Case: Special Officer, Commerce, North Eastern Electricity Company of Orissa and Anr Vs. Raghunath Paper Mills Private Limited and Anr

from the tabulated statement above set out, the auction-purchasers came to purchase the property after disconnection but they cannot be ?consumer or occupier? within the meaning of the above provisions till a contract is entered into. 63. We are clearly of the opinion that there is great reason and justice in holding as above. Electricity is public property. Law, in its majesty, benignly protects public property and behoves everyone to respect public property. Hence, the courts must be zealous in this regard. 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…..? 17) In Paschimanchal Vidyut Vitran Nigam Ltd. & Ors. vs. DVS Steels & Alloys Pvt. Ltd. & Ors. AIR 2009 SC 647 = (2009) 1 SCC 210 , the question whether the supplier can recover electricity dues from the purchaser of a sub-divided plot was considered by this Court. The following conclusion is relevant:- ?9. The supply of electricity by a distributor to a consumer is ?sale of goods?. The distributor as the supplier, and the owner/occupier of a premises with whom it enters into a contract for supply of electricity are the parties to the contract. A transferee of the premises or a subsequent occupant of a premises with whom the supplier has no privity of contract cannot obviously be asked to pay the dues of his predecessor-in-title or possession, as the amount payable towards supply of electricity does not constitute a ?charge? on the premises. A purchaser of a premises, cannot be foisted with the electricity dues of any previous occupant, merely because he happens to be the current owner of the premises. The supplier can therefore neither file a suit nor initiate revenue recovery proceedings against a purchaser of a premises for the outstanding electricity dues of the vendor of the premises in the absence of any contract to the contrary. Learned counsel for the appellant heavily relied on para 10 of the very same judgment which reads as under:- 10. But the above legal position is not of any practical help to a purchaser of premises. When the purchaser of a premises approaches the distributor seeking a fresh electricity connection to its premises for supply of electricity, the distributor can stipulate the terms subject to which it would supply electricity. It can stipulate as one of the conditions for supply, that the arrears due in regard to the supply of electricity made to the premises when it was in the occupation of the previous owner/occupant, should be cleared before the electricity supply is restored to the premises or a fresh connection is provided to the premises. If any statutory rules govern the conditions relating to sanction of a connection or supply of electricity, the distributor can insist upon fulfilment of the requirements of such rules and regulations. If the rules are silent, it can stipulate such terms and conditions as it deems fit and proper to regulate its transactions and dealings. So long as such rules and regulations or the terms and conditions are not arbitrary and unreasonable, courts will not interfere with them.? If we apply the above principles as pointed out by Mr. Tripathy, learned counsel for the appellant, undoubtedly, respondent No. 1-purchaser of the premises is liable to pay entire arrears or outstanding of power dues. However, as pointed out by Mr. P.P. Rao, learned senior counsel, respondent No. 1 is not a party to the contract with the supplier, i.e., the NESCO. We have already quoted the relevant clauses, particularly, sub-Clause 10(b) of Regulation 13 of the Electricity Supply Code, which is not applicable to respondent No. 1 herein. In other words, as mentioned in the earlier paras, in the case on hand, respondent No. 1 has not applied for transfer of service connection from the name of the erstwhile company to its name but applied for a fresh connection to its Unit after purchasing the same from the Official Liquidator. 18) It is also relevant to refer a decision of a three-Judge Bench of this Court reported in Ahmedabad Electricity Co. Ltd. vs. Gujarat Inns Pvt. Ltd. and Others, (2004) 3 SCC 587. This Court, after finding that the cases are of fresh connection, in para 3, held as under:- ?3…..We are clearly of the opinion that in case of a fresh connection though the premises are the same, the auction-purchasers cannot be held liable to clear the arrears incurred by the previous owners in respect of power supply to the premises in the absence of there being a specific statutory provision in that regard…..? 19) In a recent decision, i.e. in Haryana State Electricity Board vs. Hanuman Rice Mills, Dhanauri and Others, (2010) 9 SCC 145 , this Court, after referring to all the earlier decisions including Isha Marbles (supra) and Paschimanchal Vidyut Vitran Nigam Ltd. (supra) etc., summarized the position in the following manner which is as under:- ?12. …. (i) Electricity arrears do not constitute a charge over the property. Therefore in general law, a transferee of a premises cannot be made liable for the dues of the previous owner/occupier. (ii) Where the statutory rules or terms and conditions of supply which are statutory in character, authorise the supplier of electricity to demand from the purchaser of a property claiming reconnection or fresh connection of electricity, the arrears due by the previous owner/occupier in regard to supply of electricity to such premises, the supplier can recover the arrears from a purchaser.?

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]We are of the view that the reading of the abovee 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 company12) From the above factual details in the case on hand and in the light ofe 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 fairIf we apply the above principles as pointed out by Mr. Tripathy, learned counsel for the appellant, undoubtedly, respondent No.r of the premises is liable to pay entire arrears or outstanding of power dues. However, as pointed out by Mr. P.P. Rao, learned senior counsel, respondent No. 1 is not a party to the contract with the supplier, i.e., the NESCO. We have already quoted the relevant clauses, particularly,e 10(b) of Regulation 13 of the Electricity Supply Code, which is not applicable to respondent No. 1 herein. In other words, as mentioned in the earlier paras, in the case on hand, respondent No. 1 has not applied for transfer of service connection from the name of the erstwhile company to its name but applied for a fresh connection to its Unit after purchasing the same from the Official Liquidator.