Case: Dakshin Haryana Bijli Vitran Nigam Ltd Vs. M/S. Paramount Polymers Pvt.Ltd

2. M/s L.L.C. Steels Pvt. Ltd. was a consumer of electricity from the appellant, a distributing company established in the place of the State Electricity Board. It allegedly fell into arrears to the tune of Rs.64,23,695/towards consumption charges of electrical energy including interest and other incidental charges. Because of the failure to pay the consumption charges, the power to the undertaking was disconnected on 6.4.1998. M/s L.L.C. Steels Pvt. Ltd. had also borrowed amounts from the Haryana Financial Corporation and had mortgaged the undertaking to the Financial Corporation. In exercise of power under Section 29 of the State Financial Corporations Act, 1951, the undertaking was taken over by the Financial Corporation and advertised for sale. In the advertisement, the undertaking was offered for sale on "as is where is basis". The first respondent herein bid the undertaking and its bid was accepted. Possession was given by the Financial Corporation to the first respondent on 22.4.1999.3. On 27.11.2001, the appellantCompany decided to incorporate a term in the Terms and Conditions of Supply of electrical energy by providing that in cases where a consumer had defaulted in paying electrical charges and there had been a consequent disconnection of supply, no fresh connection in respect of the premises would be given to a purchaser unless the purchaser cleared the amount that was left in arrears by the consumer whose undertaking had been purchased. It is seen that the first respondent applied for a connection on 1.1.2002. The appellantCompany took the stand that unless the first respondent paid the amount outstanding against M/s L.L.C. Steels Pvt. Ltd., the prior consumer, no fresh connection could be given to the first respondent. Since the first respondent was not willing to comply, the application of the first respondent was rejected. The first respondent thereupon filed a suit, Civil Suit No. 23 of 2002 in the Court of Civil Judge (Senior Division), Faridabad, seeking to restrain the appellantCompany from interfering with the use of generators by the first respondent for generating electricity for its use and for a mandatory injunction directing the appellantCompany to give a fresh electric connection to the first respondent without insisting on the clearing of the dues of the prior owner of the premises. Even while the suit was pending, the first respondent filed a Writ Petition, Civil Writ Petition No. 5350 of 2002 in the High Court of Punjab & Haryana praying for the issue of a writ of certiorari to quash the circular dated 27.11.2001 introducing a condition for fresh connection only on payment of the dues of the previous consumer of electricity in the premises concerned, for a writ of prohibition restraining the appellant from removing the generators installed by the first respondent in the premises, for a writ of mandamus directing the appellant to provide electric connection temporarily to enable the first respondent to run its factory during the pendency of the Writ Petition and for other incidental reliefs. The scrutiny of the prayers made in the Writ Petition shows that there was no prayer for a writ of mandamus directing the appellantCompany to provide a permanent electric connection to the first respondent. The appellant resisted the Writ Petition submitting that the first respondent having already approached the Civil Court for relief, the Writ Petition was not maintainable. It was further contended that the Circular dated 27.11.2001 sought to be challenged in the Writ Petition was issued in exercise of power under Section 49 of the Electricity (Supply) Act, 1948 by the competent authority thereunder and that incorporation of such a condition in the Terms and Conditions of Supply was statutory in nature and was perfectly valid. It was also pleaded that the fact that a substantial amount was due to the appellant from M/s L.L.C. Steels Pvt. Ltd. was brought to the notice of the Financial Corporation and a request was made that the amount of Rs.60,48,504/should also be recovered when the sale was effected by it. The sale by the Financial Corporation was on "as is where is basis" and hence the first respondent was liable for the dues run up in respect of the premises by the prior consumer. It was submitted that there was no merit in the Writ Petition and it was liable to be dismissed.4. Almost the whole case of the first respondent in the Writ Petition was based on the decision of this Court in M/s Isha Marbles Vs. Bihar State Electricity Board [(1995) 1 S.C.R. 847]. In that decision, this Court held that in the absence of there being a charge over the property and the premises comes to be owned or occupied by the auction purchaser and that auction purchaser seeks supply of electrical energy by way of a fresh connection, he cannot be called upon to clear the past arrears as a condition precedent for the fresh connection or supply. What mattered was the contract entered into by the erstwhile consumer with the Electricity Board. The Electricity Board could not seek the enforcement of the contractual liability of the prior consumer against the third party, the purchaser. Even the bona fides of the sale may not be relevant. It was impossible to impose on the purchaser a liability which was not incurred by him. The auction purchaser came to purchase the property after disconnection but it could not be understood as a consumer or occupier within the meaning of the Electricity Act until a contract was entered into. Though, it was stated that electricity is public property and law, in its majesty, benignly protects public property and it behoves everyone to respect public property, since the law, as it stood, was inadequate to enforce the liability of the previous contracting party against the auction purchaser who was a third party and was in no way connected with the previous owner/occupier, the liability could not be enforced against the purchaser or the clearing off of the earlier dues made a condition precedent for grant of a fresh connection. The answer of the appellantCompany to the argument based on this ratio of Isha Marbles(supra) was that on 27.11.2001, the appellantCompany had incorporated a specific term in that regard in the Terms and Conditions of Supply and since there was no infirmity or invalidity attached to such a condition, the ratio of the decision in Isha Marbles(supra) would not enable the first respondent to ignore the condition specifically inserted in exercise of statutory power and consequently, no relief could be granted to the first respondent unless that condition was also fulfilled by the first respondent.5. The High Court did not go into the question of the validity or otherwise of the amendment to the Terms and Conditions incorporated as clause 21A on 27.11.2001. The learned single judge accepted the argument on behalf of the first respondent that since there was no charge on the premises for the electricity charges run up by M/s L.L.C. Steels Pvt. Ltd. and the purchase by the first respondent was on 22.4.1999, the amendment promulgated on 27.11.2001 could not be applied in the case of the first respondent and that the appellantCompany was bound to provide the electric connection to the first respondent without insisting on the Terms and Conditions introduced with effect from 27.11.2001. The argument that what was relevant was the date of the application for connection made by the first respondent herein and the application was made after the amended term was incorporated, was brushed aside stating that in the absence of any charge or of contractual liability created against the auction purchaser, the liability could not be fastened unless it is shown that on the date of transfer, the auction purchaser was either bound by a statute or by a contract. The judge also noticed that in another case where a transfer was effected in the year 2003, the appellant had conceded that the decision of the Supreme Court in Isha Marbles(supra) applied and a different stand could not be taken in the present case by the appellant. Thus, it was directed that the appellant release the power connection to the first respondent expeditiously and not later than 30 days from the date of the judgment. The appellant filed an appeal. The Division Bench of the High Court even without admitting the appeal and without appreciating that some questions of importance do arise for decision in the appeal dismissed the same by referring to the decision in Isha Marbles(supra) and stating that the amendment of the Terms and Conditions of Supply could not be made applicable since the purchase by the first respondent was prior to the introduction of condition 21A and as legislation which affected substantive rights are presumed prospective. The High Court also relied heavily on the fact that in another case of disconnection and transfer in the year 2003, the appellant had not taken up the stance it had taken up in the present case and had conceded that the decision in Isha Marbles(supra) applied to that case. It is this dismissal that is challenged in this appeal.

Reasoning:
On a scrutiny of the decisions of the High Court of Bombay giving rise to those appeals, we find that the primary question in those appeals would be the correctness of the view of the High Court that the Electricity Board had no power to impose a condition that the purchaser of an undertaking will have the obligation to clear the arrears of charges of the prior consumer. Of course, incidentally the correctness of some of the observations in Isha Marbles(supra) may also be involved. Anyway, that aspect will also have to be borne in mind while we consider the elaborate submissions made before us in this appeal.The position obtaining in Isha Marbles(supra) was akin to the position that was available in the case on hand in view of the Haryana Government Electrical Undertakings (Dues Recovery) Act, 1970. There was no insertion of a clause like clause 21A as in the present case, in the Terms and Conditions of Supply involved in that case. The decision proceeded on the basis that the contract for supply was only with the previous consumer and the obligation or liability was enforceable only against that consumer and since there was no contractual relationship with the subsequent purchaser and he was not a consumer within the meaning of the Electricity Act, the dues of the previous consumer could not be recovered from the purchaser. This Court had no occasion to consider the effect of clause like clause 21A in the Terms and Conditions of Supply. We are therefore of the view that the decision in Isha Marbles(supra) cannot be applied to strike down the condition imposed and the first respondent has to make out a case independent on the ratio of Isha Marbles(supra), though it can rely on its ratio if it is helpful, for attacking the insertion of such a condition for supply of electrical energy. This Court was essentially dealing with the construction of Section 24 of the Electricity Act in arriving at its conclusion. The question of correctness or otherwise of the decision in Isha Marbles(supra) therefore does not arise in this case especially in view of the fact that the High Court has not considered the question whether clause 21A of the terms and conditions incorporated is invalid for any reason.15. In the light of what we have stated above we think that the proper course to adopt is to set aside the judgments of the learned Single Judge and that of the Division Bench and remit the writ petition filed by the first respondent to the High Court for a fresh decision in accordance with law. The first respondent would be free to amend its writ petition including the prayers therein and in the case of such an amendment the appellant would be entitled to file an additional statement in opposition. The writ petition will be considered afresh by the High Court in the light of what we have stated above.16. It is seen that after the High Court allowed the writ petition, the connection was restored to the first respondent in obedience to the writ, even though subsequently, this Court stayed the operation of the judgment of the High Court by its order dated 5.7.2006. It is now brought to our notice that a fresh connection has been provided to the first respondent in the light of the direction in the judgment under appeal without collecting the arrears that were due from M/s L.L.C. Steel Pvt. Ltd. Strictly, in view of the fact that we have set aside the judgment of the High Court, the first respondent should lose the benefit of the fresh connection. But considering that the first respondent is an industrial undertaking and taking note of the plea that investments have been made by it to make the unit workable, we think that it will be appropriate to direct the first respondent to deposit a portion of the amount in arrears as a condition for continuance of the supply to it by the appellant on payment of regular monthly bills as per the terms and conditions between the parties. We, therefore, direct that if the first respondent pays to the appellant, without prejudice to its contentions in the writ petition, a sum of Rs.25 lakhs (rupees twenty five lakhs) within a period of six weeks from today, the fresh connection given to the first respondent will not be disconnected by the appellant, until the writ petition is disposed of afresh by the High Court pursuant to this order of remand. In case the High Court accepts the challenge of the first respondent to clause 21A as inserted in the terms and conditions of supply, the appellant will refund the sum of Rs.25 lakhs with six per cent interest thereon from the date of payment by the first respondent till the date of its return by the appellant. In case the writ petition is dismissed by the High Court, the appellant would be entitled, at the volition of the first respondent, to adjust the amount of Rs.25 lakhs towards the dues claimed from the previous consumer, M/s L.L.C. Steel Pvt. Ltd. and maintain the fresh connection given to the first respondent on it fulfilling its obligations in terms of clause 21A and act on that basis. If the first respondent, does not desire to have a power connection based on clause 21A of the Terms and Conditions of Supply, the appellant will refund the sum of Rs. 25 lakhs to the first respondent without interest within two months of the judgment of the High Court and would disconnect the power connection now given. Of course, if the first respondent fails to deposit the sum of Rs.25 lakhs within the time fixed by us, the appellant would be free to disconnect the power supply granted to the first respondent pursuant to the judgment of the High Court which we have set aside herein and take all steps that may be permissible in law for recovery of the amounts due.