Assistant Engineer (D1) Ajmer … vs Rahamatullah Khan Alias … on 18 February, 2020


Supreme Court of India

Assistant Engineer (D1) Ajmer … vs Rahamatullah Khan Alias … on 18 February, 2020

Author: Uday Umesh Lalit

Bench: Uday Umesh Lalit, Hon’Ble Ms. Malhotra, Hemant Gupta

                                                                        REPORTABLE

                                  IN THE SUPREME COURT OF INDIA
                                   CIVIL APPELLATE JURISDICTION

                                    CIVIL APPEAL NO.1672 OF 2020
                               (Arising out of SLP (Civil) No. 5190 of 2019)

         Assistant Engineer (D1), Ajmer Vidyut                         …Appellant(s)
         Vitran Nigam Limited & Anr.


                                                  versus


         Rahamatullah Khan alias Rahamjulla                           …Respondent(s)


                          WITH C.A.NO.1673/2020 @ SLP©NO.4721/2020 @
                                            D.NO.33892/2018


                                             JUDGMENT

INDU MALHOTRA, J.

Delay condoned. Leave granted.

a) The issues which have arisen for consideration in the

present Civil Appeal are : –
Signature Not Verified

Digitally signed by
MUKESH KUMAR
Date: 2020.02.18
17:17:12 IST
Reason:

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b) What is the meaning to be ascribed to the term “first due”

in Section 56(2) of the Electricity Act, 2003?

c) In the case of a wrong billing tariff having been applied on

account of a mistake, when would the amount become “first

due”?

d) Whether recourse to disconnection of electricity supply may

be taken by the licensee company after the lapse of two

years in case of a mistake?

1. The factual matrix in which the aforesaid issues have arisen

for our consideration is : –

1.1 In the present case, for the period July, 2009 to

September, 2011, the Respondent along with other

consumers were billed by the licensee company (the

Appellant herein) under Tariff Code 4400 @Rs.1.65 per

unit.

1.2 During the course of a regular audit being conducted by

the Internal Audit Party, it was discovered that in 52

cases, including that of the Respondent, the bills were

raised under the wrong Tariff Code 4400, instead of

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Tariff Code 9400, under which the prescribed tariff rate

was Rs.2.10p. per unit.

1.3 On 18.03.2014, the licensee company issued a show

cause notice to various consumers, including the

Respondent, raising an additional demand for

consumption of electricity for the past period from July,

2009 to September, 2011. It was mentioned in the notice

that the amount was payable in view of the internal

audit conducted by the department.

1.4 On 25.05.2015, the licensee company raised a bill

demanding payment of Rs.29,604/- from the

Respondent under Tariff Code 9400 for the period July,

2009 to September, 2011.

1.5 Aggrieved by the said demand, the Respondent filed a

Consumer Complaint before the District Consumer

Forum, Ajmer.

The District Forum vide Order dated 21.06.2016,

allowed the Consumer Complaint, and held that the

additional demand was time-barred.

1.6 Thereafter, the State Commission vide Order dated

30.05.2017, allowed the Appeal of the licensee

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company, and set aside the Order dated 21.06.2016

passed by the District Forum.

1.7 In the Revision Petition filed by the Respondent before

the National Consumer Disputes Redressal

Commission, the Order passed by the State Commission

was set aside. The National Commission held that the

additional demand was barred by limitation under

Section 56(2) of the Electricity Act, 2003 (“the Act”).

1.8 The licensee company has filed the present Civil Appeals

before this Court to challenge the final judgment dated

28.05.2018 passed by the National Commission.

1.9 This Court vide Order dated 05.03.2019 appointed Mr.

Devashish Bharuka as Amicus Curiae to assist this

Court on the issues raised for determination.

It was further directed that the Appellant –

Corporation would not be entitled to recover the

additional demand from the Respondent in this case,

and only the questions of law would be determined.

2. We have heard the learned Counsel on behalf of the Appellant

– Corporation and the learned Amicus Curiae.

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3. Mr. Puneet Jain represented the licensee company, and

submitted that the power to disconnect electricity supply

under Section 56(1) of the Act may be exercised by the licensee

company when a consumer neglects to pay the electricity

charges, or any other sums due and payable by him. The

neglect to pay the “sum due” by a consumer, necessarily

requires that there should be a “demand” of the sum due from

the consumer, which he is required to pay within the period

stipulated. If the demand is not paid within the stipulated

time, then the power of disconnection under Section 56(1) may

be resorted to.

3.1 It was further submitted that when a bill or demand is

raised, which is disputed by the consumer, he may raise

the dispute before the Authorities as provided by Section

42(5) or 42(6) of the Act, or avail such other remedies as

may be available in law, such as a suit for declaration

and injunction; consumer dispute before the consumer

fora; arbitration if provided by the governing agreement.

3.2 Section 56(1) of the Act confers the power of

disconnection of electricity supply for default of

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payment upon a licensee, and provides the conditions

when such a power may be invoked, the procedure and

manner of the exercise of such power, the period for

which such power can remain effective, and the

circumstances under which such a power cannot be

exercised.

3.3 Sub-section (2) of Section 56 bars the remedy of

disconnection of supply for default of payment, if the

consumer deposits the amount demanded under

protest, or if the demand has been raised two years after

the sum became “first due”, albeit the same had been

continuously shown to be recoverable as arrears of

charges.

3.4 The word “due” has been used under Section 56(1) as

well as under Section 56(2). The term “due” refers to the

amount for which the demand is raised by way of a bill.

The term “first due” would therefore imply when the

demand is raised for the first time. The bill raised by the

licensee company would be the starting point for the

exercise of power under sub-section (1) of Section 56.

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3.5 The starting point of limitation would be from the date

when the bill is raised by the licensee company. The bar

of limitation is applicable only on the exercise of power

of disconnection. As per sub-section (2) of Section 56,

the bar of limitation would be two years from the date

when the first bill is raised.

3.6 It was further submitted that in case of a mistake, the

starting point of limitation should be the date when the

mistake is discovered.

In the present case, during a regular internal audit

conducted on 18.03.2014, it was discovered that a

mistake had occurred in 52 cases, including that of the

Respondent, as the bills were raised under the wrong

Tariff Code. The Appellant–Corporation raised

additional demands on 25.05.2015, i.e., within two

years from the discovery of the mistake.

4. The learned Amicus Curiae submitted that Section 56(1) of the

Act empowers the licensee to disconnect the electricity supply

if the consumer neglects to pay his dues. The disconnection

would take place only after the consumer has consumed the

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electricity, and the bill has been generated. If the consumer

neglects to pay the bill served on him within the stipulated

period, the licensee can resort to coercive modes of recovery

provided in the Act.

4.1 The words “first due” used in the first part of sub-section

(2) of Section 56 is used in the context of the sum

quantified by the licensee in the bill; while the second

part of sub-section (2) of Section 56 indicates the date

when the first bill for the supply of electricity was raised

by the licensee under the applicable State Electricity

Supply Code.

4.2 By treating the words “first due” to mean the date of

detection of mistake, would dilute the mandate of the

two year limitation period provided by Section 56(2),

since a mistake may be detected at any point of time.

Furthermore, the words “recoverable as arrears of

charges” would be rendered completely otiose and

nugatory.

4.3 The period of limitation under Section 56(2) cannot be

extended by raising a supplementary bill. The “sum due”

raised in the original bill, and not paid by the consumer,

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must be continuously shown as arrears of charges in

subsequent bills, for it to become recoverable by taking

recourse to the coercive mode of disconnection of

electricity supply.

4.4 If after the expiry of two years of the original demand,

any genuine or bona fide mistake is detected by the

licensee in the original bill, it would be entitled to raise

a supplementary bill. The licensee company would be

entitled to resort to other modes of recovery, but not by

disconnection of supply under sub-section (1) of Section

56 of the 2003 Act.

6. Findings and Analysis

The Electricity Act, 2003 is a consumer-friendly statute.1 The

Statement of Objects and Reasons to the Act notes that over a

period of time, the performance of State Electricity Boards had

deteriorated on account of various factors, and the need was

felt to frame a self-contained comprehensive legislation, which

led to the enactment of the Electricity Act, 2003.

1 Tata Powers v. Reliance Energy, (2008) 10 SCC 321.

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6.1 Electricity has been held to be “goods” by a Constitution

Bench in State of Andhra Pradesh v. National Thermal

Power Corporation Ltd.2 Under the Sale of Goods Act,

1930 a purchaser of goods is liable to pay for it at the

time of purchase or consumption. The quantum and

time of payment may be ascertained post facto either by

way of an agreement or the relevant statute.

In the case of electricity, the charges are

ascertained and recovered as per the tariff notified by

the State Electricity Board, or under an electricity

supply agreement between the parties read with the

tariff under Section 62(1)(d), and the Electricity Supply

Code framed under Section 50.

6.2 The present Civil Appeal pertains to the interpretation

of Section 56 of the Act which reads as follows : –

“Section 56. Disconnection of supply in
default of payment –

(1) Where any person neglects to pay any
charge for electricity or any sum other than a
charge for electricity due from him to a licensee
or the generating company in respect of supply,
transmission or distribution or wheeling of
electricity to him, the licensee or the generating
company may, after giving not less than fifteen
clear days’ notice in writing, to such person and

2 (2002) 5 SCC 203.

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without prejudice to his rights to recover such
charge or other sum by suit, cut off the supply
of electricity and for that purpose cut or
disconnect any electric supply line or other
works being the property of such licensee or the
generating company through which electricity
may have been supplied, transmitted,
distributed or wheeled and may discontinue
the supply until such charge or other sum,
together with any expenses incurred by him in
cutting off and reconnecting the supply, are
paid, but no longer:

Provided that the supply of electricity shall not
be cut off if such person deposits, under
protest, –

a) an amount equal to the sum claimed from
him, or

b) the electricity charges due from him for each
month calculated on the basis of average
charge for electricity paid by him during the
preceding six months,
whichever is less, pending disposal of any
dispute between him and the licensee.

(2) Notwithstanding anything contained in any
other law for the time being in force, no sum due
from any consumer, under this section shall be
recoverable after the period of two years from
the date when such sum became first due
unless such sum has been shown continuously
as recoverable as arrear of charges for
electricity supplied and the licensee shall not
cut off the supply of the electricity.”
(emphasis supplied)

Section 56 provides for disconnection of supply in

the case of default in payment of electricity charges.

Sub-section (1) of Section 56 provides that where any

person “neglects” to pay “any charge” for electricity, or

“any sum” other than a charge for electricity due from

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him to a licensee or generating company, the licensee

after giving 15 days’ written notice, may disconnect the

supply of electricity, until such charges or other sums

due, including the expenses incurred, are paid.

However, the disconnection cannot continue after the

amounts are paid.

6.3 The obligation of a consumer to pay electricity charges

arises after the bill is issued by the licensee company.

The bill sets out the time within which the charges are

to be paid. If the consumer fails to pay the charges

within the stipulated period, they get carried forward to

the next bill as arrears.

6.4 The proviso to Section 56(1) carves out an exception by

providing that the disconnection will not be effected if

the consumer either deposits the amount “under

protest”, or deposits the average charges paid during the

preceding six months.

6.5 Sub-section (2) of Section 56 by a non obstante clause

provides that notwithstanding anything contained in

any other law for the time being in force, no sum due

from any consumer, shall be recoverable under Section

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56, after the expiry of two years from the date when the

sum became “first due”, unless such sum was shown

continuously recoverable as arrears of charges for the

electricity supplied, nor would the licensee company

disconnect the electricity supply of the consumer.

The effect of a non obstante clause was explained

by this Court in Chandavarkar Sita Ratna Rao v.

Ashalata S. Guram.3 It was held that : –

“69. A clause beginning with the expression
‘notwithstanding anything contained in this Act
or in some particular provision in the Act or in
some particular Act or in any law for the time
being in force, or in any contract’ is more often
than not appended to a section in the beginning
with a view to give the enacting part of the
section in case of conflict an overriding effect
over the provision of the Act or the contract
mentioned in the non-obstante clause. It is
equivalent to saying that in spite of the
provision of the Act or any other Act mentioned
in the non-obstante clause or any contract or
document mentioned the enactment following it
will have its full operation or that the provisions
embraced in the non-obstante clause would not
be an impediment for an operation of the
enactment.”
(emphasis supplied)

6.6. The liability to pay arises on the consumption of

electricity. The obligation to pay would arise when the

3 (1986) 4 SCC 447.

13
bill is issued by the licensee company, quantifying the

charges to be paid.

Electricity charges would become “first due” only

after the bill is issued to the consumer, even though the

liability to pay may arise on the consumption of

electricity.

7. The next issue is as to whether the period of limitation of two

years provided by Section 56(2) of the Act, would be applicable

to an additional or supplementary demand.

7.1 Prior to the coming into force of the Electricity Act, 2003,

the Indian Electricity Act, 1910 governed the law

pertaining to the use and supply of electricity in India.

Section 24 of the Indian Electricity Act, 1910 read as

follows :–

“24. Discontinuance of supply to consumer
neglecting to pay charge.

(1) Where any person neglects to pay any
charge for energy or any sum, other than a
charge for energy, due from him to a licensee in
respect of the supply of energy to him, the
licensee may, after giving not less than seven
clear days’ notice in writing to such person and
without prejudice to his right to recover such
charge or other sum by suit, cut off the supply
and for that purpose cut or disconnect any
electric supply-line or other works being the

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property of the licensee, through which energy
may be supplied, and may discontinue the
supply until such charger or other sum, together
with ally expenses incurred by him in cutting
off and reconnecting the supply, are paid, but
no longer.

(2) Where any difference or dispute which by or
under this Act is required to be determined by
an Electrical Inspector, has been referred to the
Inspector before notice as aforesaid has been
given by the licensee, the licensee shall not
exercise the powers conferred by this section
until the Inspector has given his decision:
Provided that the prohibition contained in this
subsection shall not apply in any case in which
the licensee has made a request in writing to
the consumer for a deposit with the Electrical
Inspector of the amount of the licensee’s
charges or other sums in dispute or for the
deposit of the licensee’s further charges for
energy as they accrue, and the consumer has
failed to comply with such request.”

The Standing Committee of Energy in its Report

dated 19.12.2002 submitted to the 13th Lok Sabha,

opined that Section 56 of the 2003 Act is based on

Section 24 of the 1910 Act.

The Standing Committee further opined that a

restriction has been added for recovery of arrears

pertaining to the period prior to two years from

consumers, unless the arrears have been continuously

shown in the bills. Justifying the addition of this

restriction, the Ministry of Power submitted that : –

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“It has been considered necessary to provide
for such a restriction to protect the consumers
from arbitrary billings.”

7.2 In Swastic Industries v. Maharashtra State Electricity

Board,4 this Court while interpreting Section 24 of the

Indian Electricity Act, 1910 held that : –

“5. It would, thus, be clear that the right to
recover the charges is one part of it and right to
discontinue supply of electrical energy to the
consumer who neglects to pay charges is
another part of it.”
(emphasis supplied)

7.3 Sub-section (1) of Section 56 confers a statutory right to

the licensee company to disconnect the supply of

electricity, if the consumer neglects to pay the electricity

dues.

This statutory right is subject to the period of

limitation of two years provided by sub-section (2) of

Section 56 of the Act.

7.4 The period of limitation of two years would commence

from the date on which the electricity charges became

“first due” under sub-section (2) of Section 56. This

4 (1997) 9 SCC 465.

16
provision restricts the right of the licensee company to

disconnect electricity supply due to non-payment of

dues by the consumer, unless such sum has been

shown continuously to be recoverable as arrears of

electricity supplied, in the bills raised for the past

period.

If the licensee company were to be allowed to

disconnect electricity supply after the expiry of the

limitation period of two years after the sum became “first

due”, it would defeat the object of Section 56(2).

8. Section 56(2) however, does not preclude the licensee company

from raising a supplementary demand after the expiry of the

limitation period of two years. It only restricts the right of the

licensee to disconnect electricity supply due to non-payment

of dues after the period of limitation of two years has expired,

nor does it restrict other modes of recovery which may be

initiated by the licensee company for recovery of a

supplementary demand.

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9. Applying the aforesaid ratio to the facts of the present case,

the licensee company raised an additional demand on

18.03.2014 for the period July, 2009 to September, 2011.

The licensee company discovered the mistake of billing

under the wrong Tariff Code on 18.03.2014. The limitation

period of two years under Section 56(2) had by then already

expired.

Section 56(2) did not preclude the licensee company from

raising an additional or supplementary demand after the

expiry of the limitation period under Section 56(2) in the case

of a mistake or bona fide error. It did not however, empower

the licensee company to take recourse to the coercive measure

of disconnection of electricity supply, for recovery of the

additional demand.

As per Section 17(1)(c) of the Limitation Act, 1963, in case

of a mistake, the limitation period begins to run from the date

when the mistake is discovered for the first time.

In Mahabir Kishore and Ors. v. State of Madhya Pradesh,5

this Court held that :–

5 (1989) 4 SCC 1.

18
“Section 17(1)(c) of the Limitation Act, 1963,
provides that in the case of a suit for relief on
the ground of mistake, the period of limitation
does not begin to run until the plaintiff had
discovered the mistake or could with
reasonable diligence, have discovered it. In a
case where payment has been made under a
mistake of law as contrasted with a mistake of
fact, generally the mistake become known to
the party only when a court makes a
declaration as to the invalidity of the law.
Though a party could, with reasonable
diligence, discover a mistake of fact even before
a court makes a pronouncement, it is seldom
that a person can, even with reasonable
diligence, discover a mistake of law before a
judgment adjudging the validity of the law.”
(emphasis supplied)

In the present case, the period of limitation would

commence from the date of discovery of the mistake i.e.

18.03.2014. The licensee company may take recourse to any

remedy available in law for recovery of the additional demand,

but is barred from taking recourse to disconnection of supply

of electricity under sub-section (2) of Section 56 of the Act.

10. We extend our appreciation to Mr. Devashish Bharuka,

Advocate who has very ably assisted this Court as Amicus

Curiae.

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The present Civil Appeals are accordingly disposed of in the

aforesaid terms.

All pending Applications, if any, are accordingly disposed of.

Ordered accordingly.

……………………………….J.

(UDAY UMESH LALIT)

.………………………………J.

(INDU MALHOTRA)

New Delhi,
February 18, 2020

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