Case: M/S PREM COTTEX Vs. UTTAR HARYANA BIJLI VITRAN NIGAM LTD.  &amp; ORS

3. The appellant is carrying on the business of manufacturing cotton yarn in Panipat, Haryana. The appellant is having a L.S. connection, which got extended from 404.517 KW to 765 KW with C.D 449 KVA to 850 KVA, on 3.08.2006.4. After 3 years of the grant of extension, the appellant was served with a memo dated 11.09.2009 by the third respondent herein, under the caption short assessment notice, claiming that though the multiply factor (MF) is 10, it was wrongly recorded in the bills for the period from 3.08.2006 to 8/09 as 5 and that as a consequence there was short billing to the tune of Rs.1,35,06,585/-. The notice called upon the appellant to pay the amount as demanded, failing which certain consequences would follow.5. Aggrieved by the said notice, the appellant gave a representation on 22.09.2009 and then filed a consumer complaint before the National Commission, contending inter alia that the demand made by the respondents is the outcome of a glaring mistake and gross negligence on their part and that under Section 56 of the Electricity Act, 2003 (for short the Act), no amount due from a customer is recoverable after a period of two years from the date on which it became first due.6. By an Order dated 1.10.2009, the National Commission dismissed the complaint on the ground that it is a case of escaped assessment and not a case of deficiency in service. Aggrieved by the said Order, the appellant is before us.7. While ordering notice in the above appeal on 13.11.2009, this Court granted interim stay of the impugned order. However, on an application filed on behalf of the respondents for vacating the interim order, this Court modified the stay Order on 19.08.2014 directing the appellant to pay to the first respondent herein, 50% of the demand amount within six weeks with a condition that in case the appellant succeeded, the said amount shall be refunded with interest @ 9% p.a. Accordingly, the appellant has paid a sum of Rs.54,03,293/-, on 24.09.2014. The appellant claims to have already paid a sum of Rs.13,50,000/- on 9.10.2009 itself and this amount, together with the amount deposited on 24.09.2014 pursuant to the interim order of this Court, constituted 50% of the amount as demanded in short assessment notice dated 11.09.2009.

Court's reasoning:
9. Before we proceed to consider the statutory provision and the decision of this Court relied upon by the appellant, it is relevant to take note of the fact that the appellant never disputed the correctness of the claim of the respondents that the multiply factor (MF) to be applied was 10, but it was wrongly applied as 5. The only grievance raised by the appellant both in their representation and in their consumer complaint was that they cannot be made to suffer on account of the negligence on the part of the respondents and that on the basis of the bill already raised, they have charged their customers and that it may not be possible for them to go back to their customers with an additional demand now. In addition, the bar under Section 56 was also pleaded.11. In Rahamatullah Khan (supra), three issues arose for the consideration of this Court. They were (i) what is the meaning to be ascribed to the term first due in Section 56(2) of the Act; (ii) in the case of a wrong billing tariff having been applied on account of a mistake, when would the amount become first due; and (iii) whether recourse to disconnection may be taken by the licensee after the lapse of two years in the case of a mistake.12. On the first two issues, this Court held that though the liability to pay arises on the consumption of electricity, the obligation to pay would arise only when the bill is raised by the licensee and that, therefore, electricity charges would become first due only after the bill is issued, even though the liability would have arisen on consumption. On the third issue, this Court held in Rahamatullah Khan (supra), that the period of limitation of two years would commence from the date on which the electricity charges became first due under Section 56(2). This Court also held that Section 56(2) does not preclude the licensee from raising an additional or supplementary demand after the expiry of the period of limitation in the case of a mistake or bonafide error. To come to such a conclusion, this Court also referred to Section 17(1)(c) of the Limitation Act, 1963 and the decision of this Court in Mahabir Kishore & Ors. vs. State of Madhya Pradesh (1989) 4 SCC 1 .13. Despite holding that electricity charges would become first due only after the bill is issued to the consumer (para 6.9 of the SCC Report) and despite holding that Section 56(2) does not preclude the licensee from raising an additional or supplementary demand after the expiry of the period of limitation prescribed therein in the case of a mistake or bonafide error (Para 9.1 of the SCC Report), this Court came to the conclusion that what is barred under Section 56(2) is only the disconnection of supply of electricity. In other words, it was held by this Court in the penultimate paragraph that the licensee may take recourse to any remedy available in law for the recovery of the additional demand, but is barred from taking recourse to disconnection of supply under Section 56(2).14. But a careful reading of Section 56(2) would show that the bar contained therein is not merely with respect to disconnection of supply but also with respect to recovery.16. Be that as it may, once it is held that the term first due would mean the date on which a bill is issued, (as held in para 6.9 of Rahamatullah Khan) and once it is held that the period of limitation would commence from the date of discovery of the mistake (as held in paragraphs 9.1 to 9.3 of Rahamatullah Khan), then the question of allowing licensee to recover the amount by any other mode but not take recourse to disconnection of supply would not arise. But Rahamatullah Khan says in the penultimate paragraph that the licensee may take recourse to any remedy available in law for recovery of the additional demand, but barred from taking recourse to disconnection of supply under sub-section (2) of section 56 of the Act.17. It appears from the narration of facts in paragraph 2 of Rahamatullah Khan (supra) that this Court was persuaded to take the view that it did, on account of certain peculiar facts. The consumer in that case was billed under a particular tariff code for the period from July-2009 to September-2011. But after audit, it was discovered that a different tariff code should have been applied. Therefore, a show cause notice was issued on 18.03.2014 raising an additional demand for the period from July-2009 to September-2011. Then a bill was raised on 25.05.2015 for the aforesaid period. Therefore, the consumer successfully challenged the demand before the District Consumer Forum, but the Order of the District Forum was reversed by the State Commission on an appeal by the licensee. The National Commission on a revision filed by the consumer, set aside the order of the State Commission and restored the order of the District Forum. It was this Order of the National Commission that was under challenge before this Court in Rahamatullah Khan (supra).18. Eventually, this Court disposed of the appeals, preventing the licensee from taking recourse to disconnection of supply, but giving them liberty to take recourse to any remedy available in law for recovery of the additional demand. Therefore, the decision in Rahamatullah Khan (supra) is distinguishable on facts.19. Even otherwise there are two things in this case, which we cannot overlook. The first is that the question whether the raising of an additional demand, by itself would tantamount to any deficiency in service, clothing the consumer fora with a power to deal with the dispute, was not raised or considered in Rahamatullah Khan (supra). The second is the impact of Sub-section (1) of Section 56 on Sub-section (2) thereto.21. The raising of an additional demand in the form of short assessment notice, on the ground that in the bills raised during a particular period of time, the multiply factor was wrongly mentioned, cannot tantamount to deficiency in service. If a licensee discovers in the course of audit or otherwise that a consumer has been short billed, the licensee is certainly entitled to raise a demand. So long as the consumer does not dispute the correctness of the claim made by the licensee that there was short assessment, it is not open to the consumer to claim that there was any deficiency. This is why, the National Commission, in the impugned order correctly points out that it is a case of escaped assessment and not deficiency in service.22. In fact, even before going into the question of Section 56(2), the consumer forum is obliged to find out at the threshold whether there was any deficiency in service. It is only then that the recourse taken by the licensee for recovery of the amount, can be put to test in terms of Section 56. If the case on hand is tested on this parameter, it will be clear that the respondents cannot be held guilty of any deficiency in service and hence dismissal of the complaint by the National Commission is perfectly in order.23. Coming to the second aspect, namely, the impact of Sub-section (1) on Sub-section (2) of Section 56, it is seen that the bottom line of Sub- section (1) is the negligence of any person to pay any charge for electricity. Sub-section (1) starts with the words where any person neglects to pay any charge for electricity or any some other than a charge for electricity due from him.25. In other words, the negligence on the part of the licensee which led to short billing in the first instance and the rectification of the same after the mistake is detected, is not covered by Sub-section (1) of Section 56. Consequently, any claim so made by a licensee after the detection of their mistake, may not fall within the mischief, namely, no sum due from any consumer under this Section, appearing in Sub-section (2).26. The matter can be examined from another angle as well. Sub- section (1) of Section 56 as discussed above, deals with the disconnection of electric supply if any person neglects to pay any charge for electricity. The question of neglect to pay would arise only after a demand is raised by the licensee. If the demand is not raised, there is no occasion for a consumer to neglect to pay any charge for electricity. Sub-section (2) of Section 56 has a non-obstante clause with respect to what is contained in any other law, regarding the right to recover including the right to disconnect. Therefore, if the licensee has not raised any bill, there can be no negligence on the part of the consumer to pay the bill and consequently the period of limitation prescribed under Sub-section (2) will not start running. So long as limitation has not started running, the bar for recovery and disconnection will not come into effect. Hence the decision in Rahamatullah Khan and Section 56(2) will not go to the rescue of the appellant.