions there is a commonality which is that “neglect to pay” is a conscious disregard to obligation and not otherwise. It is not to be equated to default in payment simplictor. Thus seen and applying the same to the facts of the present case, what comes out that the A.M.G. charges - 14 - having been served on the petitioner, petitioner asked for payment in instalment, because part payment is not to be accepted unless ordered, petitioner did not dispute the liability to pay, rather acknowledge the liability but prayed for instalments. It was not responded to in not because Board had no authority to grant instalment nor any other plausible reasons has been given. It was responded to and instalment facility given but much later after the disconnecting the supply. The stand of the Board appears to be that while you are alive, I will not permit giving medicine to you, but once I kill you, I will permit your revival. An absurd situation on the face of it. Had the Board responded immediately and granted petitioner instalment, the whole controversy would have been nipped in the bud. The industry would have functioned, the Board would have got the money, but someone in the Board thought otherwise. The second infirmity which also shows that there was no neglect to pay, is that on 01.09.2006 petitioner was served with a bill showing due date as 20th September, 2006. What does this means? This means clearly and simply that the entire amount shown in the bill can be paid by 20th September, which is the due date for the said payment. Notwithstanding, the bill having been accordingly raised, which the Board does not challenge being wrongly raised, on the 6th September 2006 itself, that is, more than 14 days before the due date the electricity was disconnected, for failure to pay the part of the said bill. Can it be said that there was - 15 - a conscious disregard on part of the petitioner to discharge his liability? On these facts, the answer has to be emphatic, no. He had first asked for instalment, which he was entitled to ask and then the due date being 20th September, 2006, no action could be taken before that. In that regard to the later learned counsel for the Board has relied in the case of Jayanti Industry‟s case (supra). In that case the facts were totally different. In that case, the fact of the present case was neither there for consideration nor was it considered. As noted above, in the present case, after notice for disconnection was issued on 23.08.2006, a fresh bill was served including the amount for which notice had been issued with a fresh due date. Thus, this act of the Board itself would amount to waiver to the first notice, because an amount payable thereunder was now included in a subsequent bill with an extended due date of payment. Those were not the facts as considered in the case of Jayanti Industry (supra). In this case, the fact was that there were three successive notice for disconnections. It was argued by petitioner as noticed in para 10 of the said report that the notices would supercede each other and disconnection pursuant to last notice was within less than 7 days, as such invalid. This was not accepted by the Court on the ground that the initial notice having not been complied nor it having become Stale, it could be acted upon. There the legal effect of subsequent bill including the bill already due, upon the notice was neither raised nor considered nor decided. In the case at hand, after disconnection notice fresh bill - 16 - was issued which was inclusive of the noticed amount and notwithstanding notice of disconnection a fresh extended due date was given consciously by the Board. That clearly amounts to waiver by conduct. Thus, the case of M/s Jayanti Industries (supra) is clearly distinguishable and does not apply to the facts and issue of the present case. I may note that the said Jayanti Industry (supra) was pressed into service by the Board in the case of M/s Golden Polymex (India) Ltd. Vs. The Bihar State Electricity Board & Ors. since reported in 2004(3)